Upgrading an old water heater to a heat pump water heater can provide homeowners with plenty of benefits, like lower utility bills and a decreased carbon footprint. Still, the upfront cost may sometimes cause hesitation. Fortunately, local rebates and federal tax credits are available to incentivize homeowners to move forward with installing a heat pump water heater in their houses.

Since 2007, we’ve installed water heaters across Los Angeles and its surrounding areas and have become very familiar with the different incentives available for local homeowners. Even though some of the details with these rebates and credits may change yearly, we’ve kept up with any updates and helped homeowners take advantage of these deals.

Here are the rebates and tax credits available in California for heat pump water heaters.

  • Golden State Rebates
  • Energy-Efficient Home Improvement Credit

We’ll break down each of these incentives and how to apply for them. After reading this article, you’ll be able to take advantage of the rebates and tax credits available to save money on your initial heat pump water heater investment.

What Rebates Are Available in California for Heat Pump Water Heaters?

The state of California and the federal government are incentivizing homeowners to make more environmentally friendly choices in home appliances and fixtures. The Golden State rebate and federal tax credit are only available when a homeowner installs a heat pump water heater in their home.

Conventional and tankless water heaters rely on gas and electricity to heat water, in contrast to heat pump water heaters, which use less energy to perform the same task.

Heat pump water heaters pull the heat from the surrounding area. It then separates the heat from the warm air and uses it to heat water to a set temperature. If there isn’t enough heat in the surrounding air or a high demand for hot water, the heat pump water heater uses electricity-powered coils to heat water.

The first rebate we’ll highlight is exclusive to residents in California.

Golden State Rebates for Heat Pump Water Heaters

The Golden State Rebates offer homeowners the opportunity to save hundreds of dollars on a heat pump water heater purchase through a retailer. The program has the following two rebates issued as retailer coupons available.

  • $500 rebate: This rebate is only available for homes replacing an electric water heater with a heat pump water heater.
  • $700 rebate: Homeowners seeking to replace their natural gas water heater with a heat pump water heater are eligible for this rebate.

To qualify for either of these rebates, homeowners must replace a 40 or 50-gallon natural gas or electric water heater with a 45 or 55-gallon heat pump water heater. Any other-sized water heater does not qualify.

The replacement heat pump water heater must be 45 to 55 gallons with a minimum Uniform Energy Factor rating of 3.30. UEF ratings are a standard practice set by the U.S. Department of Energy that all water heating manufacturers must adhere to so homeowners can compare energy costs between products.

Homeowners can apply for the Golden State rebate after confirming that they meet the qualifications.

How To Apply for the Golden State Rebates

Homeowners who meet the qualifications required for the Golden State rebate can verify their eligibility further through the Golden State rebate website. The process takes a few minutes and requires the homeowner to make an account. After making the account, there are two lists a homeowner must review.

  • Qualified products list: This document provides homeowners with a list of heat pump water heaters that qualify for the rebate. There are currently four heat pump water heaters on the list. Two of the water heating systems are from A.O. Smith and Rheem.
  • Participating retail store list: This list covers all the retailers (Best Buy, Home Depot, and Lowe’s) that accept the heat pump water heater rebate. The list shows multiple locations within Los Angeles and the surrounding areas.

After selecting a retailer, the website confirms the coupon and sends it via email. The rebate has an expiration date and must be used for a heat pump water heater purchase online or in-store at the chosen retailer.

Energy Efficient Home Improvement Credit for Heat Pump Water Heaters

Homeowners interested in a heat pump water heater can apply for a tax credit through the Energy Efficient Home Improvement Credit. Eligible homeowners can qualify for 30% of the heat pump water heater total cost with a limit of up to $2,000.

Here are the qualifying factors to be eligible for the tax credit.

  • The heat pump water heater must be installed in the main home.
  • The home must be located in the United States.
  • It must be an existing home and not a newly constructed home.
  • Credit is not available for rentals.
  • It only applies to heat pump water heaters with an energy star rating.

Heat pump water heaters installed between January 1. 2023, and December 31, 2032, are eligible for the tax credit, according to the Energy Star program. Homeowners can apply for the credit during tax season.

How to Apply for Heat Pump Water Heater Tax Credit

When it is time to file taxes, homeowners who installed a heat pump water heater can apply for the tax credit via Form 5695: Residential Energy Credits. The homeowner can fill out the form or with the assistance of a professional tax preparer.

To complete the form, the homeowner must have the total heat pump water heater installation costs available. The form is then submitted along with the tax filing and is reviewed by the Internal Revenue Service (IRS).

Is a Heat Pump Water Heater a Good Investment?

We’ve reviewed the California rebate and federal tax credit available for heat pump water heaters and the models that qualify. When installing a heat pump water heater in your home, you can confidently take advantage of the savings available for these products. With the push for greener alternatives, the special rebates and tax credits are an excellent way to entice homeowners to install heat pump water heaters.

For over 15 years, we’ve helped homeowners install and maintain their water heaters and encouraged them to take advantage of the available rebates and tax credits for these products. If you’re looking to upgrade to a heat pump water heater, you can contact us using any of the following buttons below. You can also book an appointment through our water heater online scheduler.

Heat pump water heaters aren’t the only available products with rebates and tax credits. Tankless water heaters are other water heating products with rebates available for homeowners in Los Angeles and the surrounding areas.

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