The U.S. Department of Energy (DOE) is moving forward with the release of billions of dollars in rebate funding to states earmarked by the Inflation Reduction Act (IRA), a step that could meaningfully alleviate HVAC and home energy costs for households across the country. The funding supports two flagship home energy programs, Home Efficiency Rebates (HOMES) and Home Electrification and Appliance Rebates (HEAR), and arrives at a moment when electricity prices are climbing in most regions and home affordability has become a top-of-mind concern for American families.
The HOMES program enables whole-home retrofits that cut overall energy use by at least 15 percent, offering performance-based rebates that reward deeper efficiency improvements across the building envelope, insulation, and heating and cooling systems. The HEAR program provides point-of-sale coupons for high-efficiency electric appliances (including heat pumps, heat pump water heaters, induction and electric stoves, and electric panel and wiring upgrades) for low- and moderate-income households. Together, the programs are backed by a combined $8.8 billion federal budget, with HOMES rebates worth up to $8,000 per household and HEAR rebates worth up to $14,000 depending on the upgrades completed and household income. Funds are available until depleted or through September 30, 2031, whichever comes first.
With this release of funds, the Department of Energy is unlocking capital that had been stalled in the state approval and blueprint process, allowing state energy offices to move rebate coupons and program payments into the hands of homeowners and contractors. The programs are expected to have particular impact on HVAC costs, given that heating and cooling equipment (including heat pumps, which the HEAR program directly subsidizes) typically represents one of the largest energy expenditures for U.S. households. By reducing the upfront cost of high-efficiency equipment and whole-home retrofits, the rebates aim to make energy-saving upgrades accessible to households that would otherwise be priced out of them.
On a recent episode of the Factor This podcast, Kate Shonk, policy principal at Advanced Energy United, explained why the funding had been stalled, where it is now headed, and how it can help households at a time when electricity prices are rising almost everywhere. Shonk noted that roughly a dozen states are rolling out unique programs to take advantage of the efficiency rebates, and highlighted early examples of what is working as states translate federal policy into on-the-ground programs for residents and contractors.
Rebecca Puck Stair, a director for the State of New Mexico's Energy, Minerals, and Natural Resources Department, talked about her state's approach to the program. Since her Department oversees the implementation of federal and state energy programs, including IRA rebate initiatives, she can speak directly to the human impact that programs like HOMES and HEAR can have on communities in need. Stair described New Mexico's efforts to optimize and consolidate programs in order to maximize the use of federal dollars, and detailed the behind-the-scenes bureaucratic work involved in translating policy from paper to practice. This includes everything from stakeholder coordination and contractor training to the mechanics of ensuring rebate coupons reach households at the point of sale.
The renewed momentum around the HOMES and HEAR programs takes on added significance in the current energy incentive landscape. The federal 25C Energy Efficient Home Improvement Credit and 25D Residential Clean Energy Credit, which previously offered tax credits of up to 30 percent for solar and up to $3,200 for heat pumps and other efficiency upgrades, expired on December 31, 2025 under the One Big Beautiful Bill Act. With those tax credits no longer available for new installations, the HOMES and HEAR rebates have become the backbone of federal residential energy savings support in 2026 and beyond. State and utility rebates continue to stack on top of the federal programs, meaning eligible households may be able to combine multiple incentives for a single project.
Advanced Energy United is a national trade association of businesses working to accelerate the transition to 100 percent clean energy and electrified transportation. The Department of Energy's release of HOMES and HEAR rebate funding underscores a renewed federal focus on residential energy affordability and its potential to reduce heating, cooling, and appliance costs for millions of American households, while supporting the domestic HVAC and home efficiency workforce responsible for delivering the upgrades on the ground.
