Tax Credits and Rebates for New Heating and Cooling Equipment in 2026

Many Chicago homeowners ask us about the federal tax credit for energy-efficient furnaces, air conditioners and heat pumps. Here is where things stand in 2026, and the rebates that are still available.

The federal tax credit ended on December 31, 2025

The Energy Efficient Home Improvement Credit (often called the 25C credit) covered up to 30% of the cost of qualifying heating and cooling equipment. A federal law passed in July 2025 ended it: equipment installed in 2026 or later does not qualify.

If your equipment was installed in 2025 or earlier, you may still be able to claim the credit for that year with IRS Form 5695. Ask your tax preparer.
For new installations in 2026, the savings now come from utility rebates, below.

Utility rebates still available in 2026

Illinois utilities pay rebates on high-efficiency equipment. Which ones apply depends on who supplies your gas and electricity. Amounts below are from each utility’s website as of September 2026 and can change; the utility’s own terms decide.

Peoples Gas (most of Chicago)

Furnace: $200 for 95% AFUE or higher, $225 for 97% AFUE or higher
Boiler: up to $350 for a hot water boiler, up to $500 for a boiler with built-in hot water
Water heater: $150 for a qualifying tankless or indirect water heater
Smart thermostat: $25

Nicor Gas (most suburbs)

Furnace: $150 for 95% AFUE or higher, $225 for 97% AFUE or higher (more when paired with a smart thermostat)
Boiler: $350 for 95% AFUE or higher, $500 for a qualifying combination boiler
Water heater: $150 for a qualifying tankless or high-efficiency storage water heater
Apply within 90 days of installation, for equipment installed in 2026

ComEd (electricity)

ComEd offers rebates and instant discounts on high-efficiency heat pumps, ductless mini-splits and smart thermostats, with extra help for income-eligible households. Amounts depend on the equipment and are set by ComEd.

How we help

When we quote a new furnace, boiler, air conditioner or heat pump, we tell you which rebates the equipment qualifies for and give you the model and efficiency details the application asks for. Contact us or call (312) 243-9896 and we will go through the options with you.