Federal IRA 25C Energy Efficient Home Improvement Credit
The federal Inflation Reduction Act 25C credit is the foundation of every Bay Area heat pump rebate stack. This is a non-refundable tax credit (not a rebate) claimed on your federal tax return for the year of installation.
Heat pump credit: 30% of project cost up to $2,000. To qualify, the heat pump must meet CEE Tier 2 efficiency thresholds — most variable-speed inverter systems qualify. Single-stage entry tier may not.
Additional credits in the same tax year: $600 for AC (CEE Tier 2), $600 for gas furnace (95% AFUE), $600 for electrical panel upgrade if it enables the heat pump installation, $150 for home energy audit. Annual cap: $3,200 across all energy efficiency improvements.
How to claim: file IRS Form 5695 with your tax return. We provide the equipment specification documentation showing CEE Tier eligibility.
Federal IRA HEEHRA (High-Efficiency Electric Home Rebate Act)
HEEHRA is a separate federal program (not a tax credit, an actual rebate) for income-qualified households. Limits: 80% of Area Median Income (AMI) qualifies for 100% rebate up to caps; 80-150% AMI qualifies for 50% rebate up to caps.
Heat pump space conditioning: up to $8,000
Heat pump water heater: up to $1,750
Electrical panel upgrade: up to $4,000
Insulation, air sealing, ventilation: up to $1,600
Cumulative cap per household: $14,000
Bay Area AMI thresholds (Santa Clara County, 2026): 80% AMI = $112,150 for a 1-person household, $128,150 for 2-person, $144,200 for 3-person, $160,200 for 4-person. 150% AMI: $210,300, $240,300, $270,400, $300,400 respectively.
HEEHRA in California is being administered by the California Energy Commission and partner agencies. Application process opened in late 2024 and continues through 2032 or until funds are exhausted.
TECH Clean California
TECH Clean California is the state's flagship heat pump rebate program, administered by the California Public Utilities Commission. Available statewide and applies to space conditioning heat pumps (separate program for heat pump water heaters).
Standard residential heat pump rebate: $1,000-$3,000 depending on equipment performance and home characteristics. Single-zone ducted systems generally qualify for $1,000-$1,500; whole-home variable-speed systems qualify for $2,000-$3,000.
Equity bonus: additional $500-$1,500 for installations in disadvantaged communities (DACs) or for income-qualified households.
Application process: contractor files application within 90 days of installation completion. Rebate paid by check or direct deposit within 8-12 weeks.
PG&E Rebates
PG&E offers various rebates through different program years and funding cycles. Current 2026 programs:
High-Efficiency Heat Pump Rebate: $500-$1,500 depending on equipment efficiency tier and home characteristics. Stacks with TECH Clean California.
Smart Thermostat Rebate: $50-$120 for qualifying smart thermostats (Nest Learning, Ecobee SmartThermostat Premium, Honeywell T9, etc.).
Whole-Home Performance Plus rebate: variable, requires home energy assessment.
Application: filed by contractor (us) at the time of installation. Rebate appears as bill credit within 8-12 weeks.
BayREN Home+ Program
Bay Area Regional Energy Network (BayREN) operates the Home+ program offering rebates for whole-home efficiency upgrades. Available throughout the 9-county Bay Area.
Heat pump space conditioning: $1,000-$3,000
Heat pump water heater: $750-$2,500
Insulation and air sealing: $250-$1,000
Bonus for combining multiple measures: 25% additional rebate
Cumulative cap: $5,000 per household per year
Application: filed by contractor or homeowner at homeplus.bayren.org.
Community Choice Aggregator (SVCE / PCE) Rebates
Bay Area cities are served by community choice aggregators (CCAs) that purchase electricity on behalf of customers while PG&E delivers it. The two main CCAs in our service area:
Silicon Valley Clean Energy (SVCE): serves most of Santa Clara County including Palo Alto, Mountain View, Sunnyvale, Cupertino, Saratoga, Los Gatos, Campbell, Milpitas, and unincorporated areas. Heat pump rebate: $1,000-$1,500. Heat pump water heater: $1,000. Smart thermostat: $50.
Peninsula Clean Energy (PCE): serves all of San Mateo County including Menlo Park, Atherton, Redwood City, San Carlos, Belmont, San Mateo, Foster City, Burlingame, Half Moon Bay, Pacifica, Daly City, South San Francisco, Hillsborough. Heat pump rebate: $1,500-$2,500. Heat pump water heater: $1,500. Income-qualified bonus: additional $1,500.
Note: San Jose is served by San Jose Clean Energy (SJCE), Santa Clara has its own municipal utility (SVP), and Palo Alto Utilities (CPAU) operates separately. Each has its own rebate programs — we identify the right program based on your address.
Stacking Strategy: Real Examples
Example 1 — Palo Alto homeowner, premium-tier heat pump conversion ($18,000 sticker):
Federal IRA 25C credit: $2,000 (tax credit)
TECH Clean California: $2,500
PG&E rebate: $1,000
SVCE rebate: $1,500
BayREN Home+ if pursuing whole-home: $1,500-$3,000
Net cost after standard stack: $11,000 (39% reduction)
Net cost with BayREN: $8,000-$9,500 (47-56% reduction)
Example 2 — Menlo Park homeowner, similar premium heat pump ($18,000 sticker):
Federal IRA 25C: $2,000
TECH Clean California: $2,500
PG&E rebate: $1,000
PCE rebate: $2,000 (higher than SVCE)
BayREN Home+: $2,000
Net cost: $8,500 (53% reduction)
Example 3 — Income-qualified Sunnyvale homeowner ($18,000 sticker, 80% AMI):
Federal IRA HEEHRA: $8,000
TECH Clean California: $3,000 (with equity bonus)
PG&E rebate: $1,000
SVCE rebate: $1,500
Net cost: $4,500 (75% reduction)
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