Technically Reviewed by Jake Smith, Online Marketing Strategist on Jan 24, 2024 | Written by Alpha Mechanical Editorial Contributors
There is a way to bring your HVAC unit up to date while simultaneously lowering your monthly energy bills and minimizing your carbon footprint. Changing out your unit and finishing a heat pump installation in Sacramento come tax filing season could mean putting hundreds if not thousands of dollars back in your pocket after making the switch.
Heat pumps are ideal for California’s dry, temperate weather conditions and can be great for space heating, air conditioning, and water heating. Heat pumps also give homeowners better oversight of the system than conventional technologies, which leads to more comfortable homes. Heat pumps are essential to decarbonizing buildings and achieving California’s zero-carbon goals, ensuring that by 2032 the carbon footprint of the state of California will be significantly reduced.
Upgrade to a heat pump in California and discover the California heat pump rebates program and which one you may end up qualifying for by doing so. Heat pumps and/or ductless mini-splits are an effective and economical system to replace your furnace. The goal of heat pump rebates in California is to reduce the lock in of carbon dioxide emissions from buildings and homes. California is giving out these incentives to encourage the conversion of HVAC systems to pure electric as conventional AC and heating units use too much energy.
In this article we uncover the updated 2024 HVAC tax credits, their limitations, how you can qualify for them, and how to claim them.
What are Energy Tax Credits and Incentives?
Before we go over the specific rebate programs, let’s address what an energy tax credit is and how these rebates came to be. Energy tax credits, such as the heat pump tax credit in California, are the government’s way to stimulate taxpayers to switch their energy sources from fossil fuels to ones with higher energy efficiency ratings which consume less electricity and energy. The federal government carries this out by giving tax credits which gives the consumer money back during the tax-filing process. This applies to California incentives for heat pump installation.
New standards set forth from the Department of Energy (DOE) which went into effect January 1, 2023, require that all residential air conditioners and heat pumps manufactured or imported to the U.S. on or after 2023 carry higher minimum SEER, HSPF, and EER ratings. It is important to know what these ratings are and what they mean:
SEER – Seasonal Energy Efficiency Ratio is a rating that every HVAC unit has. The higher the SEER rating, the more energy-efficient the unit is.
HSPF – Heating Seasonal Performance Factor measures how regulated a heat pump can heat your home during the cold weather months. Split-system heating systems must have a minimum HSPF rating of 8.8.
EER – Energy Efficiency Ratio rating is calculated in a parallel way to SEER (British Thermal Unit divided by Watt-Hours). The predominant difference is how units are tested to calculate these ratings. SEER test the performance based on outdoor temperatures, EER ratings only test the system at a consistent outdoor temperature
What Heat Pump Rebates are Currently Available in California?
Federal IncentiveInflation Reduction Act (IRA)
The Federal Inflation Reduction Act (IRA) helps pay back homeowners for home upgrades that reduce their carbon footprint, lower their energy bills, and improve indoor air quality. Now, homeowners will be able to claim a 30% tax credit including up to $2,000 for heat pump HVAC upgrade installation per year.
Because this is a tax credit though and not a rebate, your household can claim $2,000 or 30% of the total cost of the upgrade, (whichever is less) against the money you owe to the IRS for that year. The unit has to meet the modest efficiency requirements in order to qualify for the California heat pump incentives. The IRA includes two residential energy rebate programs or federal energy star program and funding for contractor training grants related to these programs which we will unpack below.
These rebates for heat pumps in California are eligible for applicants who are homeowners and aggregators. The amount you can receive for these California energy heat pump rebates is directly correlated to the amount of energy savings the unit brings
State HVAC Replacement RebateTechnology and Equipment for Clean Heating (TECH) Program
The state of California HVAC replacement rebate is the Technology and Equipment for Clean Heating (TECH) Program. The California Public Utilities Commission TECH program includes several pilots for making heat pump installations more attainable for LMI home and business owners. This is one of the incentives for heat pumps in California which applies to contractors to complete projects that often get left behind.
TECH Clean California is a statewide initiative to accelerate the adoption of clean space and water heating technology across California homes in order to help create an equitable pathway to carbon-free homes by 2045 and install six million heat pumps by 2032.
The three goals of the TECH Program are:
- Make installation of heat pumps easily accessible for contractors and customers.
