SMUD Rebates & California HVAC Incentives (2026 Guide)

Sacramento summers push past 105°F, and a failing HVAC system is not something you can put off for long. The good news: SMUD customers replacing or upgrading a heating and cooling system in 2026 can access some of the strongest utility rebates in the state — up to $3,000 on a heat pump HVAC conversion, plus additional incentives that can be stacked on top.

The landscape shifted significantly at the start of 2026. The federal Section 25C tax credit expired. California's TECH Clean California program ran out of single-family funds. Knowing which programs are still open — and which are not — is the difference between planning around real money and chasing programs that no longer exist.

This guide covers every rebate and incentive available to Sacramento-area homeowners right now, with verified amounts, official sources, and a clear note on what to confirm before you sign a contract.

Key Takeaways

• SMUD offers up to $3,000 for a gas-to-electric variable-stage heat pump HVAC conversion (SMUD, February 2026)
• Stack the Go Electric bonus — up to $2,000 more (up to $500 per qualifying circuit: panel, EV charger, range, dryer) when you electrify alongside a gas-to-electric HVAC conversion (SMUD Go Electric Bonus)
• SMUD heat pump water heater rebates reach up to $4,000 for gas-to-electric conversions (SMUD, February 2026)
• TECH Clean California single-family funds are fully reserved as of February 24, 2026 — no new single-family applications are being accepted (California Energy Commission, 2026)
• The federal 25C tax credit is gone — it expired December 31, 2025 and does not apply to 2026 installations (IRS, 2026)
• A typical heat pump installation in Sacramento runs $12,000–$17,000 before incentives; SMUD rebates can reduce that to $9,000–$12,000 for eligible systems

What SMUD Rebates Are Available for HVAC in 2026?

SMUD boosted its heat pump rebates in February 2026 and they remain the most straightforward incentive for Sacramento homeowners. The rebate amount depends on two things: whether you're converting from gas or upgrading from an existing electric system, and which type of heat pump you install.

Source: SMUD Heating and Cooling Rebates, verified June 2026.

Who Qualifies for SMUD HVAC Rebates?

You need to meet a few requirements before your contractor submits the application:

• Active SMUD customer with individually metered service (applies to single-family homes and multifamily up to 4 units)
• Hire from the SMUD Contractor Network — the rebate application must be submitted by a participating contractor, not the homeowner
• System must meet efficiency minimums — at least 15.2 SEER2 for two-stage systems; variable-stage systems have their own qualifying spec
• All permits pulled and passed — the project must comply with city and county codes, including any required inspections
• Manufactured homes qualify if the home is on a permanent foundation, individually metered, and subject to state building codes

Standard SMUD rebates do not require income verification. There is no separate income-qualified tier for HVAC (unlike the heat pump water heater program, where an up to $4,000 rebate applies).

How Does the SMUD Rebate Process Work?

Your HVAC contractor does the heavy lifting. After installation, they submit the rebate application on your behalf through the SMUD Contractor Network portal. You do not file separate paperwork independently. Rebates are subject to available funding, so getting your reservation in early matters — especially if SMUD's budget updates over the year.

What Happened to TECH Clean California Rebates?

TECH Clean California ran the state's largest heat pump incentive program and offered strong rebates for both income-qualified and market-rate homeowners. Here's where things stand as of mid-2026.

Single-family: Fully reserved, no new applications. The program stopped accepting new single-family sales reservations on November 14, 2025. By February 24, 2026, funds were fully reserved statewide. No new income verification applications are being accepted. Approved projects that were already in the pipeline continue to be processed (California Energy Commission, 2026).

Multifamily: Still open. HEEHRA rebates through TECH Clean California remain available statewide for multifamily properties, offering up to $14,000 per unit for income-qualified buildings.

Phase II: No launch date yet. The state has announced $152 million in additional HEEHRA Phase II funding, but no timeline for availability has been confirmed.

For the most current budget status, check techcleanca.com/incentives.

2026 HVAC Incentive Table: What's Open, What's Closed

Amounts are current as of June 2026. Rebate budgets and eligibility rules change — verify figures directly with the program before purchasing equipment.

