The Sacramento Municipal Utility District is increasing rebate levels for residential heat pump installations, aiming to help customers transition to clean, efficient electric heating and cooling technology while offsetting the recent expiration of federal and state incentives.
The enhanced rebates, which took effect this month, offer up to $4,000 for gas-to-electric heat pump water heater conversions and up to $3,000 for gas-to-electric heat pump HVAC system conversions. Customers upgrading from electric to electric systems can receive $1,000 for heat pump water heater and heat pump HVAC improvements.
SMUD officials said the expanded incentives are designed to make energy-efficient upgrades more affordable for Sacramento-area homeowners at a time when federal tax credits expired Dec. 31, 2025, and several state programs have exhausted their funding.
“These rebates demonstrate our commitment to making clean energy affordable and accessible for every Sacramento family,” said Lora Anguay, SMUD’s Chief Zero Carbon Officer. “Heat pumps are a reliable technology that reduce carbon emissions, boost energy efficiency and deliver about $500 a year in real savings. By increasing our rebates, we’re removing cost barriers and helping our community take part in our shared clean energy future.”
Heat pumps provide both heating and cooling and are considered more energy efficient than traditional gas systems. In addition to lowering household carbon emissions, they can improve indoor comfort and reduce long-term energy bills.
The rebate program is a key component of SMUD’s 2030 Zero Carbon Plan, which includes a goal to electrify 154,000 homes by 2030. Through its Advanced Home Solutions program, SMUD reports that more than 23,000 gas-fired space and water heating systems have already been replaced with high-efficiency electric heat pumps.
Utility officials said the timing of the increased rebates is critical, particularly for customers who had been relying on federal and state incentives to offset installation costs.
More information about SMUD’s heat pump rebate programs and application details is available at smud.org/GoElectric.
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