Bay Area Gas Furnace Rules, Heat Pumps and Rebates

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If you have a gas furnace in the Bay Area, you have probably heard that gas furnaces are being "banned." The real rule is narrower than that, and it gives you time. Nobody will make you remove a working furnace. What changes is what can be sold and installed when your current one wears out, and that date is still more than two years away. This page sets out the actual rules, the permit steps on any replacement, which heat pump rebates are open this fall, and how to decide what to do with a furnace that is 15 years old or more.

It is part of our Bay Area Winter Heating Help Center. If your heat is out right now, start with the no-heat checklist instead; if you smell gas, go straight to gas smell and carbon monoxide steps.

The Air District's zero-NOx rules, in plain terms

The Bay Area Air Quality Management District (the Air District) amended two rules: Regulation 9, Rule 4 for furnaces and Rule 9-6 for water heaters. They set a zero-NOx standard, which in practice means gas-burning models that release nitrogen oxides will stop being sold and installed here, and electric heat pumps become the replacement. The rules cover Alameda, Contra Costa, Marin, San Francisco, San Mateo and Santa Clara counties plus parts of Solano and Sonoma (BAAQMD).

The Air District's FAQ says the dates apply to appliances manufactured after them, and that the amendments "only apply to appliances that would be newly installed; they require no change-out of already existing appliances" (BAAQMD appliance rules FAQ). Its rule page is just as direct: "These new requirements apply only upon burn out of one's current equipment" (BAAQMD building appliances page).

What that means for you

• No forced removal. A gas furnace installed before 2029 can keep running and be repaired for as long as it lasts. The FAQ's answer to "do I have to replace it?" is "No, immediate replacement is not required."
• The change hits at replacement. If a furnace fails and is replaced after the compliance date, "the replacement must be zero NOx" (same FAQ).
• Mobile homes are not affected. The FAQ says appliances in mobile homes are not impacted by the amendments.
• Furnaces are not part of this year's changes. The Air District says the furnace-focused phase of its working group was set to start in late 2025, and the 2029 date still stands (BAAQMD).

The water heater proposal (pending)

On 14 July 2026 the Air District released draft amendments to Rule 9-6 that would push the small water heater date from January 2027 to January 2028, with exemptions for low-income households, space-constrained properties and electrical limits such as panels under 100 amps or long wire runs (BAAQMD news release). The comment period closed on 13 August, and the Board is "tentatively scheduled to consider a decision on the amendments to Rule 9-6 in November." Until the Board votes, the adopted date is still 1 January 2027. If your gas water heater is old too, plan for both together.

Permits and testing on any replacement

On any replacement, the 2025 California Energy Code applies to permit applications filed on or after 1 January 2026 (California Energy Commission). Key points:

• A permit is required. "Installation of a space conditioning appliance (other than a plug-in room appliance) requires a building permit" (CEC Energy Code Support Center).
• Your ducts get tested. Replacing the furnace, air handler, outdoor unit or coil triggers duct sealing. Existing ducts must test at no more than 10% total leakage or 7% leakage to outside. If they can't reach that, the fallback is sealing all accessible leaks, checked by visual inspection and a smoke test. Short duct systems (under 40 linear feet) and ducts with asbestos can be exempt from some tests (Energy Code Ace; CEC HERS program).
• A third-party rater checks the work. The 2025 code calls these raters ECC-Raters (formerly HERS raters). You have the right to hire a rater who is independent of your contractor (CEC HERS program).
• Heat pumps get a refrigerant charge check. Charge verification is required for heat pumps in all climate zones, including on alterations to existing homes (CEC Energy Code Support Center).
• The code does not force a heat pump in your house. It "encourages heat pumps" for homes (CEC, Jan 2026). The heat-pump-at-replacement requirement in the 2025 code is aimed at certain commercial rooftop units, not homes.

A contractor who offers to skip the permit is also skipping the duct test and the independent check on the work.

