Arizona Heat Pump Rebates & Incentives (2026)
Arizona's heat pump incentives changed dramatically in 2026. Federal tax credits are gone, but the state's Efficiency Arizona program now offers up to $8,000 per heat pump for income-qualified households. Utility rebates vary widely — SRP's Cool Cash program offers up to $1,125 for a 5-ton variable-capacity system, while APS ended its AC and heat pump rebates entirely. Efficiency Arizona's own rules changed on September 1, 2026: gas-to-electric projects no longer qualify, and a heat pump no longer has to be the home's primary heating and cooling source. This guide covers all major Arizona heat pump incentives available in 2026, including Efficiency Arizona HEAR, SRP Cool Cash, TEP, and the City of Flagstaff program. Here's what's actually available.
Updated and sources last checked September 19, 2026
Rates and program availability may change after this date.
Arizona
Open
Efficiency Arizona HEAR offers up to $8,000 per heat pump for households below 150% AMI. New state guidelines apply to every rebate reservation made on or after September 1, 2026: no gas-to-electric projects, electric-to-electric only (existing heat pumps included), and heat pumps no longer need to be the home's primary heating and cooling source. SRP Cool Cash provides up to $1,125 for variable-capacity systems. APS ended its AC and heat pump rebates January 1, 2026. Federal tax credits expired December 31, 2025. HOMES has not launched; no date announced.
Sources:
Short version
✓ Efficiency Arizona HEAR — up to $8,000 per heat pump
Point-of-sale rebate for households below 150% of Area Median Income (AMI) upgrading from existing electric equipment — since 26-2, gas, propane, and oil replacements no longer qualify, though adding a heat pump alongside a gas furnace still does. Applications are still being accepted — Arizona put this into its own guidelines for reservations made on or after September 1, 2026, and loosened a separate rule at the same time: a heat pump no longer has to be the home's primary heating and cooling source. Covers 100% of costs for below 80% AMI, 50% for 80–150% AMI. Must use a qualified contractor and apply before installation.
✓ SRP Cool Cash — up to $225 per ton
Salt River Project offers $75–$225 per ton depending on compressor type. A 5-ton variable-capacity heat pump yields $1,125. Plus $500 for a heat pump water heater. Available to all SRP customers.
✓ Total potential: $1,625 (above 150% AMI) to $11,375+ (below 80% AMI)
$1,625 (above 150% AMI, SRP territory) to $11,375+ (below 80% AMI). Full electrification packages through HEAR can reach ~$14,000 total incentives including electrical panel and wiring upgrades.
✗ Federal tax credits expired
Section 25C and Section 25D both ended December 31, 2025. No federal tax credit is available for any heat pump — air-source or geothermal — installed in 2026.
⚠ Above 150% AMI + APS territory = no rebates currently available
APS discontinued its AC and heat pump rebates in 2026 and HEAR is income-restricted. If you're above 150% AMI in APS territory, your only path is the HOMES program, which will serve all income levels with performance-based rebates up to $4,000 — but it has not launched and no launch date has been announced. (One exception: Flagstaff residents qualify for the city's rebate program at every income level.)
Federal tax credits are gone
Section 25C (Energy Efficient Home Improvement Credit) and Section 25D (Residential Clean Energy Credit) were both repealed effective December 31, 2025, under the One Big Beautiful Bill Act. These credits were originally scheduled to run through 2032–2034 under the Inflation Reduction Act but were terminated roughly seven years early. There is no "placed in service" exception — a heat pump purchased in 2025 but installed in 2026 does not qualify. No replacement legislation has been introduced as of June 2026.
The only surviving clean energy tax credits apply to commercial and third-party-owned systems under the Section 48E Investment Tax Credit — not to homeowner-purchased equipment. For more details, see our complete guide to federal heat pump tax credit changes.
Efficiency Arizona HEAR program
Arizona's Home Electrification and Appliance Rebates (HEAR) program — branded Efficiency Arizona — is the largest heat pump incentive currently operating in the state. Administered by the Arizona Governor's Office of Resiliency, it is funded from Arizona's roughly $153 million federal Home Energy Rebates allocation — about half of which funds HEAR, with the rest reserved for the HOMES program. The program launched in late 2024. The federal deadline for spending the funds is September 30, 2031, but the Governor's Office says funding is anticipated to be available through 2029. As of June 30, 2026, the program had issued 1,415 rebates statewide, investing $4,754,936 and saving an estimated 532,928 kWh, with more than 75% going to low-income households.
