California heat pump rebates can put up to $3,000 to $4,000 directly back in your pocket when you switch from a gas furnace or air conditioner to an electric heat pump system. If you are a Sacramento homeowner served by SMUD, you are currently in one of the strongest local rebate windows in the state, even as several statewide programs have run out of funding. This guide breaks down exactly which California heat pump rebates are still active right now, which ones have closed, and the precise steps to claim every dollar you qualify for.
Before you read further, here is the most important update for 2026, the rebate landscape changed significantly at the end of 2025. The federal tax credit for heat pumps expired, and California’s two largest statewide rebate programs are now fully reserved. However, SMUD, Sacramento’s municipal utility, responded by increasing its own local heat pump rebates specifically to fill that gap. That makes understanding what is currently funded, versus what has closed, essential before you start shopping for a system.
Quick Answer: What California Heat Pump Rebates Are Available Right Now
For Sacramento area homeowners served by SMUD, the current heat pump incentive picture looks like this:
Up to 3,000 dollars for a gas-to-electric heat pump HVAC system conversion. Up to 4,000 dollars for a gas-to-electric heat pump water heater conversion. 1,000 dollars for an electric-to-electric heat pump HVAC or water heater upgrade. Up to 2,000 dollars through the Go Electric Bonus program for related electrical panel and circuit upgrades.
These SMUD rebates can be combined with each other when a project qualifies for more than one category, and your contractor may be able to layer in additional financing programs to reduce your upfront cost further. Statewide programs that previously added thousands more on top of these utility rebates, specifically TECH Clean California and HEEHRA, are currently fully reserved across the entire state and not accepting new applications as of this year.
What Changed: Why “Up to $3,000 Back” Looks Different Than It Did in 2025
If you read about California heat pump rebates last year, the numbers you saw were likely larger, often citing combined totals of 6,000 dollars or more when stacking federal, state, and utility incentives together. Three major shifts have reshaped that picture heading into the second half of 2026.
The federal 25C tax credit expired. The Energy Efficient Home Improvement Credit, which had offered up to 2,000 dollars in federal tax savings for qualifying heat pump installations, ended on December 31, 2025. Heat pumps installed and placed into service in 2026 are no longer eligible for this federal credit.
TECH Clean California reached full reservation statewide. This program, which had offered some of the most generous heat pump incentives in California, became fully reserved in stages through late 2025 and into early 2026, with the Northern California region (which includes Sacramento) closing out by mid-February 2026. New reservation requests are currently being placed on a waitlist rather than approved.
HEEHRA rebates are fully reserved statewide. The Home Electrification and Appliance Rebates program, funded through the federal Inflation Reduction Act and administered by the California Energy Commission, is also fully reserved across all regions of the state as of February 2026. Two replacement programs, called HOMES and HEEHRA Phase II, are funded and expected to launch, but have not opened to new applicants as of this writing.
SMUD increased its own local rebates to fill the gap. In direct response to the federal and state programs running dry, SMUD raised its heat pump HVAC rebate and heat pump water heater rebate specifically to help Sacramento area homeowners continue affording the switch to electric heating and cooling. This is why the SMUD utility rebate is currently the most reliable and best-funded heat pump incentive available to Sacramento homeowners.
The practical takeaway: if you are in SMUD’s service territory, the SMUD rebate program is your primary path to savings right now, rather than the statewide programs that dominated the conversation in 2025.
SMUD Heat Pump HVAC Rebates: The Full Breakdown
SMUD serves Sacramento and the surrounding metro area, and its Advanced Home Solutions rebate program is currently the strongest active incentive for local homeowners. Here is what is available for heat pump HVAC systems specifically.
Gas-to-electric heat pump HVAC conversion: up to 3,000 dollars. If you currently heat your home with a gas furnace and are replacing that system along with your air conditioner with a single electric heat pump system, you qualify for SMUD’s highest HVAC rebate tier. Higher-efficiency, variable-capacity heat pump systems generally qualify for the full 3,000 dollar amount, while two-stage systems may qualify for a somewhat lower tier closer to 2,000 dollars depending on current program terms.
Electric-to-electric heat pump upgrade: 1,000 dollars. If you already have an older electric heat pump or electric resistance heating system and are upgrading to a new, more efficient heat pump, you qualify for this smaller but still meaningful rebate.
Go Electric Bonus for panel and circuit upgrades: up to 2,000 dollars. Many older Sacramento homes do not have sufficient electrical panel capacity to support a new heat pump alongside other electric appliances. SMUD’s Go Electric Bonus pays up to 500 dollars per eligible circuit, covering things like your panel upgrade, an EV charger circuit, a range or cooktop circuit, and a clothes dryer circuit, for a combined maximum of 2,000 dollars.
If your panel does not have enough physical space for new breakers, SMUD will even contribute up to 500 dollars toward a sub-panel installation. The key requirement to unlock this bonus is that your project must include replacing at least one existing gas appliance with a qualifying electric heat pump.
