HCP Terraform Free Tier is Being Discontinued: What You Need to Know

Edited Dec 18, 2025 to add the following clarification:

Hashicorp has clarified that what's being sunset is their user-based free tier, in favor of their pay-as-you-go plan that has a small free tier (of 500 managed resources). While you get unlimited users, SSO, and policy-as-code, and there's not much you can do under 500 resources. For real infrastructure—a single EKS cluster with networking, IAM, security groups, and add-ons consume that fast.

We'll continue to update this post with info as it comes in.

On December 15, 2025, HashiCorp sent an email to all HCP Terraform Free tier customers with news that caught many off guard: the "legacy HCP Terraform Free plan" will reach end-of-life on March 31, 2026. If you're one of the affected users, here's everything we know—and don't know—about what comes next.

What We Know So Far

HashiCorp's email to Free tier users was brief and direct:

"We're reaching out to let you know that your organization is currently on the legacy HCP Terraform Free plan. This plan will reach end-of-life (EOL) on March 31, 2026. After this date, the plan will no longer be supported. To keep using your organization without interruption, please sign up for a current HCP Terraform plan and migrate your existing organization before March 31, 2026."

Here's what we can confirm:

• Deadline: March 31, 2026—approximately 3.5 months from the announcement
• Affected users: Anyone on the "legacy" HCP Terraform Free plan (up to 500 managed resources)
• Required action: Migrate to a paid HCP Terraform plan or move to an alternative
• No blog post or press release: The announcement came exclusively via email to affected customers

The Free tier being discontinued offered up to 500 managed resources, 1 concurrent run, basic Sentinel/OPA policy enforcement (1 policy set, 1 mandatory policy), and 1 self-hosted agent. For small teams and individual practitioners, it was a viable way to use Terraform Cloud without cost.

What We Don't Know Yet

HashiCorp's email raised more questions than it answered. Several critical details remain unclear:

What happens to accounts that don't upgrade? The email says the plan will "no longer be supported," but doesn't specify whether:

• Accounts will be locked entirely
• Workspaces will be deleted
• State files will be preserved or lost
• A grace period will be offered after March 31

What happens to state data? This is the biggest concern. According to HashiCorp's own documentation, workspace deletion is unrecoverable and results in permanent loss of state files. If you're managing production infrastructure through HCP Terraform Free, losing access to your state could leave resources orphaned—still running in your cloud account but no longer manageable through Terraform.

Will there be a migration path? HashiCorp hasn't published:

• A migration guide for affected users
• Data export tools beyond standard terraform state pull
• Documentation on how to preserve workspace configurations, variables, and policies

Why "legacy" Free tier? The email refers to the "legacy HCP Terraform Free plan," suggesting there may be a distinction between older accounts and newer ones. Whether this means anything in practice remains unclear—HashiCorp hasn't explained the terminology.

We recommend affected users take immediate action to export state files and document configurations rather than waiting for clarification that may not come.

Timeline of Continued Restrictions

This announcement doesn't exist in isolation. It's part of a clear pattern of restrictions that has accelerated since IBM's acquisition of HashiCorp closed in late 2024:

The pattern is consistent: features that were once freely available are being systematically moved behind paywalls, often with minimal notice and no public announcement.

For teams evaluating their long-term infrastructure automation strategy, this trajectory is worth considering. The question isn't just "what does HCP Terraform cost today?" but "what will it cost—and what will be restricted—next year?"

Commercial Alternatives

If you're looking to move off HCP Terraform, several commercial platforms offer Terraform and OpenTofu automation. Here's how they compare across the factors that matter most for migration.

Migration Effort

Moving from HCP Terraform to another platform involves several steps:

1. State migration: Export state from HCP Terraform workspaces (terraform state pull) and configure your new backend
2. VCS reconfiguration: Reconnect repositories and webhook integrations
3. Variable migration: Recreate workspace variables and sensitive values
4. Policy migration: If using Sentinel, you'll need to adapt policies to the new platform's policy engine (OPA is more portable)
5. Team/permission setup: Recreate access controls in the new platform

Platform-specific migration considerations:

Note that all of these include support for OPA policies, OpenTofu, and GitOps.