Federal tax credits: ended

The federal 25C credit (heat pumps, furnaces, central air) ended for equipment placed in service after 31 December 2025, and the 25D credit ended for expenditures made after that date (IRS FAQ; IRS). We found no federal homeowner credit that replaces them for 2026 installs. Our federal HVAC tax credits 2026 page covers the details.

Heat pump incentives: what is open and what is not (fall 2026)

Many websites still list closed programs. This is the status on each program's own page in late September 2026.

Paused or ended

• TECH Clean California: single-family heat pump HVAC incentives have been "fully reserved and not accepting new reservations" since 14 November 2025 (TECH Clean California).
• HEEHRA (the federally funded home electrification rebates run by the state): single-family rebates have been fully reserved statewide since February 2026, with a waitlist. A waitlisted project only qualifies if the heat pump goes in after the reservation is approved (CEC filing, 24 Feb 2026).
• BayREN Home+ heat pump rebate: "no longer available as of April 2024" (BayREN).

Open: community electricity provider rebates

Your PG&E bill names your electric generation provider. For heat pump heating and cooling that replaces a gas furnace:

If you are in the city of Santa Clara (Silicon Valley Power) or Palo Alto (City of Palo Alto Utilities), your utility runs its own programs; check the current amounts on its site before you plan around them (Silicon Valley Power). For the fuller list, see every HVAC rebate in California right now and Bay Area heat pump rebates explained.

Your furnace is 15+ years old: what now?

Fifteen years is not a deadline. Plenty of well-maintained furnaces run longer. It is simply the age at which a planned decision beats a rushed one. You have three paths.

1. Keep it and repair it

Legal indefinitely under the Air District rules. This makes sense when the heat exchanger is sound, repairs are small and occasional, and you have no other reason to replace (such as a failing air conditioner). Ask for a yearly inspection of the heat exchanger and venting, and keep repair records.

2. Replace it with a new gas furnace before 2029

Also legal, and the new furnace can run for its full life after 2029. It is often the simplest swap in a house with an existing gas line, flue and ducts. Weigh that against two things: gas furnace replacements don't qualify for the heat pump rebates above, and if your air conditioner is also aging, you may end up replacing two pieces of equipment when a heat pump would cover both. The permit, duct test and rater still apply.

3. Switch to a heat pump

A heat pump heats and cools, qualifies for the provider rebates above, and puts you on the side of where the rules are heading. Bay Area winters are mild enough that heat pumps are a good fit for most homes. The questions to settle first are electrical panel capacity, whether your ducts are sized and sealed well enough, and where the outdoor unit can go. Homes without ducts can use ductless mini-splits. Compare running costs and comfort in heat pump vs furnace in the Bay Area and gas furnace vs electric heating in California.

Why planning ahead matters

The worst time to choose is the night the furnace dies in January. You are cold, the first option offered is usually a like-for-like gas swap, and rebates that require pre-application are already out of reach. A calmer order of operations:

1. Have the furnace inspected this fall and ask for an honest read on its condition and remaining repairs.
2. Find your electric provider on your PG&E bill and read its current rebate terms.
3. Get your panel and ducts assessed so you know what a heat pump would involve.
4. Get quotes for both paths, with the permit, duct testing and rater included in each.
5. If you choose a heat pump, reserve the rebate before any equipment is installed.
6. Schedule the work for a mild stretch, not the middle of a cold snap.

Cool Aid has served Bay Area homes since 1966. We install both gas furnaces and heat pumps, and we will lay out both options honestly. Our HVAC replacement service page explains how a changeout works. For cutting this winter's bill while you decide, see lowering winter heating bills.

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Written and reviewed by Jim McKinny, owner of Cool Aid Air Conditioning & Refrigeration — California C-20 and C-38 licensed, EPA Universal certified, second generation of a family business serving the Bay Area since 1966. Every job we complete is backed by our 1-year parts & labor warranty.