Heat pump water heaters: up to 4,000 dollars. While this guide focuses primarily on heat pump HVAC systems for home heating and cooling & AC Repairs, it is worth noting that SMUD’s heat pump water heater rebate is actually larger than its HVAC rebate. If your project includes both a heat pump HVAC system and a heat pump water heater, you can potentially combine both rebates for a substantially larger total.
All SMUD heat pump rebates must be submitted through a contractor enrolled in the SMUD Contractor Network. You cannot self-install and self-submit for these rebates. Your contractor handles the rebate application on your behalf as part of the installation process, and in many cases can apply the rebate amount as an upfront discount rather than requiring you to wait for reimbursement.
Statewide California Heat Pump Programs: Current Status
For homeowners outside SMUD’s territory, or for those wanting the complete statewide picture, here is where the major California heat pump rebate programs currently stand.
TECH Clean California: fully reserved statewide.
This program offered incentives for switching from gas appliances to electric heat pump alternatives. As of the most recent reporting, single-family heat pump HVAC and heat pump water heater incentives are fully reserved in all regions of California, including Northern California. New reservation requests are being placed on a waitlist, and waitlisted projects only become eligible for a rebate if and when additional funding is released and their reservation is subsequently approved.
HEEHRA (Home Electrification and Appliance Rebates): fully reserved statewide.
This is the California program funded through the federal Inflation Reduction Act and managed by the California Energy Commission. It is also fully reserved across Northern, Central, and Southern California regions. Importantly, HEEHRA rebates require income qualification and must be reserved and approved before installation begins, so even when funding does reopen, the application process needs to happen before you sign a contract with your installer.
HOMES and HEEHRA Phase II: funded but not yet launched.
Two new programs, with a combined budget of several hundred million dollars statewide, have been funded but have not opened applications as of this writing. Homeowners interested in these future programs should check the California Energy Commission’s website periodically, as launch timing can shift.
Other utility territories.
If you live outside SMUD’s service area, your local utility, such as PG&E, Southern California Edison, or San Diego Gas and Electric, primarily administers the statewide programs described above rather than offering large standalone heat pump rebates of their own. LADWP customers in the Los Angeles area have their own separate program offering up to 2,500 dollars per ton of heat pump capacity installed, which does not require income qualification.
What Happened to the Federal Tax Credit?
Many homeowners researching California heat pump rebates are still expecting to find information about the federal Energy Efficient Home Improvement Credit, commonly referred to by its tax code section, 25C. This credit previously allowed homeowners to claim up to 2,000 dollars back on their federal taxes for a qualifying heat pump installation.
That credit expired on December 31, 2025, under recent federal legislation, and there is currently no federal tax credit available for heat pump HVAC systems installed in 2026. A related credit for geothermal heat pump systems, Section 25D, which had offered a 30 percent credit, expired on the same date. If you are reading older articles or seeing outdated marketing claiming a guaranteed federal tax credit on top of state and utility rebates, that information no longer reflects current law. Always confirm directly with a tax professional or the IRS before assuming a federal credit applies to your project.
How Heat Pump Rebate Stacking Works in 2026
Stacking refers to combining multiple rebate or incentive programs on a single project to maximize your total savings. In years past, a Sacramento homeowner could potentially combine a federal tax credit, a TECH Clean California incentive, and a SMUD rebate on the same heat pump installation. That stacking opportunity has narrowed considerably for 2026 because two of those three layers are currently unavailable.
Right now, stacking for most SMUD customers looks like this: your primary incentive is the SMUD heat pump HVAC rebate of up to 3,000 dollars, combined where applicable with the Go Electric Bonus of up to 2,000 dollars for panel and circuit work, for a potential combined utility-level incentive approaching 5,000 dollars on a full gas-to-electric conversion project that also requires electrical upgrades.
Once HOMES and HEEHRA Phase II launch, stacking is expected to improve again, as these programs are generally designed to work alongside utility incentives rather than replace them. Until then, the SMUD program stands largely on its own as the most dependable layer of savings for Sacramento area homeowners.
Are Heat Pumps Worth It in Sacramento Without the Bigger Rebates?
A common question homeowners ask once they learn that some of the larger statewide programs have closed is whether a heat pump conversion still makes financial sense. The answer for most Sacramento homes remains yes, for several reasons that are independent of rebate availability.
A typical whole-home heat pump HVAC installation in California costs somewhere between 8,000 and 16,000 dollars before any incentives, depending on the size of your home, the condition of your existing ductwork, and whether electrical panel upgrades are required. With the current SMUD rebate applied, many Sacramento homeowners installing a gas-to-electric heat pump system today can expect their out-of-pocket cost to land in the range of several thousand dollars lower than the unsubsidized price, even without the statewide programs factored in.
Beyond the upfront rebate, heat pumps in Sacramento’s climate deliver real ongoing operating savings. SMUD has reported that customers switching from gas heating to a heat pump typically save around 500 dollars a year on energy costs. Because Sacramento’s winters are mild, with daily lows rarely dropping below the low 30s, a properly sized heat pump operates at high efficiency for nearly the entire heating season without needing to lean heavily on backup electric resistance heat, which is the scenario where heat pump operating costs can climb.