⚠ New guidelines apply from September 1, 2026 — and they key on your reservation, not your application
The Governor's Office of Resiliency announced revised Efficiency Arizona guidelines on July 21, 2026. The program is still open and still taking applications — what changed is the rules, not availability. Efficiency Arizona's own banner puts it as applications still being accepted, but they must meet the new program guidelines. Every rebate reservation made on or after September 1, 2026 falls under the new rules. Two earlier dates closed out the old ones: August 1 was the last day to apply under the previous guidelines for a gas-to-electric project, and August 28 was the final day to secure a reservation — which required an approved application, a completed home assessment where one was required, and an approved contractor scope of work. Installation, redemption and payment can still happen after August for reservations secured by that date. The distinction is the part that catches people: applying in July was not enough. If you applied but never reached an approved reservation by August 28, your project is under the new guidelines.
What the new guidelines change — and what they do not
- No more fuel switching. No rebates for replacing gas appliances with electric ones, matching DOE Program Notice 26-2.
- Electric-to-electric only. Rebates apply when replacing existing electric appliances — and existing heat pumps count.
- Expanded heat pump flexibility. A heat pump no longer has to serve as the home's primary heating and cooling source. This is the one change that widens eligibility rather than narrowing it.
- Weatherization standards. Insulation and air sealing standards may now be required alongside a heat pump project.
- A gas furnace does not disqualify you. The program will still rebate a heat pump added alongside a fossil-fuel appliance — what it will not do is pay to replace or remove the gas heat source. This is the practical payoff of the flexibility change above, and it is the case most Arizona households with gas heat get wrong.
Unchanged: the qualified product list and the maximum rebate amounts below; replacing standard electric HVAC, electric water heaters or electric dryers with heat pump alternatives; wiring and panel upgrades, which still have to pair with an eligible appliance rebate; and retail purchase options. The program runs through 2031, pending funding.
HEAR rebate amounts
| Measure | Maximum rebate |
|---|---|
| Heat pump (space heating/cooling), ENERGY STAR certified | $8,000 |
| Heat pump water heater, ENERGY STAR certified | $1,750 |
| Electrical panel/breaker box (only with qualified appliance) | $4,000 |
| Electric wiring (only with qualified appliance) | $2,500 |
| Insulation, air sealing, ventilation | $1,600 |
| Heat pump clothes dryer, ENERGY STAR certified | $840 |
| Electric cooking appliance, ENERGY STAR certified | $840 |
| Total per household | $14,000 |
Income eligibility
| Household income | Coverage |
|---|---|
| Below 80% of Area Median Income (AMI) | 100% of project costs (up to per-item caps) |
| 80–150% AMI | 50% of project costs (up to per-item caps) |
| Above 150% AMI | Not eligible for HEAR |
HEAR operates as a point-of-sale rebate — the discount appears directly on the contractor's invoice, not as a post-purchase reimbursement. Projects must be approved before installation begins; completed or in-progress projects are not eligible. Under DOE Program Notice 26-2, effective May 29, 2026, the heat pump rebate applies when upgrading from existing electric equipment — an electric furnace, boiler, baseboard units, an existing AC, or an older heat pump — to more efficient electric equipment, and new construction remains eligible. Replacing a gas, propane, or oil system no longer qualifies for HEAR. Arizona wrote this into its own guidelines for reservations made on or after September 1, 2026, and the program's own FAQ confirms that replacing an existing heat pump with a more efficient one qualifies.
Rebates reach you through two pathways, and which one applies depends on the measure. The contractor pathway runs through a Qualified Contractor, who applies the rebate directly to your invoice. The retail pathway lets you buy at a participating retailer using an approved coupon, and it covers only heat pump water heaters, heat pump clothes dryers, and electric cooking appliances. Heat pumps themselves are contractor-only — there is no retail route for a space-heating heat pump, so a Qualified Contractor is required for the $8,000 rebate. Electrical panel and wiring rebates are not standalone either: both are eligible only alongside a qualifying appliance installation. One more scope limit: the program currently serves homeowners who live in their own home. Renters and multifamily owners are named for future phases, not this one.
