The federal 25C tax credit made heat pump math easy for a lot of Portland homeowners. Then it expired. If you were counting on that $2,000 credit as part of your budget, the news stings, but Oregon’s incentive landscape didn’t disappear with it. It just requires a little more navigation.
As a certified Energy Trust of Oregon Trade Ally and preferred provider, we work with these programs every day. That means we can tell you with confidence what’s active right now, what’s reserved or stalled, and how to make sure your installation qualifies before the work begins. Here’s what Portland homeowners need to know heading into 2026.
The Federal 25C Credit Is Gone. Here’s What That Means
Section 25C of the tax code, which provided a credit of up to $2,000 for qualifying heat pump installation, was terminated by the One Big Beautiful Bill Act (OBBBA, Public Law 119-21), signed July 4, 2025. For heat pumps installed on or after January 1, 2026, there’s no equivalent federal credit available.
One detail worth knowing: the IRS uses the “placed-in-service date” to determine eligibility, not the purchase date or payment date. Equipment ordered or paid for in 2025 but installed in January 2026 doesn’t qualify, regardless of when you signed a contract or wrote a check. If you completed a qualifying installation by December 31, 2025, you can still claim the credit on your 2025 federal return using IRS Form 5695 during the current filing season.
Energy Trust of Oregon: The Most Reliable Incentive Right Now
Energy Trust of Oregon rebates are funded by a ratepayer surcharge on utility bills, not federal appropriations. That matters because it means these rebates were unaffected by the 25C expiration and continue operating on their own schedule. For Portland homeowners served by Portland General Electric or Pacific Power, Energy Trust is the most dependable incentive available right now.
Current rebate amounts run $800 for ductless systems and $1,000 for ducted or extended-capacity heat pumps. Income-qualified households can receive significantly more through the Savings Within Reach program, with rebates ranging from $1,800 to $3,000 depending on system type and household income.
Not every home qualifies for the same rebate path. The standard Energy Trust rebate applies when replacing electric resistance heat, which is common in older Portland homes with baseboard or wall heaters. If you’re replacing a gas furnace, you’ll need the extended-capacity rebate path, which carries different equipment requirements and installation standards. Knowing which path applies to your home before choosing equipment is how you avoid a disqualified installation.
How the Trade Ally Instant Incentive Works and Why It Matters
When you work with an Energy Trust Trade Ally, the rebate doesn’t arrive weeks after you’ve already paid in full. It’s applied as a direct reduction on your installation invoice before you pay. That’s real money off your bill on day one, not a credit you wait for.
Because First Call Heating & Cooling is a certified Energy Trust Trade Ally and preferred provider, we handle incentive processing directly. You don’t carry the full upfront cost or manage a rebate application under deadline pressure. For homeowners who work with contractors that aren’t Trade Allies, the process works differently: you pay the full installation price upfront, then self-file using Energy Trust Form 320C-HVAC within 60 days of installation and wait four to eight weeks for reimbursement. Missing that 60-day window forfeits the rebate entirely.
Other Oregon Programs: What’s Active, What’s Reserved, What’s Pending
Oregon has several other incentive programs homeowners hear about, and the status of each varies considerably right now. Don’t budget around a program without checking its current status first.
Here’s where each program stands as of July 2026:
- Oregon Heat Pump Purchase Program (HP3): Owner-occupied funding for Rounds 1 and 2 is fully reserved as of May 7, 2026. Rental and new construction funding remain available, but if you own and live in your home, HP3 isn’t a source you can count on right now. Check oregon.gov/energy before including this in any budget estimate.
- Oregon HOMES and HEAR Programs: These programs (Home Energy Efficiency and Home Electrification and Appliance Rebates) have $113 million in federal awards allocated to Oregon, but no launch date has been set as of July 2026. The U.S. Department of Energy suspended approvals while reviewing program requirements, and ODOE will announce a launch date only after that approval comes through. Income-qualified households below 150% of Area Median Income should monitor ODOE’s site, but shouldn’t treat this as a near-term option.
- Portland Clean Energy Fund’s Energy Friendly Homes Program: For Portland homeowners who qualify on income, this is one of the most significant programs available. The Portland Clean Energy Community Benefits Fund (PCEF) funds free energy upgrades, including heat pumps, valued between $15,000 and $50,000 for households earning below 150% of Area Median Income. Eligibility is limited to homes within City of Portland limits, not surrounding cities or unincorporated Multnomah County. Visit energyfriendlyhomes.com for current enrollment information.
Equipment Requirements: What Your Heat Pump Has to Meet
Choosing an eligible contractor is only half the equation. The equipment itself has to meet program efficiency standards, and those thresholds matter more than ever now that homeowners are layering whatever rebates remain available.
Energy Trust minimum HSPF2 requirements (Heating Seasonal Performance Factor, measured under the updated testing standard) differ by system type: ductless heat pumps must be inverter-driven with an HSPF2 of 8.10 or greater, while ducted central heat pumps require an HSPF2 of 7.50 or greater. Equipment that met Energy Trust standards in prior years may fall short under 2026 requirements, so confirming spec sheet eligibility before purchase is a necessary step, not an afterthought.
For ductless systems, the highest-capacity indoor head must serve the main living space of the home. This is a specific installation requirement that’s easy to get wrong during system design, and an installation that doesn’t meet it won’t qualify for the rebate regardless of equipment ratings. We verify placement requirements as part of our pre-installation process so there are no surprises after the work is done.
Getting the Most Out of Oregon’s 2026 Incentives
The rebates available to you depend on your utility provider, your current heating source, your income, and whether your address falls within specific geographic boundaries. Getting those details right before installation determines whether you capture the energy incentives you’re eligible for. First Call Heating & Cooling has served Portland-area homes since 1939, and as an Energy Trust Trade Ally, NATE-certified, and PGE Preferred Contractor, we can walk through your specific situation before any work begins. Reach us at (503) 557-0962.