California heat pump incentives: 2024 guide

Heat pumps—the energy-efficient, all-electric, extra-comfortable home heating and cooling technology—are a great fit for the mostly warm, not-so-humid climate in most of California. As of 2024, most homeowners in Cali are eligible for a few thousand dollars in incentives towards the cost of a heat pump.

We’ve covered all the incentives for clean heating and cooling upgrades from the Inflation Reduction Act of 2022 in detail here. The quick version:

• Any household can claim a $2,000 federal tax credit (or 30% of the price, whichever is less) against the cost to install an air-source heat pump that meets modest efficiency requirements. Since it’s a tax credit, rather than a direct rebate, you’re only eligible for as much free money as you’re on the hook to pay the IRS per year. You can claim the rebate with tax form 5695, the same one you'd use for solar panels.

• Larger, income-dependent rebates of up to $8,000 are not currently available, but might kick in sometime during 2024, according to the California Energy Commission. If you’re counting on those rebates, you should wait until the programs are actually in place for two important reasons. First, they’re highly unlikely to apply retroactively to a system that you’ve already installed. Second, relatively few households will be able to claim the rebate, even those who are eligible based on income.

The TECH Clean California program offers a statewide incentive for homeowners in single family or small multi-family buildings who switch from traditional heating over to a heat pump.

Qualified systems installed by qualified contractors are eligible for a $1,000 rebate. If your home needs more than one heat pump (possible in larger homes), you can claim this rebate twice, for up to $2,000 per project. The paperwork for the rebate will flow through your contractor.

According to the DSIRE database, about 20 utility companies around the state have rebate programs for residential customers who install heat pumps. The savings can range from $100 up to $3,000, depending on the utility company, and sometimes the size of the system. (Notably, PG&E does not offer residential heat pump rebates as of January 2024.)

The easiest way to figure out what’s available in your area is the incentive finder tool at The Switch Is On (a partner site of the California Public Utilities Commission). Follow your utility company's instructions to claim the rebates.

When you sign up for the EnergySage Heat Pump Marketplace, you’ll get an instant estimate of how much it might cost to install a heat pump in your home, based on real-world quotes for similar homes from vetted installers. You can schedule consultations with seasoned pros. If you want some independent guidance, one of our Energy Advisors can help you through the process. We’re already the country’s largest marketplace for solar energy, and now we’ve brought that clean-energy experience to heat pump shopping. Learn more here.