Upgrading your HVAC system today can save you more than energy—it can unlock rebates and tax credits that reduce your out-of-pocket cost. In 2025, several federal and state incentives exist, though some are set to expire or have limited funding. Understanding them helps you make smart decisions and claim every dollar you’re entitled to.
Below is a guide for California homeowners, especially in Northern California, to navigate current HVAC rebates and tax credits in 2025—along with deadlines, eligibility details, and strategies to maximize savings.
HOW THE FEDERAL ENERGY EFFICIENT HOME IMPROVEMENT CREDIT WORKS
Since January 1, 2023, the Energy Efficient Home Improvement Credit allows homeowners to claim 30% of qualified home upgrades—including HVAC systems—installed before December 31, 2025.
The credit covers up to $3,200 per year, split into:
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$1,200 for general energy efficiency improvements (windows, insulation, etc.)
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$2,000 for HVAC systems such as high-efficiency heat pumps or hybrid systems
Eligible HVAC equipment must meet or exceed ENERGY STAR® standards and, starting in 2025, must include a Qualified Manufacturer Identification Number (QMID) on your tax return.
For central air systems to qualify, efficiency must meet SEER2 ≥ 17.0 and EER2 ≥ 12.0. You’ll claim the credit on your annual tax return using IRS Form 5695.
Because this credit expires at the end of 2025, homeowners should plan and install qualifying systems now to ensure eligibility.
STATE AND LOCAL REBATES AVAILABLE IN 2025
California continues to offer regional and statewide HVAC incentives that encourage homeowners to upgrade to cleaner, more efficient systems.
CALIFORNIA HOMES / HEEHRA PROGRAM
The Home Electrification and Appliance Rebates (HEEHRA) program, part of the federal Inflation Reduction Act, provides major rebates for electrification upgrades such as heat pump HVAC systems.
California received $291 million in federal funding to administer these rebates through 2025. However, as of mid-year, Northern California single-family rebates are fully reserved, and new applications are temporarily paused. Future funding rounds may reopen later in 2025.
If your home qualifies, you can receive:
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Up to $8,000 for a new heat pump HVAC system
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Up to $4,000 for panel upgrades or electrical improvements
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Additional rebates for insulation and ventilation improvements
When new funding becomes available, HEEHRA rebates are typically income-based and can be combined with other incentives.
PG&E, BAYREN, AND LOCAL UTILITY REBATES
In addition to state programs, many utility companies offer rebates for high-efficiency HVAC upgrades:
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PG&E Rebates – Incentives for heat pumps, central AC, and smart thermostats
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BayREN Home+ Program – Rebates up to $1,000 for efficiency improvements and electrification projects in the Bay Area
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Southern California Edison – Heat pump incentives of $1,000 or more for qualifying homeowners
Utility and regional programs often have their own funding cycles, so check availability before scheduling an installation.
North HVAC Services can help identify which programs are currently active and assist with the documentation to ensure you receive all eligible rebates. Call (415) 845-6910 to speak with a technician who understands the latest California rebate landscape.
HOW TO STACK REBATES AND TAX CREDITS
Yes—you can combine federal tax credits with California state and local rebates. But timing and documentation matter.
To maximize savings:
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Apply for rebates first. Rebates reduce your total project cost, and you’ll claim the federal credit on the net amount.
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Confirm all equipment meets ENERGY STAR® and SEER2 minimums.
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Request documentation from your installer—including the model number and manufacturer QMID (required for 2025).
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Keep all receipts and installation records for tax filing.
Combining these incentives can often reduce the total cost of a new HVAC system by 25–40%, depending on your home and location.
WHY MANY PROGRAMS ARE EXPIRING OR CHANGING
The 2025 expiration date on several programs is due to the way the Inflation Reduction Act was structured—funding and credit extensions must be renewed by Congress.
Additionally:
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HEEHRA and HOMES program funds are limited per state and region.
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Federal tax credits under Section 25C end December 31, 2025.
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Equipment efficiency standards (SEER2 and EER2) increased in 2023, meaning only newer systems qualify.
The bottom line: waiting until 2026 could mean missing out on thousands of dollars in savings. If you’ve been planning to replace or upgrade your HVAC system, 2025 is the time to act.
HOW TO CLAIM YOUR REBATES AND CREDITS SUCCESSFULLY
Many homeowners miss rebates simply because they skip small details. Follow this process to make sure your paperwork is complete:
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Verify that your HVAC contractor is licensed and enrolled in the rebate program.
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Obtain proof of system efficiency (AHRI certificate) for federal tax credit eligibility.
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File your federal claim using IRS Form 5695 at tax time.
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Submit state or local rebate forms promptly—many programs close once funds are depleted.
Working with a certified contractor like North HVAC Services ensures you meet all documentation and installation standards required by both federal and state programs.
WHY UPGRADING NOW MAKES FINANCIAL SENSE
If your current HVAC system is more than 10–15 years old, it’s not just inefficient—it’s costing you money every month.
Replacing it now allows you to:
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Take advantage of credits and rebates before they expire
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Benefit from lower monthly utility costs
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Improve indoor comfort and air quality
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Increase your home’s resale value
North HVAC Services specializes in high-efficiency HVAC systems, including heat pumps, ductless mini splits, and smart thermostats that qualify for 2025 rebates. Call (415) 845-6910 to schedule your free upgrade consultation before current programs close.
FINAL TAKEAWAY
California homeowners still have access to strong HVAC rebates and tax credits in 2025—but time is running out. Federal incentives expire at the end of this year, and several state rebate programs are already oversubscribed.
By acting now, you can lock in thousands in savings and upgrade to a cleaner, more efficient HVAC system that lowers your monthly energy costs for years to come.
North HVAC Services can handle everything from equipment selection to rebate submission, making sure you don’t leave money on the table. Call (415) 845-6910 today to get started on your energy-efficient HVAC upgrade.
