Energy efficiency help for Kentucky homeowners: what still exists in 2026

The part that changed: federal tax credits are gone

The Energy Efficient Home Improvement Credit (Section 25C), which covered 30% of insulation, air sealing, windows, doors, heat pumps, and water heaters, and the Residential Clean Energy Credit (Section 25D) for solar and batteries, were both terminated by federal legislation in 2025 for property placed in service after December 31, 2025. If your improvement was installed and working by that date, you claim it on your 2025 return. If it was installed in 2026, there is no federal credit. Be wary of any contractor still selling “30% back from the government” on a 2026 job.

What still exists in Kentucky

1. Weatherization Assistance Program (free, income-based)

The biggest remaining program, and the one people in this area use least because they have not heard of it. Kentucky Housing Corporation funds it with federal Department of Energy and LIHEAP money, and it is delivered by the state's 22 Community Action agencies. In the Owensboro area that is Audubon Area Community Services. A crew does an energy audit, then does the work at no cost to the household: attic and wall insulation, air sealing, duct sealing, and often furnace repair or replacement when the unit is unsafe. Eligibility is income-based and tied to federal poverty guidelines, with priority for seniors, people with disabilities, and families with young children. Renters can qualify with the landlord's agreement.

2. LIHEAP (help paying the bill)

The Low Income Home Energy Assistance Program does not fix the house, but it offsets heating and cooling bills for households up to 150% of the federal poverty guideline, with seasonal enrollment windows (a spring cooling subsidy and a fall and winter heating subsidy) run through the same Community Action agency. Applying for LIHEAP is also the easiest on-ramp to the weatherization program above.

3. USDA Section 504 (rural repair money)

If you own a home outside city limits, the USDA's 1%-interest repair loans (and grants for homeowners 62 and older removing hazards) cover HVAC replacement, electrical, and insulation as part of making a home safe. We wrote a separate guide on it; the short version is that much of Daviess County qualifies and almost nobody applies.

4. Utility rebates (check your specific provider)

Utility programs change year to year and differ between Owensboro Municipal Utilities, Kenergy, and the investor-owned utilities serving surrounding counties. Typical offerings are rebates on high-efficiency heat pumps, smart thermostats, and free or discounted home energy audits. Call your utility or check its website before you buy equipment, and get the rebate form before the install, not after.

Which improvements actually pay without a subsidy

With the federal credit gone, the math has to stand on its own. In this climate, roughly in order of payback:

1. Air sealing and attic insulation. Cheapest per unit of savings by a wide margin. Most older homes around here are under-insulated.
2. Duct sealing. Leaky ducts in an unconditioned attic or crawl space can waste a large share of what the system produces.
3. Smart thermostat and a clean filter. Nearly free.
4. High-efficiency heat pump when the old system needs replacing anyway. Replacing a working system purely for efficiency rarely pays quickly.
5. Windows. Last. New windows are a comfort and resale decision more than an energy one; the payback on energy alone is usually measured in decades.

How to start

1. Call your Community Action agency and ask about weatherization and LIHEAP eligibility. One call covers both.
2. If you are outside city limits, check the USDA eligibility map for your address.
3. Ask your utility what rebates are active this year.
4. Get a free planning estimate for the work so you know what it should cost at local prices, subsidy or not.