The 150% AMI cliff is the defining feature of Arizona's incentive landscape
Because federal credits are gone and APS dropped its rebates, households above 150% AMI in APS territory — outside Flagstaff — currently have access to zero heat pump incentives. The upcoming HOMES program will partially address this gap by offering performance-based rebates up to $4,000 at all income levels.
HOMES program — pending launch
Arizona's Home Efficiency Rebates (HOMES) program has not yet launched as of September 2026, and no launch date has been announced — the Governor's Office of Resiliency's most recent timeline statement (May 2026) covers only HEAR's expansion to multifamily units "in the coming months." Unlike HEAR, HOMES uses a whole-home performance approach and will be available to all income levels — making it the first Arizona incentive available to above-150% AMI households since federal credits expired.
| Household income | Expected maximum (modeled pathway) |
|---|---|
| Below 80% AMI | Up to $8,000 |
| 80–150% AMI | Up to $4,000 |
| Above 150% AMI | Up to $4,000 |
HOMES requires modeled energy savings of 20% or greater (modeled pathway) or measured savings of 15% or greater (measured pathway). HEAR and HOMES can be combined for different measures in the same home but cannot both apply to the same individual measure.
Utility rebates by service territory
Utility rebate availability in Arizona varies dramatically by service territory. SRP customers retain meaningful rebates while APS customers have none on the equipment itself.
APS — AC and heat pump rebates discontinued
Arizona Public Service discontinued its AC rebate, its smart thermostat rebate and its Home Performance with ENERGY STAR Checkup rebates effective January 1, 2026, following Arizona Corporation Commission Decision No. 81584. No replacement equipment rebate has been announced. APS still lists some smaller offers on its rebates page — duct sealing, insulation, a water heater timer, and Cool Rewards thermostat bill credits — so it is worth checking aps.com/rebates for anything outside the heat pump itself.
⚠ Common mistake: assuming APS still offers heat pump rebates
Many contractors and third-party sites still list APS rebates that no longer exist. The APS equipment rebate on a new AC or heat pump ended January 1, 2026. If you're an APS customer, your options are Efficiency Arizona HEAR (if income-qualified), the City of Flagstaff rebate (if you live in Flagstaff), or waiting for the HOMES program launch.
SRP Cool Cash — active through April 30, 2027
| Compressor type | Minimum SEER2 | Rebate per ton | 5-ton system |
|---|---|---|---|
| Single-stage | 15.2 | $75 | $375 |
| Multi-stage | 15.2 | $150 | $750 |
| Variable-capacity | 15.2 | $225 | $1,125 |
| Inverter-driven mini-split | 15.2 | $225 | — |
SRP also offers a $500 rebate for heat pump water heaters with a UEF of 2.8 or better, limited to one HPWH rebate per customer every 10 years. Both programs require installation by an Arizona-licensed contractor. Cool Cash systems must replace or supplement an existing central heat pump or central AC — on split systems, both the air handler and the condensing unit must be replaced — and single-stage systems require Manual J load calculations with the application. Applications must be submitted within 6 months of installation, with a limit of 5 cooling-system rebates per customer. There are no income-qualified tiers — Cool Cash is available to all SRP customers.
TEP — Efficient Home Program
Tucson Electric Power offers up to $720 for a high-efficiency heat pump installation and $400 for a heat pump water heater equipped with a wireless programmable timer, which you must agree to program so the unit does not run from 4–7 PM. Mini-split heat pumps qualify for up to $100 per ton. The program uses instant rebates through participating Trade Ally contractors.
UniSource Energy Services
UniSource operates a parallel Efficient Home Program with lower rebate levels: up to $450 for a heat pump. UniSource serves parts of northern and southern Arizona including portions of Santa Cruz and Mohave counties.
Southwest Gas
As a natural gas utility, Southwest Gas offers no heat pump or electrification rebates. Its rebate program exclusively promotes gas appliance efficiency.
