How to Maximize Your HVAC Tax Credits & Rebates (2025)

2025 is the best year ever to upgrade your HVAC. Federal credits, state rebates, and utility incentives are stacking up, potentially saving you $8,000-12,000 on your installation.

Here's how to capture every dollar you're eligible for.

Federal Tax Credit (30% Up to $2,000)

What Qualifies

• Heat pumps (air source, ground source)
• Central air conditioning
• Furnace + AC systems
• Ductless mini-splits
• Hot water heat pumps

Claim Process

1. Installation completed in 2025
2. Equipment meets ENERGY STAR standards
3. File IRS Form 5695 with 2025 tax return
4. Claim 30% of cost, capped at $2,000

Example

• Heat pump install: $18,000
• 30% credit: $5,400
• Actual credit: $2,000 (capped)

Gotcha: Not Income-Limited (For Now!)

Unlike many rebates, this credit applies to all income levels. No income limit. Get it while it lasts.

TECH Clean California Rebates ($3,000-8,000)

What Qualifies

• Heat pumps: $3,000-5,000
• Heat pump + water heater: $6,000-7,000
• All-electric upgrades: Maximum rebates

Income Limits (Check Your Eligibility)

• Low-income: 0-60% area median income = MORE rebates
• Moderate-income: 60-100% AMI = standard rebates
• Above 100% AMI: Limited eligibility

2025 Bay Area Income Limits

• Alameda County (60% AMI): ~$55,000
• Santa Clara County (60% AMI): ~$72,000
• San Francisco County (60% AMI): ~$77,000

Check: tech.ca.gov for your county

Application Process

1. Get pre-approved (before work starts)
2. Complete installation
3. Submit inspection photos + receipts
4. Rebate deposited 6-8 weeks later

PG&E Rebates ($500-2,000)

Programs Available

• Energy Savings Assistance: Income-qualified, may be FREE
• Standard rebates: For non-income-qualified customers
• Time-of-use rates: 20-30% savings on energy bills

Mini-Split Heat Pumps

• $500-1,000 rebate

Central Heat Pump

• $800-1,500 rebate

Application

• Installer submits on your behalf
• Rebate applied to energy bill (not direct payment)

California's Cool Choice Rebates ($500-1,500)

What Qualifies

• Heat pump installation
• System replacement
• Efficiency upgrades

Application

• Online application
• Installation completion
• Instant rebate at contractor

Strategic Stacking Example

2,000 sq ft Fremont Heat Pump Install

Equipment + labor: $18,000

Rebates stacked:

• Federal 30% credit: $2,000
• TECH Clean CA (moderate-income): $4,000
• PG&E rebate: $1,000
• Cool Choice: $1,000
• Total rebates: $8,000

Net cost after rebates: $10,000 Effective discount: 44%

Application Timeline

Optimal process:

1. Month 1: Get pre-approved for TECH rebate
2. Month 2: Complete installation
3. Month 3: Submit documentation for rebates
4. Month 4-5: Receive rebate payments
5. April next year: Claim federal tax credit

What Documentation You'll Need

For each rebate:

• ✓ Installation invoice
• ✓ Equipment serial numbers + specs
• ✓ Proof of purchase/receipt
• ✓ Before/after photos
• ✓ Building permit (if required)
• ✓ Contractor license/certification

Pro tip: We handle all paperwork for you

Common Disqualifications

❌ Contractor not certified: Only licensed, certified contractors qualify ❌ Used/salvage equipment: Must be new ❌ Wrong efficiency rating: Below minimum ENERGY STAR ❌ Incomplete paperwork: Missing serial numbers or specs ❌ Late filing: Rebates have deadlines

How we help: Our team ensures you meet every requirement

Tax Filing Tips

For Federal Credit

• Form 5695 (Residential Energy Credits)
• Schedule from energy property placed in service
• Keep installation documentation
• Carry forward unused credit to future years

For State Rebates

• Treated as rebate (usually tax-free)
• Some rebates are utility bill credits (not taxable)
• Consult tax professional if unsure

Future Outlook (2026+)

Federal credit potentially ending:

• Currently set to expire after 2032
• But Congress could extend sooner
• Act now while available

State rebates:

• TECH program funded through 2031
• Budget may adjust

Questions to Ask Your Contractor

1. Are you certified for these rebates?
2. Will you handle rebate paperwork?
3. What rebates apply to my system?
4. When will I receive rebates?
5. Any equipment requirements?

Red Flags with Contractors

🚩 "I'll submit rebate and keep the money" (illegal) 🚩 "Cash discount, forget the rebate" (loses your incentives) 🚩 "Can't guarantee rebate approval" (bad sign) 🚩 "We don't do TECH rebates" (means less savings for you)

Galaxy's Rebate Guarantee

✓ Certified for all major programs ✓ Handle 100% of paperwork ✓ Track rebate status for you ✓ Troubleshoot denials ✓ Maximize available incentives

Bottom Line

With proper planning, your net HVAC cost can be:

• Heat pump install: $18,000
• Minus rebates/credits: -$8,000
• Net cost: $10,000

That's less than many single-stage gas furnaces.

Ready to maximize your rebates?

Get Rebate Pre-Approval | Call (925) 578-3293