TL;DR
- The 2026 rebate picture is leaner than 2024-2025. The federal 25C tax credit ended for installs after December 31, 2025.
- California’s single-family rebates through TECH Clean California and HEEHRA were fully reserved across Southern California by early 2026 (waitlist only).
- What can still help: SDG&E equipment rebates and income-qualified utility programs. Confirm current funding before counting on a number.
- You must use a participating contractor and approved equipment to qualify for any utility rebate.
If you’re replacing a furnace or AC in 2026, a heat pump can still pencil out on energy savings and comfort, but the rebate help is smaller and shifts during the year. Here’s what’s actually available and how to confirm it.
Rebate programs change fast. Funds get reserved or repealed mid-cycle. Verify current status directly with SDG&E and the California Energy Commission before you make a purchase decision.
What SDG&E offers in 2026
SDG&E runs three rebate programs that apply to heat pumps:
Energy-Saving Assistance Program (ESAP). Income-qualified households (under 200% of federal poverty line) may qualify for no-cost energy upgrades through SDG&E’s assistance program, which can include heat pump measures for eligible homes. Limited to single-family and 2-4 unit residential. Eligibility and covered measures change, so apply through the SDG&E ESAP portal and confirm what’s covered for your home.
Equipment rebates (general residential). $750–$1,500 per heat pump depending on efficiency rating. Higher rebates for:
- SEER2 ≥ 18 systems
- HSPF2 ≥ 9.5 (heating efficiency)
- All-electric replacement (removing gas furnace)
Whole-home electrification bonus. Additional $500–$1,000 if the heat pump is part of removing all natural gas appliances. Stacks on top of equipment rebate.
What TECH Clean California adds (when funded)
The state-funded TECH Clean California program runs alongside SDG&E. When single-family funds were open, the amounts looked roughly like this:
- Standard heat pump: $1,000
- Cold-climate heat pump (rare in San Diego): $2,500
- Income-qualified bonus: additional $1,500
- All-electric retrofit bonus: additional $500
Status in 2026: Single-family residential rebates were fully reserved across Southern California by early 2026, and the program stopped taking new single-family income-verification applications, moving new requests to a waitlist. So you can’t plan a 2026 install around TECH money right now. Funding can reopen as cycles reset, so confirm current availability before counting on it.
Federal 25C tax credit (ended for 2026 installs)
The 25C tax credit for residential energy improvements expired for systems installed after December 31, 2025. The One Big Beautiful Bill moved the end date up from 2032. There’s no 25C credit on a heat pump installed in 2026.
If you installed in 2025, you can still claim it on your 2025 return: 30% of heat pump cost up to $2,000, plus smaller amounts for qualifying panel upgrades and energy audits. It’s a tax credit, not a rebate, claimed via IRS Form 5695.
What the stack looked like when everything was funded
For reference, here’s what a full stack looked like in 2024-2025, replacing a 15-year-old gas furnace + AC with a 4-ton heat pump in a Carlsbad home. Note how much of it depended on the 25C credit and TECH funds, both largely gone in 2026:
| Source | When funded | 2026 status |
|---|---|---|
| SDG&E equipment rebate | $1,250 | Possible; confirm current amount |
| SDG&E whole-home electrification bonus | $750 | Confirm current availability |
| TECH Clean California | $1,000 | Single-family funds reserved; waitlist |
| TECH all-electric bonus | $500 | Reserved; waitlist |
| Federal 25C tax credit | $2,000 max | Ended for 2026 installs |
That kind of $5,500 stack brought a $14,000 install down to roughly $8,500 when every program was open. In 2026, with the credit expired and TECH single-family funds reserved, a typical non-income-qualified household should expect substantially less, and should confirm each piece before assuming it.
How to actually claim them
1. Use a participating contractor. Not every HVAC contractor is enrolled in SDG&E’s program or TECH. Ask before you sign. We’re enrolled in both and handle the paperwork.
2. Verify equipment eligibility. AHRI-certified equipment with the right SEER2/HSPF2 ratings. The contractor pulls the AHRI reference number for the rebate filing.
3. Sign the rebate application at install time. SDG&E and TECH applications happen during install, not after. The contractor submits within 30–60 days of completion.
4. Wait 6–12 weeks for the rebate check or bill credit. SDG&E typically applies the rebate as a bill credit. TECH sends a check.
5. If you installed in 2025, file the 25C credit on your 2025 return. Save the install invoice for IRS Form 5695. There’s no 25C credit for a 2026 install.
Pitfalls to avoid
Don’t install before checking eligibility. If your equipment isn’t on the approved list, you can lose whatever rebate is currently funded. Fixing that retroactively isn’t possible.
Don’t pay for the install before rebates are confirmed. Reputable contractors hold rebate paperwork as a delivery requirement. If a contractor wants full payment before the rebate forms are filed, that’s a red flag.
Don’t assume your panel can handle it. Heat pumps draw less than electric resistance heat but more than gas. A 100A service may need upgrade for a 4-ton heat pump. Panel upgrade cost ($2,500–$5,000) eats into rebate savings if not planned.
Don’t assume the funds are still there. California’s single-family rebate funds for 2026 were fully reserved across Southern California early in the year, faster than the usual mid-year exhaustion. Confirm current funding before you build a budget around any state rebate.
Common denial reasons
Wrong equipment model. If the contractor orders an AHRI-uncertified model or a generic builder-grade unit without the required SEER2 or HSPF2 rating, the rebate is denied after install. Always get the AHRI reference number confirmed before signing.
Application submitted late. SDG## When to call usE and TECH applications must be submitted within a specific window after install (usually 60 days). Contractors who miss the deadline mean you miss the rebate.
Customer income tier mismatch. TECH Clean California has income tier caps. If you apply as Tier 2 but your household income qualifies you for Tier 1 (lower income, higher rebate), you may receive a smaller rebate. Confirm your tier before install.
Panel not upgraded first. If your electrical panel upgrade was done by a separate contractor or was not included in the rebate application, the rebate submission can be rejected. Bundle the panel work with the heat pump install under the same application.
Property not owner-occupied. SDG## When to call usE rebates apply to owner-occupied primary residences. Rental properties and vacation homes have different eligibility rules and lower rebate amounts.
When to call us
We pull permits, file rebates, and install the right equipment for your home. No upselling, no funny math, we tell you what the system costs, what it’ll save, and what your net out-of-pocket is after rebates. See our heat pump service page for scope details, or the heat pump installation cost guide for the full 2026 pricing breakdown.
Call us at (442) 777-6440 for a heat pump quote in San Diego County. Free estimate, transparent rebate filing, and we don’t charge until the rebate paperwork is submitted on your behalf.