2025 is one of the best years in history to install a heat pump in Sonoma County. Between the federal Inflation Reduction Act credits, PG&E rebates, and California state programs, eligible homeowners can offset $2,000–$4,000+ of installation costs. Here’s everything you need to know.
Federal Tax Credit: 25C (IRA)
The Energy Efficient Home Improvement Credit (25C) under the Inflation Reduction Act provides a 30% federal tax credit on heat pump installation, up to $2,000 per year. This is a direct credit against your federal tax liability — not a deduction — meaning it reduces what you owe dollar for dollar.
- Covers: air-source heat pumps, ductless mini-splits, heat pump water heaters
- Qualifying requirement: must meet efficiency standards (most modern units do)
- Claimed on: IRS Form 5695 when you file your taxes
- Carries forward: unused credit can carry to future years
PG&E Residential Rebates
PG&E offers rebates for qualifying heat pump installations through their Energy Upgrade California program. Current rebate levels:
| Equipment Type | PG&E Rebate (est.) |
|---|---|
| Air-Source Heat Pump (central) | Up to $800 |
| Ductless Mini-Split System | Up to $1,200 |
| Heat Pump Water Heater | Up to $1,000 |
PG&E rebate amounts change. Check current offers at pge.com or ask us at the time of your estimate.
California TECH Clean Program
The TECH Clean California program provides additional point-of-sale incentives for qualifying heat pump installations in low-to-moderate income households. Ask us if you may qualify.
How to Claim the Federal Credit
- Have the heat pump professionally installed by a licensed HVAC contractor (required)
- Keep your installation invoice and manufacturer’s certification statement
- Complete IRS Form 5695 when filing your federal taxes
- Report the credit amount on Schedule 3, Line 5
We provide all necessary documentation for your tax filing at the time of installation.
Want to Maximize Your Incentives? We walk every customer through available federal, state, and utility incentives before installation.
(707) 584-0714Free EstimateCombined Example: $7,000 Heat Pump Installation
| Item | Amount |
|---|---|
| Heat pump installation cost | $7,000 |
| Federal 25C credit (30%, capped at $2,000) | −$2,000 |
| PG&E rebate (est.) | −$800 |
| Net cost to homeowner | $4,200 |
See also: Heat Pump Installation › | Heat Pump vs. Gas Furnace ›