The rebate landscape for heat pumps changed substantially between 2024 and 2026, and most of what you will find online has not caught up. Guides still walk through stacking federal credits with state programs that no longer accept applications.
What remains is smaller but real, and it is almost entirely local. Which program applies to you depends on which utility appears on your electricity bill, not on which city you live in, and that distinction trips up more homeowners than any other part of the process.
Here is what is actually paying out, what closed, and how to avoid disqualifying yourself before you start.
Program details verified September 2026. Funding cycles and amounts change during the year, so confirm current terms before committing to a project.
What Has Closed
Start here, because building a budget around a program that ended is the most expensive mistake available.
Federal 25C tax credit. Expired December 31, 2025. It previously offered up to $2,000 for a qualifying heat pump. It does not apply to 2026 installations. If a contractor’s quote subtracts a federal credit, ask when their pricing sheet was last updated.
TECH Clean California. Funds for heat pump HVAC and heat pump water heaters in single family homes were fully reserved as of November 2025, and new reservations are not being accepted.
Bay Area Air District Clean HEET. The application window closed July 14, 2026.
BayREN Home+. Funding has been subscribed for periods during 2026. Worth checking current status rather than assuming either way.
The practical effect is that the four-program stack contractors used in 2024 no longer exists. In 2026 your rebate comes primarily from one source: your community choice electricity provider.
Find Your Provider First
This is the step that determines everything else, and it is not intuitive. Community choice energy providers do not follow city boundaries the way people expect, and PG&E still delivers the power regardless of who generates it.
Look at your electricity bill. The generation provider listed there tells you which program you are eligible for.
San José Clean Energy (SJCE) serves the City of San José. Their EcoHome Rebate is the main program for San Jose addresses.
Silicon Valley Clean Energy (SVCE) serves much of the rest of Santa Clara County, including Sunnyvale, Cupertino, Mountain View, Milpitas, Los Altos, and Campbell. Their program is called FutureFit. SVCE does not serve San José proper.
Westlight Energy, previously Peninsula Clean Energy, serves San Mateo County, covering Redwood City, Menlo Park, San Mateo, Foster City, and Belmont.
City of Palo Alto Utilities runs its own separate program for Palo Alto residents.
Silicon Valley Power serves the City of Santa Clara independently.
If you are in San José and reading about FutureFit, you are reading about a program you cannot use. The reverse applies just as often.
What Each Program Offers
San José Clean Energy EcoHome Rebate
For San José addresses, EcoHome is the base layer. The heat pump HVAC rebate runs up to $1,500 for a system replacing an existing gas appliance, rising to around $2,500 for households enrolled in CARE or FERA or living in a designated Environmental Justice Community.
SJCE also offers rebates for heat pump water heaters and add-on measures including electrical panel upgrades and attic insulation, plus interest-free payment plan options on qualifying projects. If you are already doing panel work for the heat pump, it is worth asking whether that portion qualifies separately.
Silicon Valley Clean Energy FutureFit
For SVCE territory, FutureFit offers up to $2,500 for replacing a gas furnace with a heat pump HVAC system, with roughly $1,000 more for CARE or FERA households.
SVCE also runs city partnership bonuses in some communities, which stack on top of the base rebate and carry their own rules and funding limits. If you are in one of those cities, the combined amount can be the strongest in the region.
Other Providers
Westlight Energy, City of Palo Alto Utilities, and Silicon Valley Power each publish their own terms and amounts. If your bill lists one of these, go directly to their program page rather than relying on a general Bay Area guide, including this one.
The Rules That Disqualify People
Most failed rebate claims are not equipment problems. They are process problems, and every one of them is avoidable.
You must apply and be approved before work begins. This is the single most common disqualifier. These are not tax credits you claim afterward. If installation starts before your reservation is approved, you can forfeit the rebate even when the equipment qualifies perfectly. Contractors who move fast on a failed system in July are sometimes moving faster than the paperwork.
The new system must replace a gas appliance. These are electrification programs. Replacing an aging heat pump with a new heat pump generally does not qualify, and neither does replacing an electric furnace. The incentive is for switching fuels.
You must be the account holder and own the property. Renters and landlords who are not the utility account holder run into this regularly.
New construction is excluded. Programs fund replacement projects, not new builds.
The equipment must meet minimum efficiency thresholds. Programs specify minimum SEER and HSPF ratings, and 2026 brought refrigerant requirements into the picture as well. A system that is otherwise fine for your home can fall outside program rules.
Funding is first come, first served. Programs run on annual funding cycles and close when the money is committed. An amount published in January may not be available in September.
Getting the Documentation Right
Ask about rebate requirements before you sign, not after the system is installed.
The information programs generally want includes equipment make, model, and efficiency ratings, proof the old system was gas, the permit, and an itemized invoice. Confirm with your contractor that they will provide equipment specifications and a detailed invoice, and keep copies of everything including the pre-approval.
If a contractor cannot tell you which provider serves your address or which program applies, that is worth noting before the work starts rather than after.
Is the Rebate Enough to Change Your Decision?
Sometimes, and it is worth being honest about when it is not.
A rebate in the $1,500 to $2,500 range narrows the gap between a heat pump and a gas furnace replacement. It rarely closes it entirely on its own. What tends to close it is the combination of the rebate plus the fact that a heat pump replaces your air conditioner too.
If both your furnace and your AC are near end of life, the comparison is one heat pump against two separate systems, and the rebate applies on top of that. If only your furnace failed and your AC is newer, the rebate alone usually does not justify discarding working equipment.
We walk through that comparison during the assessment rather than assuming the rebate settles it. You can read more in our guide to choosing between a heat pump and a furnace and AC.
Frequently Asked Questions
Can I still claim the federal tax credit for a heat pump?
Not for a 2026 installation. The 25C credit expired December 31, 2025. If you installed in 2025, you may still have claimed it on that year’s return.
How do I know if I am an SJCE or SVCE customer?
Check the generation provider listed on your electricity bill. San José addresses are generally SJCE. Sunnyvale, Cupertino, Mountain View, Milpitas, Los Altos, and Campbell are generally SVCE.
Do rebates apply to ductless mini-split systems?
Ductless systems are heat pumps, so they can qualify, provided the installation meets the program’s efficiency requirements and replaces a gas appliance.
Can I apply after the work is done?
Generally no. Most programs require approval before installation begins and do not pay retroactively. This is the most common reason claims fail.
Do rebates cover the electrical panel upgrade?
Some programs offer separate add-on rebates for electrical infrastructure, attic insulation, and prewiring. If your project includes panel work, ask whether that portion qualifies on its own.
Will replacing my old heat pump with a new one qualify?
Usually not. The programs are designed to move homes off gas, so the rebate typically requires replacing a gas appliance rather than upgrading existing electric equipment.
How long does the rebate take to pay out?
It varies by program and submission volume. Treat it as a reimbursement arriving after the project rather than money available at the time you pay the invoice, and plan your financing accordingly.
Planning the Project Around the Rebate
The order of operations matters more than the amount. Confirm your provider, confirm the program is currently funded, get approval, then schedule the work.
That sequence is easy to follow when you are planning a replacement in advance and nearly impossible when your system has already failed in a heat wave. If your equipment is aging, that is an argument for handling it on your schedule rather than on its own.
San Jose Heating and Cooling has spent 20+ years installing heat pumps and cooling systems across Santa Clara County and the greater Bay Area. We will tell you which provider serves your address and which program applies before you commit to anything.
Learn more about heat pump installation and replacement, or call (669) 207-9691 to schedule an assessment.