If you searched for the heat pump tax credit this year, you probably found pages promising up to $2,000 back. Most of them are out of date. The federal credit covered equipment installed through the end of 2025, and California’s income-based heat pump rebate ran out of money in February 2026. Here is what is actually true right now, with the sources, and what is still worth pursuing in the Sacramento area.
The federal credit: what happened
The Energy Efficient Home Improvement Credit, often called 25C, paid 30 percent of the cost of a qualifying heat pump, up to $2,000 per year. According to the IRS, it applies to improvements made from January 1, 2023 through December 31, 2025. ENERGY STAR’s federal tax credit page says the same thing: these credits were available through the end of 2025.
So the answer depends entirely on when your system went in:
- Installed in 2025 or earlier. You can still claim it for the tax year the equipment was installed, using IRS Form 5695. If your heat pump went in during 2025 and you have not filed that return yet, this is money you should not leave behind. Keep the invoice and the manufacturer certification statement for the model.
- Installed in 2026. The federal heat pump credit does not apply. Any contractor quoting you a 2026 installation with “$2,000 back from the IRS” built into the price is working from old information.
The companion Residential Clean Energy Credit, which covered geothermal heat pumps along with solar and batteries, also ended on December 31, 2025, per ENERGY STAR.
California’s HEEHRA rebate: fully reserved
The Home Electrification and Appliance Rebates program, HEEHRA, is federally funded and run in California through TECH Clean California. For single-family homes it offered up to $8,000 toward a heat pump for households under 80 percent of area median income, and up to $4,000 for households between 80 and 150 percent. The reservation had to be approved before installation, and the work had to be done by a HEEHRA-trained, TECH Clean California-certified contractor.
According to TECH Clean California, as of February 24, 2026, single-family HEEHRA rebates are fully reserved statewide, the program stopped accepting new income verification applications, and the Northern California region is fully reserved. New reservation requests go on a waitlist in case more funding appears, and a waitlisted project only qualifies if the heat pump is installed after its reservation is approved.
In practical terms for a Sacramento homeowner planning a 2026 replacement: do not build your budget around HEEHRA. If funding returns, it will be a bonus.
A warning that comes with it
Programs that run out of money attract scams. TECH Clean California’s own guidance is that a legitimate HEEHRA contractor only needs your income eligibility verification code or approval document. Nobody administering this rebate needs your bank statements, tax returns or account logins. If someone asks for them to “hold your rebate spot,” walk away.
What is still available in the Sacramento area
With the federal credit gone and HEEHRA reserved, the incentives that still matter here come from your electric utility, and they differ by where you live.
- SMUD customers, which covers most of Sacramento County including Elk Grove, Citrus Heights, Rancho Cordova and Folsom, have the most developed heat pump rebate program in the region. Our guide to SMUD heat pump rebates explains how it works and what the paperwork requires.
- Roseville Electric customers are on a separate municipal utility with its own efficiency programs. Check their current offerings before you sign a contract, because they change during the year.
- PG&E electric customers, which includes much of Placer County such as Rocklin, Lincoln, Loomis and Granite Bay, fall under different programs again.
The fastest way to see everything that currently applies to your address is the rebate finder at The Switch Is On, the statewide site TECH Clean California itself points homeowners to. Enter your zip code, then confirm the details with the utility directly, because program budgets open and close.
Does a heat pump still make sense without the credit?
Often, yes, and in Sacramento the case never rested on the tax credit alone. Our heating season is short and mild, which is exactly the climate where a heat pump does its best work, and one system replaces both the furnace and the air conditioner. If your furnace and AC are both past fifteen years, you are pricing a full replacement anyway.
Where it makes less sense is replacing a working, fairly new furnace just to switch. The math on that changed when the credit ended. We go through the comparison in heat pump versus furnace in Sacramento, and the real numbers in heat pump replacement cost.
How we handle incentives on a quote
We price the system first and list any rebate separately, with the program name, so you can see the real cost with and without it. We will not fold an incentive into the price that you might not receive. For a starting range before anyone visits, the cost calculator takes about a minute, and replacement estimates are free. If your current system is simply broken, our diagnostic is a flat $69 and it is credited toward the repair.
Frequently asked questions
Is there a federal heat pump tax credit in 2026?
No. The Energy Efficient Home Improvement Credit covered qualifying heat pumps installed through December 31, 2025, according to the IRS. A heat pump installed in 2026 does not qualify for that federal credit.
I installed a heat pump in 2025. Can I still claim the credit?
Yes, for the tax year it was installed. The credit is 30 percent of qualifying costs up to $2,000 and is claimed on IRS Form 5695. Keep your invoice and the manufacturer’s certification statement for the equipment.
Can I still get the California HEEHRA heat pump rebate?
Not for new applications right now. TECH Clean California reports that as of February 24, 2026, single-family HEEHRA rebates are fully reserved statewide, new income verifications are closed, and new reservations go on a waitlist in case funding becomes available.
What heat pump rebates are still available in Sacramento?
Mainly utility programs. SMUD has the most established heat pump rebates in Sacramento County, Roseville Electric runs its own programs, and PG&E territory in Placer County has different options. The Switch Is On rebate finder shows what applies to your zip code.
Is a heat pump still worth it without the tax credit?
In Sacramento it often is, because the heating season is mild and one heat pump replaces both a furnace and an AC. It makes the least sense when you would be removing a newer furnace that still works well.
Someone asked for my bank statements to reserve a heat pump rebate. Is that normal?
No. TECH Clean California says a legitimate HEEHRA contractor only needs your income eligibility verification code or approval document. Requests for bank statements or account access are a warning sign.