Heat Pumps Defy Tax Credit Expiry, Surge in US Sales

Why heat pumps remain dominant in the US market

Even as New York endures record summer heat, the conversation around heat pumps is gaining momentum. These electric-driven units move thermal energy rather than generate it, delivering efficiency that traditional gas furnaces can’t match.

According to the Air Conditioning, Heating, and Refrigeration Institute, shipments have risen ↑ 2x over the past 15 years, and in Q1 2026 they outpaced natural‑gas furnaces by ↑ 32%. The trend persists despite the expiration of the federal tax credit that capped incentives at $2,000 through 2025 (see Reuters).

“The market has matured enough that buyers see value without subsidies,” notes UC Berkeley energy economist Lucas Davis.

Installation costs remain higher than gas units, prompting earlier government rebates. The Trump administration’s 2026 policy shift eliminated those credits (Bloomberg), echoing the 2025 sunset of the $7,500 EV incentive that briefly spiked vehicle sales before a sharp decline.

Yet demand for heat pumps is holding steady. Seasonal data show a modest spring uptick, mirroring historic patterns but with a slightly steeper curve this year. Analysts point to three forces: rising electricity prices, stricter building codes, and growing consumer awareness of carbon footprints.

Internationally, China and Germany are scaling similar deployments, reinforcing the view that heat pumps are a cornerstone of global decarbonization strategies. For a deeper dive into the thermodynamic cycle, see the 2023 explainer linked in the original report.

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Intel provided by: Elena Rostova

Socio-Economic Trends Analyst