NYC Renovation Incentives in 2026: Con Edison, NYS Clean Heat, J-51 and Sales Tax
Incentives NYC homeowners can still use in 2026 when renovating a kitchen, bath, apartment or townhouse: Con Edison and NYS Clean Heat rebates, J-51 status, sales tax on capital improvements, ended federal credits.
Short answer
In 2026 the incentives that matter most in a New York City renovation are utility programs (NYS Clean Heat heat pump rebates through Con Edison and participating contractors, and Con Edison offers such as up to $4,000 for professionally installed insulation and air sealing) and the sales tax rule for capital improvements, which keeps tax off the labor on most renovations. The federal 25C and 25D home energy credits ended after 2025, and the J-51 building tax abatement is paused for work completed after June 29, 2026 until the City Council acts on the authorized extension. All rebates are subject to each program’s current terms and funding.
What changed going into 2026
Three changes shape the numbers for any NYC project planned this year:
- Federal credits ended. Under Public Law 119-21, the IRS says the Energy Efficient Home Improvement Credit (25C) is not allowed for property placed in service after December 31, 2025, and the Residential Clean Energy Credit (25D) is not allowed for expenditures made after that date. Heat pumps, insulation, windows and solar installed in 2026 do not earn these credits.
- J-51 is between authorizations. HPD states that it is still reviewing J-51 Reform applications for work completed on or before June 29, 2026, but work completed after that date is not currently eligible. The State Legislature authorized an extension; if the City Council enacts it in full, work completed after June 29, 2026 and before June 30, 2036 would become eligible.
- Utility programs carry most of the load. Con Edison’s residential incentives and the statewide NYS Clean Heat program, administered by the utilities with NYSERDA, remain the main sources of rebates for heat pumps, weatherization and electrification.
Incentives by type of home
What you can use depends heavily on what you own. A townhouse owner controls the boiler, the roof and the electrical service; an apartment owner in a co-op or condo usually controls only what is inside the unit.
| Program | Townhouse / 1–4 family | Co-op or condo apartment | Notes |
|---|---|---|---|
| NYS Clean Heat (heat pumps) | Yes, through a participating contractor | Usually through the building’s own program, not the unit owner | Rebates are paid via contractors; amounts vary by system and utility |
| Con Edison weatherization | Up to $4,000 for insulation and air sealing | Rarely applicable inside a unit | Must be professionally installed |
| Con Edison smart thermostat | $85 for an eligible enrolled thermostat | Possible if the unit controls its own heat or cooling | Enrollment program |
| Con Edison Energy Exchange | Incentives to replace gas appliances with electric | Possible, subject to building rules | Check the current equipment list before buying |
| J-51 Reform abatement | Not for single-family houses | Building-wide work in eligible co-ops and condos | Paused for work completed after June 29, 2026 |
| Sales tax: capital improvement | Yes | Yes, for the owner’s permanent improvements | Form ST-124 to the contractor |
NYS Clean Heat: heat pumps in a townhouse or small building
If you are gutting a brownstone, a two-family in Queens or a Brooklyn rowhouse, the renovation is the cheapest moment to change the heating system: walls and ceilings are open, line sets and ducts can be run where they belong, and the electrical service can be sized once. NYS Clean Heat rebates for air-source and ground-source heat pumps are applied through participating contractors rather than paid directly to the homeowner, so the contractor’s enrollment matters. Amounts depend on the type of system, whether it replaces the whole heating load, and your utility, and they have changed more than once since 2024. Treat any figure you see as a starting point and get the current rebate in writing in the installer’s proposal.
In larger co-op and condo buildings, heat pump incentives typically run through programs aimed at the building as a whole, and individual owners normally cannot change the heating system without the board. If your building is planning an electrification project, coordinate your renovation timing with it.
Con Edison offers that fit a renovation
Insulation and air sealing
Con Edison advertises up to $4,000 for professionally installed insulation and air sealing. In a townhouse gut renovation, the top-floor ceiling, rear walls and the parlor-floor bay are the usual targets. The work is far cheaper with framing exposed than as a retrofit later.
Gas to electric
Con Edison’s Energy Exchange program offers incentives for replacing gas appliances with electric ones. In a kitchen renovation that switches to induction, the real cost is often the electrical work: a dedicated 240-volt circuit and, in older buildings, a panel or service upgrade. In many co-ops the building also has to approve added electrical load. See induction vs gas in NJ and NYC.
