New Jersey Renovation Incentives in 2026: Rebates, Financing and What Ended
Which incentives New Jersey homeowners can still use during a kitchen, bathroom or whole-home renovation in 2026: utility heat pump rebates, 0% on-bill repayment, Whole Home Energy Solutions, Comfort Partners, and the federal credits that ended.
Short answer
In 2026 the main renovation incentives in New Jersey come from your electric and gas utility, under programs overseen by the NJ Board of Public Utilities: rebates on heat pumps, water heaters and other efficient equipment, whole-home insulation and air-sealing programs, and interest-free on-bill repayment (PSE&G offers up to $25,000 for an HVAC project and up to $75,000 when building decarbonization measures are included). The federal home-improvement and residential clean energy tax credits (25C and 25D) ended after December 31, 2025. All rebates are subject to each program’s current terms and funding.
What changed for 2026
Until the end of 2025, many New Jersey homeowners paired utility rebates with two federal tax credits: the Energy Efficient Home Improvement Credit (section 25C, for heat pumps, insulation, windows and similar upgrades) and the Residential Clean Energy Credit (section 25D, for solar, batteries and geothermal). The federal law enacted on July 4, 2025 (Public Law 119-21) ended both early. According to the IRS:
- 25C is not allowed for property placed in service after December 31, 2025.
- 25D is not allowed for expenditures made after December 31, 2025, and an expenditure counts as made when installation is completed. Paying a deposit in 2025 for equipment installed in 2026 does not preserve the credit.
Equipment installed and in service in 2025 can still be claimed on your 2025 return using Form 5695. For work done in 2026, plan your budget without these credits.
The federal Home Energy Rebates funded by the Inflation Reduction Act (often called HOMES and HEAR) are run by each state. New Jersey’s plan has focused on income-qualified households, and the rebates were not broadly open to the public at the time of writing. Check the NJ Board of Public Utilities for current status before counting on them.
Utility rebates you can use in a renovation
New Jersey’s investor-owned utilities (PSE&G, JCP&L, Atlantic City Electric, Rockland Electric, New Jersey Natural Gas, Elizabethtown Gas and South Jersey Gas) run the state’s residential energy-efficiency programs directly. New Jersey’s Clean Energy Program lists them in four main groups:
| Program type | What it covers | Where it fits in a renovation |
|---|---|---|
| Efficient products and HVAC rebates | Heat pumps, furnaces and boilers, water heaters, smart thermostats, some appliances; instant or post-purchase rebates | Replacing heating, cooling or hot water during a gut or whole-floor renovation |
| Whole Home Energy Solutions | Assessment by a BPI-certified contractor, then insulation, air sealing and high-efficiency equipment | Gut renovations where walls and ceilings are open anyway |
| Building decarbonization | Moving from fossil-fuel equipment to electric heat pumps and heat pump water heaters | Full electrification, often paired with a kitchen move to induction |
| Moderate-income weatherization | Weatherization upgrades at no cost for eligible low- to moderate-income customers | Income-qualified homeowners and some rentals |
Rebate amounts change and differ by utility, equipment tier and efficiency rating. As examples, JCP&L’s published HVAC rebates in November 2026 listed $500 to $750 for qualifying air-source heat pumps, $1,000 for cold-climate heat pumps, up to $750 for ductless systems and up to $1,500 for geothermal heat pumps. PSE&G’s HVAC Instant Rebates Program applies rebates through participating contractors, and PSE&G adds $300 per eligible measure for customers who qualify for its low- to moderate-income incentive (household income at or below 400% of the federal poverty level, residence in a qualifying census tract, or enrollment in programs such as LIHEAP or SNAP). Always confirm the current rebate table and equipment list before you buy.
Interest-free financing: on-bill repayment
For many renovations, financing matters more than the rebate itself. PSE&G’s on-bill repayment lets qualified residential customers pay for efficiency upgrades in equal monthly installments on the utility bill, interest-free:
- Up to $25,000 for an HVAC Instant Rebates or Whole Home Energy Solutions project.
- Up to $50,000 for a standalone building decarbonization project, of which up to $2,000 can go toward electrical upgrades (income-qualified customers are not subject to that cap).
- Up to $75,000 in total for a project that combines HVAC or whole-home work with decarbonization measures such as heat pumps or heat pump water heaters.
- Repayment terms of 84 or 120 months, depending on the program, project cost and income qualification.
