You may only need to upgrade your home heating and cooling systems a few times in your lifetime, but with the right timing, you can save money, increase your home’s comfort, and lower your home’s carbon footprint—all at the same time!
If you’re planning to make HVAC upgrades in 2025, a heat pump is the best option. Heat pumps provide energy efficient, carbon-free heating and cooling, so you get two upgrades for the price of one. They’re a crucial home electrification upgrade and, right now, they’re eligible for a $2,000 federal tax credit.
Keep reading to find out why heat pumps are worth the investment in 2025.
Heat Pumps are Ideal for California’s Climate
Heat pumps don’t just work well in California—they thrive.
Most of California has a moderate climate, which is ideal for heat pumps. That’s because heat pumps work by moving heat from one place to another, rather than creating heat by burning fuel the way combustion appliances like furnaces do. In the summer, a heat pump will transfer heat out of your home to keep it cool; and, during the winter, it will transfer heat into your home to increase the temperature.
The more moderate the temperature outside, the easier it is for a heat pump to collect and transfer heat. Although cold climate heat pump technology has made significant advancements, heat pump efficiency drops when it gets too cold outside. Since most of California experiences relatively mild winters, heat pumps work extraordinarily well here for both space and water heating.
Heat Pumps Have Many Benefits for California Homes
Heat pumps have many benefits that make them the best type of heating and cooling system for California homes.
- Energy Efficiency: Heat pumps are one of the most energy efficient options for home heating, especially when compared to baseboard electric heat, heating oil, or propane.
- Heating and cooling: Heat pumps are not just for heating! They also provide energy efficient air conditioning. This dual functionality makes them a great option for California, where reliable heating and cooling are needed to stay comfortable throughout the year.
- Flexible options: There are many types of heat pump HVAC systems available, including ducted heat pump systems and ductless mini split heat pump systems.
- Environmental regulations: California has ambitious carbon reduction goals and will ban the sale of new gas furnaces and water heaters in 2030. Upgrading to a heat pump now will prepare you for the clean energy future California is moving toward.
- Heat pump incentives: Heat pumps qualify for tax credits and incentives, reducing installation costs and making them a more cost-effective option.
Heat Pumps are Eligible for Incentives in 2025
Heat pump rebates and tax credits are a big reason why heat pumps are worth it in California. There are several incentives for heat pump installation in California in 2025. Here are some of the best.
Heat Pump Tax Credit — $2,000
The heat pump tax credit is a federal incentive that reduces your income tax liability by 30% of your heat pump installation costs, up to $2,000 per year. It significantly reduces your heat pump costs, making it more affordable to upgrade. Plus, you can claim it more than once. If you install a heat pump HVAC system this year, you can claim your $2,000 credit when you file your 2025 taxes. Then, install a heat pump water heater next year and claim another $2,000 credit in 2026.
TECH Clean California Heat Pump Rebates
TECH Clean California is currently offering a heat pump HVAC system incentive to single-family households that enroll in an electric utility demand response program.
California HEERA Rebates
Income-qualified households in California are eligible for up to $8,000 in rebates to install zero-emission appliances, including heat pumps. Single-family household incomes between 80% and 150% of the area median income are eligible for rebates of up to $4,000. Single-family households with incomes less than 80% of the area median income are eligible for rebates of up to $8,000.
California Utility Heat Pump Incentives
Many utility companies offer savings when upgrading to energy efficient equipment like heat pumps. Incentives range from hundreds of dollars to thousands for heat pump installation. The Los Angeles Department of Water & Power offers an incentive of $300 per ton for heat pump HVAC systems, SMUD offers up to $3,000 for heat pump HVAC replacement, and Roseville Electric offers a $1,000 rebate when switching from gas heating to an electric heat pump.
Find A Heat Pump Installer Near You in California With The Clean Energy Connection
If you’re looking for a trusted California heat pump company to help you upgrade to a heat pump heating and cooling system this year, the Clean Energy Connection makes it easy.
Contractors in our directory have passed a thorough vetting process, including license verification and reference checks, and we perform ongoing customer satisfaction surveys. You can filter by location, services offered, and incentives to find the right fit. Comparing all of the different companies and available incentives in California can be difficult on your own–if not downright overwhelming. So, if you’re looking for a trusted installer for a heat pump HVAC system, turn to the Clean Energy Connection to simplify the process.