City of Flagstaff — Home Weatherization and Energy Rebate Program
No Arizona city or county other than Flagstaff offers direct financial rebates for heat pump installations. For the FY26–27 cycle (work completed July 1, 2026 through June 30, 2027), Flagstaff offers up to $2,000 for a primary-source heat pump or $1,500 for a non-primary-source installation — down from $3,000/$2,500 in the prior cycle — through a sliding income-based scale: 25% of project cost for the lowest income tier, 15% for the middle tier, and 5% for the highest, meaning all income levels qualify at some percentage. Both homeowners and renters (with landlord authorization) are eligible, limited to one heat pump rebate per household. Heat pumps must be cold climate rated and listed on the NEEP Product List; air-to-water heat pumps on the city's qualified product list are also eligible. Primary-source rebates additionally require a BPI energy audit showing the home meets minimum weatherization standards (air sealing, attic and crawl space insulation, duct sealing).
⚠ Flagstaff is nearly out of money for this cycle
The FY25–26 cycle exhausted 100% of its funding by March 25, 2026 — months before the fiscal year ended. The FY26–27 cycle opened July 1, 2026 and is going the same way: the city's funding tracker showed $10,186.73 remaining as of September 15, 2026, down from $41,670 in mid-July. Funds are awarded first-come, first-served. Check the tracker on the city's program page before you count on this rebate.
How programs stack
Efficiency Arizona HEAR rebates can be combined with utility rebates from SRP, TEP, or UniSource — the program explicitly allows "stacking," with the condition that total rebates and discounts may not exceed the total project cost. HEAR and HOMES cannot stack on the same measure but can apply to different measures in the same home. Federal credits are no longer available.
Above 150% AMI — heat pump + HPWH (SRP territory)
- Efficiency Arizona HEAR: $0 (not eligible)
- SRP Cool Cash (5-ton variable): $1,125
- SRP HPWH rebate: $500
Realistic maximum: ~$1,625
80–150% AMI — heat pump + HPWH (SRP territory)
- Efficiency Arizona HEAR (50% of $10,000 install): $5,000
- HEAR HPWH (50% of $3,000 install): $1,500
- SRP Cool Cash (5-ton variable): $1,125
- SRP HPWH rebate: $500
Realistic maximum: ~$8,125
Below 80% AMI — heat pump + HPWH (SRP territory)
- Efficiency Arizona HEAR (100% of costs): up to $8,000
- HEAR HPWH (100% of costs): up to $1,750
- SRP Cool Cash (5-ton variable): $1,125
- SRP HPWH rebate: $500
Realistic maximum: ~$11,375
What you'll actually pay
For a typical ducted heat pump installation ($8,000–$12,000 before incentives), with HEAR figures assuming an upgrade from existing electric equipment: above 150% AMI in SRP territory, expect $6,875–$10,875 out of pocket after SRP Cool Cash. At 80–150% AMI with SRP, expect $2,875–$4,875 after HEAR covers half the project cost and Cool Cash is applied. Below 80% AMI, out-of-pocket costs can approach $0 when project costs fall within the rebate caps — though the program's own published figures show an average qualified heat pump project costing $13,263, leaving roughly $5,263 out of pocket after the $8,000 cap — that figure works from the program's own average project cost rather than the range above, and before any utility rebate. In APS territory, above 150% AMI, expect to pay full price until HOMES launches.
Arizona has no state tax credit for heat pumps and no state-level loan program specifically for heat pumps. SHILA (Sustainable Home Improvement Loans of Arizona) offers flexible-term home improvement loans at shilaaz.org.
Weatherization Assistance Program
The Arizona Weatherization Assistance Program (WAP), administered by the Arizona Department of Housing, provides free weatherization services — including potential HVAC replacement — to income-eligible households. The Department of Housing publishes the current income limits; homeowners and renters with landlord permission both qualify, and applications are taken by ten regional sub-grantee agencies rather than by the state. WAP is funded by DOE, LIHEAP, and contributions from APS, SRP, and Southwest Gas.
Governor Hobbs announced a $5 million POWER AZ investment on March 10, 2026, to expand energy-saving upgrades for income-eligible households. However, federal funding faces uncertainty — the FY2026 presidential budget proposed eliminating WAP and LIHEAP entirely.