Other utilities offer their own financing; ask yours. On-bill repayment covers the energy measures, not the cabinets, tile or finishes, so it complements rather than replaces a renovation loan.
Free upgrades for income-eligible households: Comfort Partners
New Jersey’s Comfort Partners Program provides efficiency measures at no cost to eligible households with significant energy use and income at or below 250% of the federal poverty guidelines. Depending on the home, it can include insulation, air sealing, duct sealing, efficient lighting, hot water measures, thermostats and refrigerator replacement. Owners and renters can apply.
Where incentives meet a kitchen or bathroom renovation
Kitchens
Switching to induction often goes with a broader electrification plan: a heat pump for heating and cooling, a heat pump water heater and, in many older Hudson County and Essex County homes, an electrical service or panel upgrade. Rebates attach mainly to the HVAC and water heating equipment rather than to the range itself, so price the whole package and confirm what qualifies. See induction vs gas.
Bathrooms
The usual incentive opportunities are a heat pump water heater when the old tank is near the end of its life, and insulation and air sealing on exterior walls when they are opened. An ENERGY STAR-qualified exhaust fan with humidity control is good practice even where no rebate applies.
Gut and whole-home renovations
This is where incentives add up. With walls and ceilings open, insulation and air sealing cost far less than in a finished house, and moving to heat pumps can be designed in from the start. Ask whether your contractor or energy auditor participates in your utility’s Whole Home Energy Solutions program before demolition, since many programs require pre-approval or an assessment before work begins. See our gut renovation page.
Sales tax: the saving most homeowners miss
Not an incentive program, but often worth more than a rebate: most kitchen, bathroom and whole-home renovations are capital improvements under New Jersey sales tax rules. With a completed Form ST-8 from the homeowner, the contractor does not charge sales tax on labor and instead pays tax on the materials it buys. Ask how tax is handled in your proposal.
How to use incentives without slowing the job
- Find your utility for electric and for gas; they may differ.
- Check eligibility before ordering equipment. Many rebates require specific efficiency tiers, listed products or a participating contractor.
- Get pre-approval where the program requires it, especially for whole-home work and on-bill repayment.
- Keep model numbers, invoices and permit sign-offs. Rebate applications commonly ask for them.
- Treat rebates as a bonus, not the budget. Programs change, and funding is not guaranteed.
We build energy systems into our own projects, including a solar roof and smart power at 33 Bayview and radiant heating at 31 Bayview in Jersey City, and we plan renovations so equipment choices fit the programs available at the time. See our New Jersey renovation page or start a project brief.
Frequently asked questions
Can I still get a federal tax credit for a heat pump in 2026?
No. The IRS states that the Energy Efficient Home Improvement Credit (25C) is not allowed for property placed in service after December 31, 2025. Utility rebates in New Jersey are separate and continue under their own program terms.
Are there NJ rebates for induction stoves?
Rebates in New Jersey attach mainly to heating, cooling, water heating and certain appliances, and the list varies by utility. Check your utility's current efficient-products and building decarbonization offers before buying a range.
What is PSE&G on-bill repayment?
An interest-free way to pay for qualifying efficiency upgrades in monthly installments on your PSE&G bill: up to $25,000 for an HVAC or whole-home project, up to $50,000 for a standalone building decarbonization project, and up to $75,000 combined, with 84- or 120-month terms.
Who qualifies for free energy upgrades in New Jersey?
Households with significant energy use and income at or below 250% of the federal poverty guidelines may qualify for the Comfort Partners Program, which installs efficiency measures at no cost. Utilities also run moderate-income weatherization programs.
Do I pay sales tax on a renovation in New Jersey?
Usually not on labor, if the work is a capital improvement and you give the contractor a completed Form ST-8. The contractor pays sales tax on materials.
Sources & further reading
- IRS: FAQs on modification of sections 25C, 25D and others under Public Law 119-21
- IRS: Instructions for Form 5695, Residential Energy Credits
- New Jersey’s Clean Energy Program: Utility-run programs for homeowners
- New Jersey’s Clean Energy Program: Comfort Partners
- PSE&G: HVAC Instant Rebates Program and on-bill repayment
- JCP&L: HVAC equipment rebates
- NJ Division of Taxation: Form ST-8, Certificate of Exempt Capital Improvement
Costs are 2026 planning ranges for the New Jersey and New York City market, not quotes. Rules summarized here change and vary by building and municipality; confirm requirements with your local building department, building management or attorney before you start.