Heat pumps remain popular in the US despite loss of tax credit

It feels as if it should be illegal to even think about heating appliances during the height of summer—seriously, these heat waves in New York have been brutal—but we need to talk about heat pumps. The appliances use electricity for heating, they’re incredibly efficient, and they’re on the rise. (For what it’s worth, many heat pumps can also be run in reverse to cool buildings.) In the US, heat pump sales have doubled over the past 15 years, according to a new report .

And they’re winning the heating race against fossil fuels, outpacing natural-gas furnaces by 32% during the first quarter of 2026. These stats are especially striking at this moment, because a key tax credit for heat pumps just ended with the close of 2025. But you wouldn’t know it from looking at the data.

Why are heat pumps still so hot? In case you need a quick refresher, heat pumps use electricity to essentially move heat from one spot to another. A refrigerant moves around a loop in the device, expanding and compressing, gathering and releasing heat at different points in the cycle.

(For a more in-depth look at the thermodynamics, this explainer I wrote in 2023 still holds up.) The result is an appliance that can be incredibly efficient. Once you pay for and install a heat pump, it’s generally significantly cheaper to run than a gas or oil furnace or other types of electric heating systems. And because they’re more efficient and don’t involve burning fossil fuels, heat pumps can be a major help in decarbonizing buildings.

One of the major hurdles to wider use of heat pumps is the appliances’ cost: They tend to be more expensive to buy and install than gas furnaces. For this reason, many governments offer incentives to encourage their adoption. In the US, people who installed heat pumps between 2023 and 2025 were eligible for up to $2,000 in tax credits.

Last year, though, the Trump administration slashed those tax credits, along with many of the other incentives that were part of the 2022 Inflation Reduction Act. Effective January 1, 2026, no more financial help for heat pumps. I think I’ve seen this film before, and I didn’t like the ending.

Tax credits of up to $7,500 for new EVs ended on September 30, 2025. In the quarter leading up to that deadline, sales spiked as people rushed to take advantage of the incentive. Then they fell off a cliff.

Things are starting to normalize now , but clearly the tax credit’s sunset had a major effect. But as it turns out, heat pumps are an entirely different story. In the first few months of 2026, sales have actually gone up, as Lucas Davis, an energy economist and UC Berkeley professor, points out in a new analysis .