For the 2026 tax year, you can take advantage of the 25C Energy Efficient Home Improvement Credit. This federal tax credit allows you to claim 30% of the cost of a qualified heat pump installation, up to a maximum of $2,000 per year.
To be eligible for this credit, the equipment must be installed in an existing primary residence and meet specific energy efficiency standards. We recommend ensuring your system is ENERGY STAR certified to qualify. This incentive remains available through 2032, providing a reliable way to offset your upfront investment.
In addition to the federal tax credit, you may be able to stack these savings with California state and local programs, including:
- TECH Clean California: This program offers rebates of up to $3,000 for single-family homes in San Francisco, with incentives reaching as high as $4,800 for income-qualified households.
- BayREN Home+: You may qualify for up to $2,500 for heat pump water heaters.
- PG&E Local Incentives: Local utility rebates can often be layered on top of federal and state programs to further reduce costs.
Because the federal credit is non-refundable, it cannot exceed your total tax liability for the year. We always suggest consulting with a tax professional and a licensed HVAC contractor to ensure your specific model and installation meet all technical requirements for these incentives.
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