- Demonstrate scalable solutions to key market barriers via regional pilot projects
- Inform California’s decarbonization decision-making with public data, analyses, and case studies
Local HVAC Replacement RebatesSMUD Energy Efficiency Program
The Sacramento Municipal Utility District (SMUD) is a community-owned electric utility that serves Sacramento County and parts of Placer County in California. SMUD is committed to protecting the environment with efforts of conservation of water and greenhouse gas emissions. SMUD extends a variety of programs and services to help its customers lower their environmental impact while also consolidating their electric bill. These programs include rebates for energy-efficient appliances and equipment, as well as financial assistance for low-income customers.
There are several California energy heat pump incentives including SMUD HVAC rebates in Sacramento which offers up to $3,500 for heat pump HVAC replacement and several hundred dollars for 2 stage packaged units. SMUD offers rebates for residential and commercial customers in order to conserve energy and costs on utility bills.
For residential homeowners, SMUD provides a home heating and cooling rebate of up to $3,500 for replacing an aged heating and cooling system with a high-efficiency HVAC system that meets SMUD’s program guidelines. Customers could also be eligible for a $30 rebate for recycling a mercury thermostat through the Thermostat Recycling Corporation. Additionally, there is a tax credit available for up to 30% of the project cost, up to a maximum of $2,000.
For commercial business owners, SMUD offers a variety of incentives to help them lower heating and cooling costs. These incentives include rebates for energy-efficient lighting, heating and cooling systems, and controls.
Local HVAC Replacement RebatesRoseville Energy Efficiency Program
Program Overview: As a City of Roseville resident, you are eligible for an exclusive energy savings rebate on central air conditioning and heat pump systems in addition to rebates available through your utility company. Contact us to find out what Roseville residents’ offers are accessible for your HVAC replacement project when converting from a gas furnace to a fossil fuel heat pump.
- Heat Pump Rebate: $1000 per split system 16 SEER / 8.2 HSPF and 2 stage compressor, packaged system 15 SEER / 8 HSPF and 2 stage compressor.
- Smart Thermostat Rebate: Customers will receive up to $100 on the purchase for each qualifying smart thermostat (max 2).
For Additional Information about these rebates, access the City of Roseville Residential Rebates website HVAC & Smart Thermostats.
Advantages of Upgrading to a Heat Pump System
Some of the greatest reasons to upgrade to a heat pump system go even beyond the heat pump rebates program in California and are about the systems themselves. All heat pumps have the technology to add-on to an existing HVAC system and use less energy than traditional furnaces, boilers, or strip heating units.
Heat pumps have both heating and cooling capabilities suited to keep your California home comfortable. These units work to transfer heat from one place to another whether that heat is in your home being moved outdoors in the warm weather months or transferring heat into your home to increase the temperature inside.
Furthermore, there are an ever growing number of new California rebates for heat pump and energy efficient upgrades to reduce the cost of a heat pump advancement for your home.
- When properly installed, heat pumps provide several virtues, including:
- Quiet and labor-saving operation
- Lowering your carbon footprint
- Reduced heating and cooling costs
- All-electric undertaking (which means you can power them with solar)
- Improving indoor air quality and comfort
Upgrade your heating & cooling with a heat pump
Connecting with Top Sacramento HVAC Contractor for Clean Energy
If you are looking for a trusted California company to help you upgrade to all-electric heating and cooling this year, Alpha Mechanical makes HVAC services in Sacramento easy.
Need help with applying for these incentive opportunities for your home HVAC system? We not only can partner with you for the heat pump installation and upgrades, we are able to sit with you to go over the incentive and rebates information. We are there with you from start to finish of each project. We also offer repair and maintenance services for both home and commercial HVAC systems. All our services come at affordable prices.
Need help with applying with incentives opportunities for your home HVAC system, call us today and work with the best furnace replacement services in Sacramento. Our technicians can help you repair your heating system. And if it is time to replace a gas furnace with a heat pump we can be there for you every step of the way.
Final Thoughts
Save big on new heating and cooling systems with California heat pump rebates. By stacking these incentives, you can significantly offset the upfront cost of a heat pump during your HVAC replacement process and enjoy long-term energy savings, while making a positive impact on the environment. The beauty of these heat pump incentives in California is that you can combine the rebates and tax credits:
- Install a heat pump and potentially reduce your energy bills by up to 50%.
- Claim the federal tax credit for 30% of the installation cost, up to $2,000.
- Receive additional rebates from your local utility, like SMUD’s $3,500 offer.
Until 2030, these will be great years to upgrade your heating and cooling for a more appropriate and efficient system for your home, while every incentive and tax credit is just a bonus in doing so. You can schedule consultations with seasoned pros at Alpha Mechanical to determine the best route for installation and replacement in your home. If you want some independent guidance, one of our technicians can help you through the process.
Find out why Alpha Mechanical is PREMIER HVAC company.
