Heat Pump Water Heater Rebates in California (2025 Guide)

With California’s aggressive push to eliminate gas-powered appliances, heat pump water heaters (HPWH) have become a top priority in statewide electrification plans. These high-efficiency systems use electricity to move heat instead of generating it directly, cutting energy use by up to 65%.

And the best part? In 2025, you can get $3,000–$6,000 back in stackable rebates and federal tax credits. In this blog we will break down top 5 most rewarding rebates in San Jose.

1. $2,000 Federal Tax Credit for Heat Pump Water Heaters

Program: Inflation Reduction Act (IRA), Section 25C

Rebate: 30% of cost, up to $2,000

Applies To: ENERGY STAR® certified heat pump water heaters

Effective: 2023–2032

Claim Method: IRS Form 5695 on your tax return

Eligibility:

• Must be installed in an existing primary residence (not new construction)
• Must meet or exceed Energy Star specifications
• Applies to both equipment and installation costs
• Annual limit: $2,000 total per year for heat pump equipment (includes HVAC if claimed the same year)

ENERGY STAR official tax credit page

2. TECH Clean California: Up to $3,100

Rebate: Up to $3,100

Program Type: State-funded electrification incentive

Stackable With: PG&E, Golden State Rebates, local utility programs

Eligibility:

• Must replace a gas water heater with an electric heat pump water heater
• Must use a TECH-registered contractor
• Must be in a qualifying utility area (PG&E, SCE, or SoCalGas territory)
• Can be for single-family homes or multifamily units
• Additional bonus available for low-income households (CARE/FERA customers)

 TECH Clean California HPWH program

3. Golden State Rebates: $500–$1,000

Rebate: $500–$1,000 (varies by utility and location)

Program Type: Utility-sponsored rebates for high-efficiency appliances

Utilities Covered: PG&E, SCE, SoCalGas, Liberty, Bear Valley Electric

Eligibility:

• Must replace an existing natural gas water heater
• New unit must be an ENERGY STAR-certified HPWH
• Must obtain a permit and pass final inspection
• Rebates submitted within 60–90 days of installation

Golden State Rebates – Check eligibility by ZIP

4. PG&E Rebates: $500–$1,000

Rebate: $500–$1,000 (often funneled through Golden State Rebates or TECH Clean CA)

Utility: PG&E (Pacific Gas & Electric)

Bonus: Up to $1,000 extra available if electrical panel upgrade is required and bundled through TECH

Eligibility:

• You must be a PG&E customer
• Must install an ENERGY STAR-certified HPWH
• Must replace a gas unit, not new installs
• Installation must meet code and permitting requirements

 PG&E Rebates Directory

5. San José Clean Energy (SJCE): Up to $2,000

Rebate:

• $1,000 base
• + $1,000 for income-qualified households
• + $500 for panel upgrade if needed

City: Available only to San José residents

Eligibility:

• Must be a SJCE customer
• Replace a gas water heater with a qualifying HPWH
• Must use a licensed contractor
• Must pull a permit and pass inspection
• Stacks with TECH and federal incentives

 San José Clean Energy Electrification Rebates

6. Silicon Valley Clean Energy (SVCE): Up to $2,000 + Panel Bonus

Rebate:

• $2,000 for HPWH
• + $1,000 panel upgrade bonus
• + $500–$1,000 income-qualified bonus

Cities Served: Sunnyvale, Cupertino, Mountain View, Los Altos, Saratoga, Morgan Hill, Gilroy, and more

Eligibility:

• Must be an SVCE customer
• Install an ENERGY STAR heat pump water heaters  via a licensed contractor
• Replace gas water heater
• Must obtain permit and final inspection approval

 SVCE Home Rebates

Potential Total Savings

Stack total: Up to $6,000+ possible in combined incentives.

Ready to Upgrade?

We specialize in heat pump water heater installations that qualify for every available incentive. We’ll:

• Recommend the right unit
• Handle permits and inspections
• Help you apply for all rebates and tax credits

 Get your rebate estimate and quote today

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