Every HVAC quote in the Sacramento area now comes with a rebate conversation, and most of the information floating around is a year out of date. Some of it is still quoting a federal tax credit that no longer exists. This is the picture as of September 2026, by utility, with the parts that changed marked clearly. We confirm the live figures the day we quote, because these programs move, but this is the shape of it.
First: which utility are you on?
The Sacramento area has three electric utilities and the rebates are completely different, so nothing else in this article matters until you know which one bills you.
- SMUD: the City of Sacramento, most of Sacramento County, Elk Grove, Citrus Heights, Carmichael, Rancho Cordova, Fair Oaks, Orangevale, and most of Folsom.
- Roseville Electric: the City of Roseville only. Cross the city line into Rocklin or Granite Bay and you are on PG&E.
- PG&E: Rocklin, Lincoln, Loomis, Granite Bay, El Dorado Hills, Auburn, and some Folsom addresses. In Rocklin and Lincoln most homes buy their electricity through Pioneer Community Energy, but PG&E owns the lines and the rebate picture is PG&E’s.
Gas is PG&E everywhere in the region. If you are not sure, the name on your electric bill settles it; neighborhood names do not, especially in Folsom.
SMUD: the programs that matter for heating and cooling
SMUD pays homeowners to move from gas to electric, and it pays well. At the time we wrote this, its residential list included:
- Heat pump HVAC replacing gas heating: $3,000 for a variable-stage system, $2,000 for two-stage. Minimum efficiency applies (15.2 SEER2 for the two-stage tier).
- Heat pump HVAC replacing an existing electric system: $1,000.
- Panel upgrade bonus: up to $2,000 when it is needed for a gas-to-electric conversion.
- Heat pump water heater replacing gas: $3,000 to $4,000 depending on tank size; $1,000 for electric-to-electric.
- Induction cooktop or range replacing gas: $750, applied for online with before-and-after photos.
- Smart thermostat: a rebate tied to SMUD’s demand-response program, meaning the thermostat can be adjusted a few degrees during peak events. Check the current figure and the fine print before you count on it.
The part people miss: for the HVAC and water heater rebates, the equipment has to be installed by a contractor in SMUD’s Contractor Network, and the contractor submits the application. You do not fill out a form afterward. If the installer is not in the network, there is no rebate, regardless of what equipment went in. Ask before you sign.
Roseville Electric: a smaller program, but real
Roseville runs its own utility and its own rebates. They are smaller than SMUD’s, and the published figures have varied from year to year, so treat these as the shape rather than the number:
- Heat pump HVAC: a flat rebate, larger when the heat pump replaces gas heating than when it replaces an existing electric system. Recent applications listed $1,000 and $600 respectively.
- Heat pump water heater: larger, with recent figures around $2,500 for gas-to-electric.
- HVAC tune-up: a small flat rebate, historically $50, for a professional tune-up with an invoice dated in the spring-summer window.
- Smart thermostats and panel replacement: programs exist; amounts change.
What Roseville does not pay for is a straight air conditioner replacement or a new gas furnace. Neither does SMUD. If a quote in Roseville mentions a rebate on a new AC, ask which program, because there is not one.
PG&E territory: mostly statewide programs
PG&E itself offers little for residential HVAC in this region. What may apply in Rocklin, Lincoln, Granite Bay and the PG&E parts of Folsom are statewide programs, chiefly TECH Clean California, which pays incentives on qualifying heat pumps through participating contractors when funding is available. It has opened and closed several times. We check the day we quote and we do not promise it in advance.
What ended: the federal 25C credit
Until the end of 2025, the federal Energy Efficient Home Improvement Credit, Section 25C, paid 30% of the cost of a qualifying heat pump up to $2,000 as a tax credit, and it stacked on top of utility rebates. The One Big Beautiful Bill Act, signed July 4, 2025, ended it for any system placed in service after December 31, 2025. There is no federal HVAC credit for installations in 2026. If you finished an installation in 2025 and have not filed, you can still claim it on that return with Form 5695. If a contractor is quoting the credit for a 2026 job, they are out of date.
How the rebate actually reaches you
- Before the quote: we confirm your utility, check the current program, and confirm the equipment we are proposing qualifies. A heat pump that misses the efficiency tier by a hair earns nothing.
- On the quote: the rebate is shown as a line, with the program named. If it is not named, it is not real.
- After the job: for SMUD, we submit through the Contractor Network. Some contractors advance the rebate as a discount on the invoice and collect it from SMUD themselves; others let SMUD pay you directly. Either is fine, but it should be stated.
- Timing: allow several weeks. Rebates arrive after the utility processes the application, not at the time of installation.
Where this changes the decision
The rebates only apply to heat pumps, and that is the point of them. In SMUD territory, a $3,000 rebate covers a meaningful share of the difference between replacing a furnace and an air conditioner separately and replacing both with one heat pump. In a house where both are original, which describes most of Elk Grove, Natomas and the 1990s tracts, that usually tips the answer. In a house with a young air conditioner and an old furnace, it usually does not, and we say so. Our guide to heat pump vs furnace in Sacramento works through the cases, and when to replace a furnace covers whether you are at that decision at all.
For the equipment side, see heat pump installation in Sacramento, AC installation in Roseville, and our guide to heat pump brands. Diagnostic is a flat $69 across the region, credited toward any work.
Frequently asked questions
How much is the SMUD heat pump rebate in 2026?
At the time of writing, $3,000 for a variable-stage heat pump HVAC system replacing gas heating, $2,000 for two-stage, and $1,000 for electric-to-electric. Up to $2,000 more is available toward a panel upgrade when one is needed. The equipment has to be installed by a contractor in SMUD’s network.
Does SMUD or Roseville Electric pay a rebate on a new air conditioner?
No. Neither utility pays for a straight air conditioner replacement or a new gas furnace. The rebates are for heat pumps, heat pump water heaters, induction cooking, thermostats and panels.
Is the federal heat pump tax credit still available?
No. The 25C credit ended for systems placed in service after December 31, 2025. Installations completed in 2025 can still be claimed on the 2025 return with Form 5695.
I live in Rocklin. What rebates apply?
Rocklin is PG&E territory with electricity through Pioneer Community Energy, so neither SMUD nor Roseville Electric rebates apply. Statewide programs such as TECH Clean California sometimes do, when funded. We check the day we quote.
Do I apply for the SMUD rebate myself?
Not for HVAC or water heaters. The participating contractor submits the application through SMUD’s Contractor Network after the job. Some contractors advance the rebate on the invoice; others let SMUD pay you directly. Ask which before you sign.