A heat pump also gives you both heating and cooling from a single system, which means homeowners who would otherwise need to replace an aging furnace repairs and an aging air conditioner separately can often handle both replacements at once, for less combined cost than replacing each system independently down the road.
How to Apply for SMUD and California Heat Pump Rebates: Step by Step
Step 1: Confirm your utility territory. Determine whether SMUD, PG&E, or another utility serves your home, since this determines which rebate program path applies to you. Sacramento city and most of the immediate metro area, including Elk Grove, Rancho Cordova, Citrus Heights, and Fair Oaks, fall within SMUD’s service territory.
Step 2: Choose a contractor enrolled in the relevant contractor network. SMUD rebates must be submitted through a contractor in the SMUD Contractor Network. If you are hoping to access TECH Clean California or HEEHRA once new funding becomes available, those programs similarly require a TECH Clean California-certified, HEEHRA-trained contractor. Ask any installer you are considering directly whether they are currently enrolled and active in these networks, since enrollment status can change.
Step 3: Get a home assessment and system sizing. A qualified contractor will assess your home’s existing ductwork, electrical panel capacity, and heating and cooling load to recommend the right size and type of heat pump system. This step also determines whether your project will need panel or circuit upgrades that could qualify for the Go Electric Bonus.
Step 4: Confirm rebate reservation before installation begins. For SMUD rebates, your contractor typically handles the reservation and application as part of the proposal process. For any statewide program that may reopen, such as HOMES or a future HEEHRA Phase II window, reservation approval is required before the heat pump is installed, not after. Installing first and trying to apply for these specific programs afterward will disqualify the project.
Step 5: Complete the installation and documentation. Your contractor will install the system to program specifications, often including required documentation such as before-and-after photos for certain rebate categories, and submit final paperwork to SMUD or the relevant program.
Step 6: Receive your rebate. In many cases, your contractor can apply the rebate amount as an upfront discount on your invoice rather than requiring you to wait for a reimbursement check, though this depends on your specific contractor’s process.
Common Questions About California Heat Pump Rebates
Do I need to replace my gas furnace to qualify for the largest SMUD rebate?
Yes. The highest SMUD heat pump HVAC rebate tier, up to 3,000 dollars, is specifically for gas-to-electric conversions, meaning you are replacing an existing gas furnace with an electric heat pump system. If you already have an all-electric system and are simply upgrading to a newer, more efficient heat pump, you qualify for the smaller 1,000 dollar electric-to-electric rebate instead.
Is the federal heat pump tax credit still available in 2026?
No. The federal Energy Efficient Home Improvement Credit, which previously offered up to 2,000 dollars, expired on December 31, 2025, and does not apply to heat pumps installed in 2026. Speak with a tax professional to confirm how this applies to your specific situation.
Can I still apply for TECH Clean California or HEEHRA?
Both programs are currently fully reserved statewide, including in the Sacramento region. New applications are being placed on a waitlist rather than approved, and waitlisted projects only become eligible if additional funding is released. Two newer programs, HOMES and HEEHRA Phase II, are funded but have not yet opened to applicants.
How much can I really save on a heat pump installation in Sacramento right now?
For SMUD customers doing a full gas-to-electric conversion that also requires panel work, combining the up to 3,000 dollar HVAC rebate with the up to 2,000 dollar Go Electric Bonus can bring total utility-level savings close to 5,000 dollars, before factoring in any future statewide program funding that may become available.
Do heat pumps actually work well in Sacramento’s climate?
Yes. Sacramento’s mild winters, with daily lows that rarely drop below the low 30s, fall well within the efficient operating range of modern heat pump systems. A common misconception is that heat pumps struggle in cold weather, but that primarily applies to much colder climates than Sacramento experiences. For more detail on how the technology performs as temperatures drop, see our complete guide on how a heat pump works in winter.
Does the rebate apply to mini-split and ductless heat pump systems?
Yes. SMUD’s heat pump rebates generally apply to package units, split systems, and mini-splits, provided the equipment meets SMUD’s performance and efficiency standards. Confirm the specific model you are considering qualifies before finalizing your purchase.
How long does the SMUD heat pump rebate program last?
SMUD rebates are subject to availability of program funding and can change without much advance notice, similar to how the statewide programs reached full reservation faster than originally expected. If you are considering a heat pump installation, it is worth starting the process sooner rather than later, since utility rebate levels and availability are not guaranteed to remain at current levels indefinitely.
Get Help Navigating California Heat Pump Rebates in Sacramento
Rebate programs in California change quickly, and the difference between a program that is open today and one that closes next month can mean thousands of dollars. Our team works within the SMUD Contractor Network and stays current on every active heat pump incentive, from SMUD’s gas-to-electric conversion rebates to the Go Electric Bonus for panel upgrades, so you do not have to track program funding levels yourself.
If you are considering switching from a gas furnace to an electric heat pump system, we can walk you through a no-obligation home assessment, confirm exactly which Sacramento area rebates your project currently qualifies for, and handle the rebate paperwork as part of your installation. Contact our team today to find out how much you can save on a heat pump conversion this year.