Heat Pump Rebates in California (2025)

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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

Rebate ProgramMax Amount
Federal Tax Credit (IRA)$2,000
TECH Clean California$3,100
Golden State Rebates$1,000
PG&E (stacked w/above)Varies
San José Clean Energy (SJCE)$2,000 + $500
Silicon Valley Clean Energy (SVCE)$2,000 + $1,000

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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Frequently Asked Questions

How much is the rebate for a heat pump water heater in California?

California homeowners can receive up to $6,000 in combined rebates and tax credits in 2025. This includes:

  • $2,000 federal tax credit

  • Up to $3,100 from TECH Clean California

  • $500–$1,000 from Golden State Rebates or your utility (e.g., PG&E)

  • Additional rebates from SJCE or SVCE (up to $2,000 plus bonus for panel upgrades)

 

Who qualifies for the $2,000 federal tax credit for heat pump water heaters?

To qualify:

  • You must install an ENERGY STAR-certified heat pump water heater

  • It must be in your primary residence

  • The installation must occur between 2023–2032

  • File IRS Form 5695 with your federal return

  • Applies to existing homes only, not new construction

 

Can I stack rebates from multiple rebates?

Yes! You can stack rebates from:

  • TECH Clean California

  • Golden State Rebates or PG&E

  • Local programs like SJCE or SVCE

  • Federal tax credits

 

Example: If you’re in San Jose, you could combine a $3,100 TECH rebate with a $2,000 SJCE rebate and the $2,000 federal credit (subject to limits).

What kind of heat pump water heater qualifies for rebates?

To qualify, the unit must:

  • Be ENERGY STAR® certified

  • Have a UEF rating of at least 3.1

  • Be installed by a licensed contractor

  • Replace a gas or electric resistance water heater

  • Be installed with permits and inspection approval

 

How do I apply for these rebates?

Here’s a quick overview:

  • Federal Tax Credit: Claim on your tax return using Form 5695

  • TECH Clean California: Work with a TECH-enrolled contractor (they apply for you)

  • Golden State Rebate: Submit online with receipts and permit documentation

  • SJCE/SVCE: Apply via their official rebate portals after project completion

 

Do I need a panel upgrade to qualify?

Not always. But if your existing panel doesn’t support a heat pump water heater, some programs offer additional rebates (e.g., $500 from SJCE or $1,000 from SVCE/TECH) to help cover upgrade costs.

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