Thermostats and batteries
Smaller programs pay for enrolling a smart thermostat ($85 at the time of writing) or a home battery. These are minor in a renovation budget but cost nothing to apply for.
J-51: what it is and who it is for
J-51 Reform is a property tax abatement for building-wide alterations and improvements, not for individual apartment renovations. For co-ops and condos, HPD lists these conditions among others:
- The building is a Class A multiple dwelling operated as condominium or cooperative housing, and not used in whole or in part as a hotel.
- The average assessed valuation is no greater than $45,000 per dwelling unit at the start of work.
- The work is on HPD’s certified reasonable cost schedule and meets a minimum of $1,500 per dwelling unit.
- A Notice of Intent is filed with HPD at least 15 days before work begins.
Approved projects can abate existing real property taxes by up to 8⅓% of the certified reasonable cost each year for up to 20 years, capped at 70% of the cost. If you are on a co-op or condo board planning a boiler, roof, window or facade project, ask your managing agent and counsel about the extension status before you commit to a schedule. If you are an owner renovating your own unit, J-51 does not apply to your kitchen or bathroom.
Sales tax: the saving that applies to almost everyone
New York State treats work that permanently adds to or alters real property as a capital improvement, which is not subject to sales tax on the contractor’s charge. The state’s own examples include installing kitchen cabinets and a water heater; painting existing cabinets or replacing a thermostat are taxable repairs. The owner gives the contractor a completed Form ST-124, Certificate of Capital Improvement. The contractor still pays tax on materials and builds that cost into the price.
Two points catch NYC owners out. Freestanding appliances are not capital improvements, so a refrigerator or washer sold with the job is taxable. And work done for a tenant that has to be removed at the end of a lease may not qualify, which matters for renters and some commercial spaces. With NYC’s combined sales tax rate, getting this right on a $100,000 renovation is worth several thousand dollars.
How to fit incentives into the schedule
- Decide on heating and hot water early. Heat pump and weatherization programs often require pre-approval or a participating contractor before work begins.
- In a co-op or condo, ask the managing agent about building-wide programs and electrical capacity before you design around them.
- Give your contractor Form ST-124 with the signed contract, and check that appliances are invoiced separately.
- Keep model numbers, invoices and DOB sign-offs. Rebate applications and future buyers both ask for them.
- Budget without the rebate. Programs change and funding is limited; treat the rebate as a bonus.
We built energy systems into our own projects, including a Tesla solar roof and smart power at 33 Bayview in Jersey City, and we restored the Uptown 388 brownstone in Manhattan. For New Jersey programs, see our NJ incentives guide. To plan a project in Manhattan, Brooklyn or Queens, see our New York City renovation page or start a project brief.
Frequently asked questions
Are there rebates for heat pumps in NYC in 2026?
Yes. The NYS Clean Heat program, run with Con Edison and other utilities, offers heat pump rebates through participating contractors. Amounts depend on the system and are subject to program terms and funding, so confirm the current rebate in the installer's proposal.
Can I use J-51 for my apartment renovation?
No. J-51 Reform is a building-level abatement for eligible multiple dwellings, including co-ops and condos with an average assessed value of $45,000 or less per unit. It does not cover an individual owner's kitchen or bathroom, and work completed after June 29, 2026 is not currently eligible pending City Council action.
Do I pay sales tax on a renovation in New York City?
Usually not on the contractor's charge, if the work is a capital improvement and you give the contractor Form ST-124. Repairs, maintenance and freestanding appliances are taxable.
Is there still a federal tax credit for energy upgrades?
No. The IRS states that the 25C credit does not apply to property placed in service after December 31, 2025, and the 25D credit does not apply to expenditures made after that date.
Does Con Edison pay for insulation?
Con Edison advertises up to $4,000 for professionally installed insulation and air sealing. Eligibility and amounts depend on the program's current terms.
Sources & further reading
- NYC HPD: J-51 Reform
- Con Edison: Energy efficient savings for renters and homeowners
- NYS Clean Heat (NYSERDA and New York utilities)
- NYS Department of Taxation and Finance: Capital Improvements tax bulletin
- IRS: FAQs on modification of sections 25C, 25D and others under Public Law 119-21
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.