Most migrations can be completed in minutes to weeks depending on complexity. The biggest variable is how heavily you've invested in Sentinel policies (which aren't portable across platforms), although there are many tools to auto-convert them into OPA.

Cost

This is where the differences become significant. HCP Terraform's RUM (Resources Under Management) model charges per resource per hour, which scales non-linearly as infrastructure grows.

HCP Terraform pricing (current):

• Free tier (being discontinued): 500 resources, 1 concurrent run
• Standard: $0.00014/resource/hour (~$0.10/resource/month), 3 concurrent runs
• Plus/Enterprise: Contact sales

What this means in practice:

Remember: every security group rule, IAM policy, S3 lifecycle configuration counts as a resource. Teams frequently discover their actual resource count is 30-50% higher than expected.

Alternative pricing models:

For teams with large infrastructure but moderate deployment frequency, per-run or concurrency-based models often cost significantly less than RUM pricing.

Features to Be Excited About

Moving platforms isn't just about escaping restrictions—it's an opportunity to gain capabilities HCP Terraform doesn't offer:

Scalr

• Drift detection: Built-in and free.
• CLI support: continue using the command-line
• Full GitOps support: Atlantis-style commands via PR comments, apply-before-merge, merge-before-apply, etc.
• Unlimited run concurrency
• OpenTofu support: Run Terraform or OpenTofu with the same platform

Spacelift

• Multi-IaC support: Terraform, OpenTofu, Pulumi, CloudFormation, Ansible, Kubernetes in one platform
• Drift detection and remediation: Built-in, not a paid add-on
• Stack dependencies: Sophisticated orchestration for complex infrastructure

env0

• Cost visibility: Built-in cost estimation and tracking
• TTL environments: Automatic cleanup of temporary infrastructure
• Approval workflows: Flexible deployment governance

Across all platforms:

• No RUM pricing: None of the major alternatives use per-resource billing
• Better concurrency: More parallel runs out of the box
• OpenTofu compatibility: Hedge against future Terraform restrictions

Self-Hosted and Open Source Alternatives

If you'd rather not depend on another SaaS platform, several self-hosted and open source options exist:

Atlantis

What it is: Open source Terraform pull request automation. Runs plan and apply based on GitHub/GitLab comments.

Pros:

• Completely free
• GitOps-native workflow
• Full control over execution environment
• Active community

Cons:

• Self-hosted infrastructure required
• No built-in state management (use S3, GCS, etc.)
• Limited governance features compared to commercial platforms
• No UI—everything through PR comments

Best for: Teams comfortable with GitOps, already running Kubernetes or similar infrastructure, and wanting zero vendor lock-in.

OpenTofu + DIY Pipeline

What it is: Run OpenTofu (the open source Terraform fork) in your own CI/CD system with cloud-based state storage.

Typical setup:

• OpenTofu or Terraform CLI in GitHub Actions/GitLab CI/Jenkins
• State stored in S3 + DynamoDB (locking) or equivalent
• Manual implementation of approval workflows

Pros:

• Maximum flexibility and control
• No per-resource or per-run costs
• OpenTofu is fully open source (MPL 2.0)

Cons:

• Significant DIY effort for state locking, secrets management, policy enforcement
• No centralized UI or audit logs without additional tooling
• Maintenance burden falls entirely on your team

Best for: Platform engineering teams with bandwidth to build and maintain internal tooling.

Terramate

What it is: Open source orchestration tool for Terraform/OpenTofu. Handles code generation, stack management, and execution across many directories.

Pros:

• Orchestration layer without replacing your execution environment
• Works with any CI/CD system
• Simplifies monorepo management

Cons:

• Orchestration only—doesn't provide state management, UI, or governance
• Complementary to other solutions rather than a complete replacement

Best for: Teams with complex Terraform monorepos looking for better orchestration without a full platform.

Quick Comparison

What Should You Do Now?

If you're on HCP Terraform Free, run one of the many scripts that will estimate your costs on an HCP paid plan, then book a demo with any of the many alternatives or get a quote to compare costs.

Have questions about migrating from HCP Terraform? We're happy to help—reach out to our team or check out our migration guide.