✓ Best candidates for Arizona heat pump incentives in 2026
Households below 80% AMI in SRP territory replacing an existing AC or electric resistance system with a heat pump — an electric-to-electric upgrade, which is what HEAR now covers. This group can stack HEAR (up to $8,000) + SRP Cool Cash (up to $1,125) + free WAP weatherization for the lowest possible out-of-pocket cost — in the best cases approaching zero, though the program's published averages show most below-80% AMI heat pump projects still involve several thousand dollars out of pocket. Homeowners replacing electric resistance heat gain the largest efficiency improvement — roughly 2–3× the heating output per kilowatt-hour consumed.
Arizona climate context
Arizona is overwhelmingly cooling-dominant in its populated areas. The primary motivation for heat pump adoption here is replacing aging AC systems with equipment that provides both more efficient cooling and efficient heating from a single system. About 60% of Arizona homes heat with electricity — many using inefficient electric resistance systems — and 33% use natural gas.
| City | Heating design temp (99.6%) | Cooling design temp (0.4%) | Climate zone |
|---|---|---|---|
| Phoenix | 38.6°F | 110.2°F | 2B (Hot-Dry) |
| Tucson | 31.7°F | 105.9°F | 2B (Hot-Dry) |
| Prescott | 17.5°F | 94.3°F | 4B (Mixed-Dry) |
| Flagstaff | 3.9°F | 85.5°F | 5B (Cold-Dry) |
In Phoenix and Tucson, EER2 matters more than SEER2 because EER2 measures efficiency at 95°F — closer to sustained operating conditions where outdoor temperatures exceed 100°F for months. Standard heat pumps perform excellently year-round in southern Arizona. For northern Arizona, cold-climate rated heat pumps (maintaining COP ≥1.75 at 5°F) are essential — Flagstaff's design temperature of 3.9°F is comparable to Minneapolis.
For homeowners considering pairing solar with a heat pump installation, see our guide to home batteries — Arizona's high solar resource makes battery storage particularly relevant for managing time-of-use electricity rates.
How to apply
Check income eligibility for Efficiency Arizona HEAR
Use the Eligibility Screening Tool at efficiencyarizona.com to see if your household income falls at or below 150% AMI — or qualifies categorically through enrollment in programs like LIHEAP, SNAP, AHCCCS, WIC, or SSI. Households above 150% AMI should wait for the HOMES program or proceed with utility rebates only.
Submit your application at efficiencyarizona.com
Homeowners apply directly — the application takes about 10–15 minutes with income documentation ready. Approval is required before any work begins; completed or in-progress projects are not eligible. Note that the program tracks your reservation, not your application: a reservation needs an approved application, a home assessment where one is required, and an approved contractor scope of work, and it is the reservation date that determines which guidelines apply to you.
Work with your assigned Qualified Contractor
After approval, a Qualified Contractor is assigned to your project — or you can select your preferred contractor from the network list. The rebate is applied to the contractor's invoice and deducted from the project cost. An approved retail coupon pathway is available only for heat pump water heaters, heat pump clothes dryers, and electric cooking appliances — a space-heating heat pump has to go through a Qualified Contractor.
Claim your utility rebate
SRP Cool Cash is submitted after installation — within 6 months, with a limit of 5 cooling-system rebates per customer. TEP and UniSource rebates are instant: the participating contractor deducts the rebate from your final project cost. Confirm your utility's current program before starting.
What to watch
IRA funding runway
The Governor's Office of Resiliency says HEAR funding is anticipated to be available through 2029 — well before the September 30, 2031 federal spending deadline. HEAR draws on roughly half of Arizona's $153 million Home Energy Rebates allocation, and 1,415 rebates worth $4,754,936 had been issued as of June 30, 2026. If adoption accelerates — especially as contractors become more familiar with the program — funds could deplete faster than projected.
HOMES program launch
Not yet launched, and no launch date has been announced — the Governor's Office of Resiliency's most recent timeline statement (May 2026) covers only HEAR's expansion to multifamily units "in the coming months." HOMES will be the first incentive available to above-150% AMI households since federal credits expired. Watch efficiencyarizona.com for launch announcements.
SRP Cool Cash renewal
SRP renewed Cool Cash for the new program year at the same rebate levels ($75/$150/$225 per ton, up to $1,125), with qualifying installs now accepted through April 30, 2027. SRP can change or cancel the program at any time, so confirm current terms before scheduling.
