HOME ENERGY · ELECTRIFICATION
A major federal tax credit disappeared at the end of 2025, yet US heat-pump sales kept rising. Efficiency, cooling and an established market may explain their resilience.
Heating equipment may feel like a strange subject during a punishing summer, but heat pumps are also cooling machines—and their US market is hard to ignore.
Over 15 years, unit sales have roughly doubled. During the first quarter of 2026, heat pumps outsold natural-gas furnaces by 32%, extending a lead that has survived changing energy prices, uneven policy support and the slow replacement cycle of household equipment.
That momentum is notable because a federal incentive worth as much as $2,000 ended with 2025. If the credit had been driving purchases, shipments might have dropped sharply in January. Instead, data shows continued strength.
How Heat Pumps Work
Heat pumps use electricity to transfer heat rather than create it by burning fuel. Refrigerant circulates through a closed loop, changing pressure as it expands and compresses. At different points, it absorbs heat from one location and releases it in another.
In winter, the system collects heat from outdoor air or the ground and moves it inside. Many models can reverse direction during summer, carrying indoor heat outdoors and functioning as air conditioners. One appliance can therefore provide both heating and cooling.
Moving heat requires far less energy than producing the same amount with electric resistance. After installation, a heat pump can also cost less to operate than gas, oil or many conventional electric systems. Because it avoids on-site fossil-fuel combustion and uses electricity efficiently, it can substantially reduce building emissions, especially as power grids add cleaner generation.
The Tax Credit Test
The obstacle is the upfront bill. Heat pumps often cost more to purchase and install than gas furnaces, so rebates and tax credits have been widely used to narrow the difference. US households installing qualifying systems from 2023 through 2025 could claim up to $2,000.
The Trump administration later cut that benefit along with many incentives created by the 2022 Inflation Reduction Act. Beginning January 1, 2026, the federal heat-pump credit was no longer available.
Electric vehicles offered a warning about what might happen next. Their federal credits, worth as much as $7,500 for new vehicles, expired on September 30, 2025. Buyers rushed to complete purchases before the deadline, lifting sales in the preceding quarter; demand then fell abruptly before beginning to normalize.
A similar pattern for heating equipment would have produced a late-2025 surge followed by a weak opening to 2026. The heat-pump market did not follow that script.
Sales Broke the Expected Pattern
But shipments actually increased during the first months of 2026, as UC Berkeley energy economist Lucas Davis highlighted in an analysis of industry data. The result suggests the expired incentive had not been the decisive reason most households chose the technology.
Figures compiled by the US trade group AHRI cover manufacturers representing roughly 90% of the national market overall. Shipments were nearly unchanged from December to January and then rose gradually through spring.
Some seasonal improvement is normal: previous years also show sales strengthening as winter gives way to spring. Yet the 2026 increase was slightly stronger than the usual pattern, not weaker. That is the opposite of what a major incentive-driven decline would look like.
Davis concluded that the domestic market appears healthy enough to operate without depending on tax credits. The credit may still have helped individual households afford an installation, but at the national level its disappearance did not produce an obvious sales shock.
Momentum Beyond One Incentive
Heat pumps have outsold gas furnaces in the United States for four consecutive years. Their annual sales have moved up and down, but the broader direction remains clear enough that MIT Technology Review placed the technology on its 2024 breakthrough list.
The shift is not limited to one country. China and Germany are among the markets that have posted strong heat-pump growth in recent years, reflecting a wider push to electrify buildings, reduce fossil-fuel use and combine efficient heating with increasingly necessary cooling.
Adoption will not advance in a perfectly straight line. Each purchase depends on equipment age, local climate, installer availability, electricity and gas prices, housing design and a household’s ability to cover the initial expense. State, local and utility programs may still matter even after the federal credit has gone.
Even so, the early 2026 figures show a technology moving beyond dependence on one policy. Heat pumps are succeeding because they solve practical comfort needs while lowering energy use. For a major tool in building decarbonization, that market durability may be the most encouraging signal of all.
