This page was first written as a 2025 guide. Nearly everything it said about incentives has changed since, so we have rewritten it as a before-and-after: what a Bay Area homeowner could use in 2025, what is left in 2026, and what to do if your installation straddles the two.
If your system was installed in 2025 or earlier
The federal Energy Efficient Home Improvement Credit (25C) ended for property placed in service after 31 December 2025, but equipment placed in service in 2025 or earlier can still be claimed on that year's tax return (IRS; IRS 25C page). Keep the invoice and the manufacturer's certification, and confirm your situation with a tax professional.
What changed for 2026 installations
| Program | Status in 2026 |
| Federal 25C tax credit (heat pumps, furnaces, AC) | Ended for equipment placed in service after 31 December 2025 (IRS). A system installed in 2025 or earlier is still claimed on that year's return. |
| TECH Clean California (single-family heat pump HVAC) | Fully reserved since 14 November 2025; not accepting new reservations (TECH Clean California). |
| HEEHRA (the state's federally funded home electrification rebates) | Single-family rebates fully reserved statewide; waitlist only (California Energy Commission). |
| California Energy-Smart Homes | 2026 incentive funding fully subscribed as of April 2026 (BayREN). |
| BayREN Home+ heat pump rebate | No longer available as of April 2024 (BayREN). |
| PG&E residential HVAC rebates | None listed. PG&E's residential rebates page currently lists a generator and battery rebate, a used EV rebate and an EV charging rebate, but no heat pump, AC, furnace or thermostat rebates (PG&E). |
What is still open in 2026
The incentives that remain are paid by the local electricity provider or city utility that serves your address, and almost all of them are for heat pumps that replace gas heating.
| Provider | Where | Heat pump HVAC offer |
| Silicon Valley Clean Energy | Campbell, Cupertino, Gilroy, Los Altos, Los Altos Hills, Los Gatos, Milpitas, Monte Sereno, Morgan Hill, Mountain View, Saratoga, Sunnyvale, unincorporated Santa Clara County | $2,000 for a heat pump replacing a gas furnace; $3,000 income-qualified. Apply before installation. (source) |
| San José Clean Energy | San José | $1,500 for heat pump HVAC replacing gas equipment; $2,500 in designated Environmental Justice communities. Pre-apply and get approval before installation. (source) |
| City of Palo Alto Utilities | Palo Alto | Up to $2,500 for heat pump HVAC that replaces a gas or fossil-fuel heater; up to $5,000 for income-eligible residents. (source) |
| Silicon Valley Power | City of Santa Clara | Gas furnace replacement: $3,000 per ton, up to $10,000. Also a tune-up rebate of up to $75. Check that the heat pump program is open when you apply. (source) |
| WestLight Energy (formerly Peninsula Clean Energy) | San Mateo County, including Redwood City and Woodside | Heat pump HVAC upgrades: up to $2,500. (source) |
| MCE | Marin and much of Contra Costa County, including Walnut Creek, Danville and San Ramon | Up to $400 per 500 square feet of home; installation by a participating contractor. (source) |
| Ava Community Energy | Much of Alameda County | No Ava-branded heat pump HVAC rebate found; Ava points customers to its incentive finder. (source) |
Heat pump HVAC rebates from Bay Area electricity providers. Figures are the programs' own, read 24 September 2026.
Two other changes worth knowing: Peninsula Clean Energy is now called WestLight Energy, and BayREN's current program for homeowners, EASE Home, is income-qualified and focused on insulation and duct sealing rather than heat pump rebates.
Other 2026 changes that affect an HVAC decision
- The 2025 California Energy Code applies to permits filed from 1 January 2026, with duct testing and, for heat pumps, refrigerant verification on many changeouts.
- The Bay Area Air Quality Management District's zero-NOx standard for new furnaces takes effect in 2029. It covers new units sold or installed, not working furnaces already in homes.
Both are explained in Bay Area gas furnace rules and heat pumps, part of our Winter Heating Help Center. For the full list of programs across California, see HVAC rebates in California (2026).
Program details checked 24 September 2026. Funding, amounts and rules change, sometimes mid-year. Confirm the current terms on the program's own page, and get any pre-approval in writing, before you sign a contract.
Frequently Asked Questions
I installed a heat pump in December 2025. Can I claim the tax credit?
Equipment placed in service in 2025 or earlier can still be claimed on the 2025 return (IRS). Confirm with a tax professional.
Is there any federal HVAC tax credit for 2026?
No. The 25C credit ended for equipment placed in service after 31 December 2025.
Does PG&E still give HVAC rebates?
PG&E's residential rebates page currently lists no heat pump, AC, furnace or thermostat rebates (PG&E).
What rebate is available in my city?
It depends on your electricity provider, which is named on your PG&E bill. The table above covers the South Bay, Peninsula and East Bay providers.
Talk to a technician
Cool Aid Air Conditioning & Refrigeration has installed and repaired heating systems across the Bay Area since 1966. We will tell you which incentives apply at your address and quote the job against the programs that are actually open, with a 1-year parts and labor warranty on every job.
📞 Call 1-800-266-5243.
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