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Guide

California HVAC Rebates What's Available in 2026

Reviewed by the Brewer HVAC technical team • Updated May 2026

Federal and California incentives for HVAC upgrades are real and stacking correctly makes them substantial. A Nevada County homeowner replacing a gas furnace with a qualifying heat pump system can access between $2,000 and $5,000 in combined credits and rebates in 2026 — more for moderate-income households. The programs are not simple, and the qualifying equipment rules change. Here is the current picture as of 2026, applied specifically to Nevada County homeowners.

At a glance

Program Equipment Maximum Amount Income Limit
Federal 25C Tax Credit Heat pump (ducted or ductless) $2,000 per year None
Federal 25C Tax Credit Heat pump water heater $2,000 per year (shared cap) None
Federal 25C Tax Credit High-efficiency gas furnace $600 None
Federal 25C Tax Credit Central AC $600 None
PG&E Heat Pump Rebate Qualifying ducted heat pump (HSPF2 ≥ 7.5) Up to $800 None
TECH Clean California Heat pump system (contractor rebate) Up to $3,000 (mod. income) 150% AMI
TECH Clean California Duct sealing (with heat pump) Up to $500 150% AMI
HEEHRA (low-income) Heat pump system Up to $8,000 (fully funded) 80% AMI

The federal 25C tax credit — the one most homeowners miss

The Inflation Reduction Act (IRA) created a revised Section 25C credit that runs through 2032. It covers 30% of qualifying HVAC equipment cost, up to $2,000 per year for heat pumps and $600 for high-efficiency furnaces or AC. The credit resets annually — if you install a heat pump this year and a heat pump water heater next year, you can claim up to $2,000 each year. The 25C credit applies to equipment cost only, not labor, and requires the installed system to meet specific efficiency thresholds: SEER2 ≥ 15.2, EER2 ≥ 10, HSPF2 ≥ 7.8 for ducted heat pumps. Not every brand or model qualifies — the AHRI directory lists qualifying equipment. We specify qualifying equipment by default on all heat pump quotes; if a system we quote does not qualify, we will tell you.

TECH Clean California

TECH Clean California is a California Energy Commission program designed to accelerate heat pump adoption. Unlike the federal credit, TECH is a point-of-sale discount processed through the contractor — you do not file for it; we apply it directly to your invoice. The income qualification is based on household income relative to Area Median Income (AMI) for Nevada County. Moderate-income households (80-150% AMI) receive up to $3,000 for a qualifying heat pump installation. The program also covers duct sealing when done alongside a heat pump install. As of 2026, TECH funding is active in Nevada County. Available funding levels can change — we confirm current program status during the estimate.

PG&E rebates for heat pumps

PG&E offers rebates for qualifying heat pump installations in its service territory, which includes most of Nevada County (areas served by PG&E for electricity). The rebate amount depends on the system type and efficiency rating. For ducted heat pumps meeting the HSPF2 threshold, the current rebate runs up to $800. Ductless mini-split systems are also eligible. The rebate is processed after installation — we submit the paperwork as part of the job. Note: Truckee is served by Truckee Donner Public Utility District (TDPUD), not PG&E, so PG&E rebates do not apply there. TDPUD has its own incentive programs for electric equipment upgrades.

Stacking incentives correctly

The 25C federal credit and TECH Clean California rebate can be combined — they are from different sources and there is no offset rule between them. The PG&E rebate also stacks. A qualifying moderate-income household installing a ducted heat pump in 2026 could realistically combine: $2,000 federal 25C credit, $3,000 TECH rebate, and $800 PG&E rebate — totaling $5,800 in incentives against a typical $10,000-$13,000 heat pump install. HEEHRA (High-Efficiency Electric Home Rebate Act) covers low-income households (under 80% AMI) with up to $8,000 toward heat pumps; implementation has varied by state — we can check current California program status at time of quote.

How the application process works with Brewer

We handle rebate paperwork as part of every qualifying installation. You do not need to track down forms or submission portals. For the 25C federal tax credit, we provide a signed manufacturer's certification statement that your tax preparer attaches to Form 5695 — you claim the credit when you file taxes. TECH and PG&E rebates are processed post-installation via contractor submission; you receive a check or account credit directly. We require the same qualifying information (income verification for TECH, utility account for PG&E) before the install so there are no surprises. If the program has closed or funding is exhausted when we check, we tell you upfront — we do not quote incentives we cannot confirm.

Frequently asked

Can I combine the federal tax credit with California rebates?

Yes — the federal 25C credit and TECH Clean California rebate come from different sources and stack without offset. The PG&E rebate also stacks with both. A qualifying install can legitimately combine all three.

Do rebates cover installation labor?

The federal 25C tax credit covers equipment cost only, not labor. TECH Clean California and PG&E rebates cover the system cost and may include some installation cost depending on the program version — we apply the current rules at time of quote.

What efficiency ratings do I need to qualify for the 25C credit?

For ducted heat pumps: SEER2 ≥ 15.2, EER2 ≥ 10, HSPF2 ≥ 7.8. For ductless mini-splits: SEER2 ≥ 15, EER2 ≥ 10, COP ≥ 2.2 at 47°F. For central AC without heat: SEER2 ≥ 15.2, EER2 ≥ 11.7. We specify only qualifying equipment and confirm eligibility before the install.

How do I claim the 25C credit on my taxes?

File IRS Form 5695 with your federal return. We provide a signed Manufacturer's Certification Statement confirming the installed equipment meets IRS qualifying thresholds. Your tax preparer attaches it to the return. The credit is non-refundable — it reduces tax owed, but will not generate a refund if your tax liability is less than the credit amount.

Does replacing a gas furnace alone qualify for the 25C credit?

Yes, but the maximum is $600 for a qualifying high-efficiency gas furnace (AFUE ≥ 97%). The heat pump credit ($2,000) is significantly more generous, which is part of why heat pump replacement often pencils out better than furnace-only replacement when the equipment is aging.

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