Does PG&E Offer Any Heat Pump HVAC Rebates?

PG&E is the natural gas provider for much of the Sacramento area, but SMUD is the electric utility for the city of Sacramento and surrounding communities. For HVAC rebates, what matters is your electric provider.

PG&E customers outside the SMUD service territory have historically accessed heat pump rebates through TECH Clean California. With single-family TECH Clean funds now fully reserved, PG&E customers in the Sacramento Valley looking for direct rebates should check pge.com/rebates and the Switch Is On incentive finder at switchison.org for any programs that may have launched after mid-2026.

If you're not sure whether your home is in the SMUD service territory, you can check your electric bill or enter your address at smud.org.

Can You Stack SMUD Rebates With Other Programs?

Yes — stacking is explicitly permitted and is how you get the most money back.

A Sacramento homeowner converting from a gas furnace to a variable-stage heat pump and upgrading their electrical panel at the same time could combine:

• $3,000 SMUD heat pump HVAC rebate
• up to $2,000 SMUD Go Electric bonus (up to $500 per qualifying circuit — panel, EV charger, range, dryer)

That's up to $5,000 in SMUD rebates on a single project. If you also replace a gas water heater with a heat pump water heater in the same visit, the water heater rebate (up to $4,000) stacks on top of the HVAC rebates.

The federal 25C tax credit is no longer available for 2026 projects, so the stack calculation no longer includes that offset.

What About the Federal 25C Tax Credit?

The Section 25C Energy Efficient Home Improvement Credit was a significant incentive through the end of 2025 — qualifying heat pump systems earned a 30% credit up to $2,000 per year (IRS, 2026).

That credit expired on December 31, 2025, under the One Big Beautiful Bill Act (Pub. L. 119-21). Installations placed in service after that date do not qualify. If you installed a qualifying system before December 31, 2025, you may still be able to claim the credit on your 2025 return — confirm with a tax professional.

There is no active federal tax credit for heat pump HVAC systems purchased in 2026.

What Should I Do Before Scheduling an Installation?

Getting rebates is mostly about sequencing. A few steps that protect your eligibility:

1. Confirm your SMUD service area. SMUD rebates only apply to SMUD electric customers. Check your electric bill or smud.org if you're unsure.

2. Hire a SMUD Contractor Network member. The rebate must be submitted by a participating contractor. Before signing any contract, confirm the company is listed in the SMUD Contractor Network.

3. Get a home assessment first. An honest contractor will size your system correctly before recommending equipment. An oversized heat pump doesn't heat or cool better — it short-cycles, wears faster, and costs more. A-CLASS technicians assess your home and existing ductwork before recommending equipment.

4. Check the current SMUD budget status. Rebates are subject to available funding. Ask your contractor to confirm current availability when they submit your project.

5. Pull permits before work starts. Sacramento requires permits for HVAC installations and typically a HERS rating inspection for efficiency compliance. Your contractor should handle this — but verify before work begins.

How Much Can Sacramento Homeowners Actually Save?

A typical heat pump HVAC installation in Sacramento runs between $12,000 and $17,000 before incentives. For a homeowner qualifying for the maximum SMUD stack (gas-to-electric conversion + panel upgrade), that's $5,000 back, bringing the net cost down to roughly $7,000–$12,000 depending on system size and existing electrical infrastructure.

Add in the heat pump water heater rebate (up to $4,000) and a homeowner going all-electric in one project could receive up to $9,000 in SMUD rebates total — a significant offset on an electrification project.

These are real numbers, not estimates. But they depend on your system type, your contractor's SMUD certification, and available funding at the time of installation. The only way to know your exact rebate is to get a quote from a SMUD Contractor Network member who submits rebate applications regularly.

If you're a SMUD customer and want to know exactly what your home qualifies for, call A-CLASS Heating and Air at (916) 342-9108. We'll walk through your existing system, tell you which equipment qualifies, and give you a straight answer on what the rebate math looks like for your specific project.