Energy Upgrades and Rebates for NY Homeowners

For upgrades installed in 2026, New York homeowners can no longer claim the federal energy tax credits, which ended after December 31, 2025. The main help left is state and utility money: NYS Clean Heat rebates for heat pumps paid through your contractor, NYSERDA insulation incentives, a free home energy assessment, and New York State income tax credits for geothermal and solar systems.

This guide sorts out what is still available, which upgrades tend to pay back first, and how the city's Local Law 97 does (and does not) affect your home. Incentive amounts change and depend on your utility and address, so treat the figures below as a starting point and confirm them before you sign a contract.

What happened to the federal credits

The 2025 federal tax law (Public Law 119-21, often called the One Big Beautiful Bill) cut short two credits that many homeowners used:

• Energy efficient home improvement credit (section 25C). 30% of qualifying costs, with a $1,200 annual limit for items like insulation, windows and doors and a separate $2,000 annual limit for heat pumps and heat pump water heaters. The IRS says it is not allowed for any property placed in service after December 31, 2025.
• Residential clean energy credit (section 25D). 30% of the cost of solar panels, geothermal heat pumps, battery storage and similar property. It is not allowed for expenditures made after December 31, 2025, and the IRS says an expenditure counts as made when the installation is completed. If you paid in 2025 but the system was finished in 2026, there is no federal credit.

What New York still offers

A few rules that are easy to miss:

• Work with a participating contractor. NYS Clean Heat works through participating contractors, so choose an installer from the program's contractor directory before you sign. The program is sponsored by the state's utilities, including Con Edison, National Grid, Central Hudson, NYSEG, RG&E, Orange & Rockland and National Fuel Gas.
• Weatherize first for a bigger rebate. NYS Clean Heat offers a significantly higher heat pump rebate for homes that have been weatherized and qualify for its Weatherized Tier, and sealing and insulating first can let you buy smaller, cheaper equipment.
• Use the rebate finder. Amounts vary by location and utility. The Clean Heat site has a rebate finder that asks for your address and lists the programs you qualify for.
• State tax credits carry forward. The geothermal and solar credits are not refundable, but unused amounts carry over for up to five years. For geothermal, the home must have been your residence and not rented during the tax year you claim it, and you can claim only one system per year.
• Lower incomes, bigger help. Con Edison runs separate offers for income-eligible renters and homeowners, and lists energy efficiency incentives of up to $1,200 per dwelling unit for affordable multifamily buildings.

Which upgrades pay back first

Payback depends on your home, your current fuel and your utility rates, so be skeptical of any contractor who quotes a payback period without looking at your bills. The order that usually makes sense follows NYS Clean Heat's own getting-started steps (plan first, then air sealing and insulation, then a contractor-designed system):

1. 1

   Get the free energy assessment

   An assessment finds air leaks, missing insulation and inefficient equipment. You can also build a self-guided plan with MyEnergy, New York State’s home energy planning tool.
2. 2

   Fix the envelope: air sealing and insulation

   This is usually the cheapest work per unit of energy saved, it qualifies for NYSERDA incentives, and it shrinks the heat pump you will need later.
3. 3

   Replace equipment at the end of its life

   The best time to switch to a heat pump or heat pump water heater is when your boiler, furnace, AC or water heater is due anyway, because you only pay the difference over a like-for-like replacement.
4. 4

   Size heat pumps properly

   Your NYS Clean Heat contractor designs the system for your home’s size, layout and insulation. Ask to see the load calculation.
5. 5

   Consider solar or geothermal last

   These have the largest upfront costs. Without the federal 30% credit, rely on the state credit and incentives and run the numbers carefully.

How Local Law 97 fits in

Local Law 97 sets carbon emissions limits for large NYC buildings. It applies to a single building over 25,000 gross square feet, two or more buildings on the same tax lot that together exceed 50,000 square feet, and two or more condo buildings under the same board that together exceed 50,000 square feet. Limits started in 2024 and get stricter in 2030.

• Most one- to four-family houses and small buildings are below those thresholds, so LL97 does not require you to do anything. Upgrades are your choice.
• If you own in a large co-op or condo, LL97 is the building's obligation, but you pay for it through maintenance, common charges or assessments if the building needs upgrades or faces fines. Ask the board for its compliance plan. See Local Law 97 for co-op and condo owners and estimate exposure with the LL97 fine estimator.
• Apartment owners can still help. Replacing an old window AC with an efficient heat pump unit, or a gas range with induction, may need board approval under your alteration agreement. See renovating a co-op or condo.

Timeline to plan a heat pump project

1. Step 1

   Assessment and rebate check

   Book the free assessment and run your address through the Clean Heat rebate finder.

2. Step 2

   Weatherization

   Air sealing and insulation, using NYSERDA incentives where you qualify.

3. Step 3

   Quotes from participating contractors

   Get at least two. Compare the load calculation, equipment model, incentives applied and warranty.

4. Step 4

   Electrical check

   Confirm whether you need a panel or circuit upgrade, and whether any DOB permit is needed (see our DOB permit guide).

5. Step 5

   Installation and tax forms

   Keep invoices and model numbers. Claim any NYS geothermal or solar credit with your state return for the year the system is placed in service.

Permits are a common trip-up in the city; read do you need a DOB permit? before work starts. For the bigger picture on what your home costs to run, see the home maintenance budget guide.