APS regulatory proceedings
APS discontinued its AC rebate, its smart thermostat rebate and its Home Performance with ENERGY STAR Checkup rebates following ACC Decision 81584, and its rebates page still carries that notice. Future rate cases or policy changes could restore an equipment rebate; none had been as of September 2026. The same page continues to list several smaller offers, so the picture there is worth a periodic look.
Frequently asked questions
What heat pump rebates are available in Arizona in 2026?
Arizona heat pump rebates in 2026 come from two main sources: the Efficiency Arizona HEAR program (up to $8,000 per heat pump for households below 150% AMI) and utility rebates. Efficiency Arizona moved to new program guidelines on September 1, 2026: gas-to-electric projects no longer qualify, replacing an existing electric system or an existing heat pump does, and a heat pump no longer has to be the home's primary heating and cooling source. The cutoff keys on when a rebate reservation was secured, not when you applied. SRP offers up to $225 per ton through Cool Cash, while TEP offers up to $720. APS discontinued its AC and heat pump equipment rebates effective January 1, 2026. Federal tax credits under Sections 25C and 25D expired December 31, 2025.
Can I stack Efficiency Arizona HEAR rebates with utility rebates?
Yes. Efficiency Arizona HEAR rebates can be combined with utility rebates from SRP, TEP, or UniSource. However, HEAR and the upcoming HOMES program cannot both apply to the same individual measure. A low-income household in SRP territory could receive up to $11,375 by combining HEAR with SRP Cool Cash for a heat pump and heat pump water heater.
Do heat pumps make sense in Arizona's hot climate?
Yes. Heat pumps use the same vapor-compression cycle as traditional air conditioners for cooling, so they cool just as effectively. The advantage is they also provide efficient heating in winter — important because Phoenix design temperatures drop to 38°F and Tucson to 31°F. For northern Arizona cities like Flagstaff (design temp 3.9°F), cold-climate rated heat pumps are essential. About 60% of Arizona homes already heat with electricity, making heat pumps a direct efficiency upgrade.
Who administers Arizona's HEAR program?
The Efficiency Arizona HEAR program is administered by the Arizona Governor's Office of Resiliency and funded from Arizona's roughly $153 million federal Home Energy Rebates allocation — about half of which funds HEAR, with the rest reserved for the HOMES program. It operates through qualified contractors and participating retailers statewide. The federal deadline for spending the funds is September 30, 2031, but the Governor's Office of Resiliency says funding is anticipated to be available through 2029. Applications are processed at efficiencyarizona.com.
Why did APS stop offering heat pump rebates?
Arizona Public Service discontinued its AC rebate, its smart thermostat rebate and its Home Performance with ENERGY STAR Checkup rebates effective January 1, 2026, following Arizona Corporation Commission Decision No. 81584. APS customers in the Phoenix metro area currently have no utility rebate on a new heat pump itself. Income-qualifying APS customers can still access Efficiency Arizona HEAR rebates, and the upcoming HOMES program will serve all income levels.
Sources
- Efficiency Arizona — Program Guideline Changes (July 21, 2026)
- Efficiency Arizona — Frequently Asked Questions
- Efficiency Arizona — HEAR Program
- Arizona Governor’s Office of Resiliency — Efficiency Arizona
- SRP — Air Conditioner Rebates (Cool Cash)
- SRP — Heat Pump Water Heater Rebates
- TEP — Efficient Home Program
- UniSource — Efficient Home Program
- APS — Rebates (AC and heat pump rebates discontinued)
- City of Flagstaff — Home Weatherization and Energy Rebate Program
- Arizona Department of Housing — Weatherization Assistance Program
- IRS — 25C/25D Termination FAQ
Disclaimer: This page covers the main statewide, utility, and IRA heat pump incentives available to Arizona homeowners in 2026. It does not calculate savings, guarantee eligibility, or represent any incentive program. Utility rebates vary by service territory — APS, SRP, TEP, and UniSource each operate independently. We verify status regularly but programs can change without notice. Always confirm current amounts and eligibility with Efficiency Arizona, your utility, and your contractor before making decisions.
See how this state compares → Heat Pump Rebates by State (2026)