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 eliminated all residential rebates entirely. 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.
Last verified: March 23, 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. SRP Cool Cash provides up to $1,125 for variable-capacity systems. APS eliminated all residential rebates in 2026. Federal tax credits expired December 31, 2025. HOMES program expected later in 2026.
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). 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 all residential rebates in 2026 and HEAR is income-restricted. If you're above 150% AMI in APS territory, wait for the HOMES program (expected later in 2026), which will serve all income levels with performance-based rebates up to $4,000.
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Section 25C (Energy Efficient Home Improvement Credit) and Section 25D (Residential Clean Energy Credit) were both repealed effective December 31, 2025, under the One Big Beautiful Bill Act.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 March 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 and funded by approximately $153 million in federal IRA allocations, the program launched in early 2025 and runs through September 30, 2031, or until funds are exhausted. As of mid-March 2026, approximately 800 rebates had been issued statewide.
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 | $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. Homes with existing heat pumps cannot receive the heat pump rebate — this is for first-time heat pump installations only.
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 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 March 2026. Multiple sources indicate it will start later in the year. 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.
APS — all residential rebates discontinued
Arizona Public Service discontinued all residential energy efficiency rebate programs effective January 1, 2026, following Arizona Corporation Commission Decision No. 81584. This includes AC/heat pump upgrade rebates, smart thermostat rebates, and the Home Performance with ENERGY STAR program. No replacement has been announced.
⚠ 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 residential rebate program ended January 1, 2026. If you're an APS customer, your options are Efficiency Arizona HEAR (if income-qualified) or waiting for the HOMES program launch.
SRP Cool Cash — active through April 30, 2026
| 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. Both programs require installation by an Arizona-licensed contractor and replacement of an existing system. Applications must be submitted within 6 months of installation, with a limit of 5 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 (set to avoid 3–7 PM peak hours). 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. Flagstaff offers up to $3,000 (primary source installation) or $2,500 (non-primary source) through a sliding income-based scale: 25% of project cost for lowest-income households, 15% for middle-income, and 5% for above-median-income residents — meaning all income levels qualify at some percentage. All heat pumps must be cold climate rated and listed on the NEEP Product List.
⚠ Flagstaff funding is nearly exhausted
As of October 2025, 99% of FY25-26 funding had been distributed. New awards are unlikely until the next fiscal year beginning July 1, 2026. Contact the City of Flagstaff Sustainability office to confirm availability before applying.
How programs stack
Efficiency Arizona HEAR rebates can be combined with utility rebates from SRP, TEP, or UniSource. 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): above 150% AMI in SRP territory, expect $6,375–$10,375 out of pocket. At 80–150% AMI with SRP, expect $1,875–$3,875. Below 80% AMI, out-of-pocket costs could approach $0 if project costs fall within rebate caps. 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 households at or below 200% of federal poverty guidelines. WAP is funded by DOE, LIHEAP, and contributions from APS, SRP, and Southwest Gas. SRP alone contributes up to $9,000 per eligible household through WAP.
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 with a first-time heat pump installation. This group can stack HEAR (up to $8,000) + SRP Cool Cash (up to $1,125) + free WAP weatherization for a potentially zero-cost project. 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
Visit efficiencyarizona.com to determine if your household income falls below 150% AMI. Households above 150% AMI should wait for the HOMES program or proceed with utility rebates only.
Find an Efficiency Arizona–qualified contractor
HEAR requires using a qualified contractor or approved retail pathway. The contractor handles the rebate application on your behalf.
Apply before installation begins
HEAR approval is required before work starts. The rebate appears as a point-of-sale discount on your contractor's invoice.
Submit utility rebate after installation
SRP Cool Cash, TEP, and UniSource rebates are submitted separately after installation is complete. SRP requires applications within 6 months of installation. Confirm your utility's current program before starting.
What to watch
IRA funding runway
Arizona's $153 million HEAR allocation runs through September 2031, but only ~800 rebates have been issued so far. If adoption accelerates — especially as contractors become more familiar with the program — funds could deplete faster than projected.
HOMES program launch
Expected later in 2026. This 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
The current program year expires April 30, 2026. SRP has not yet confirmed renewal terms or rebate levels for the next cycle. If you're an SRP customer planning a heat pump installation, submitting before April 30 locks in the current rates.
APS regulatory proceedings
APS eliminated rebates following ACC Decision 81584. Future rate cases or policy changes could restore some form of residential efficiency program, but nothing has been proposed as of March 2026.
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. SRP offers up to $225 per ton through Cool Cash, while TEP offers up to $720. APS discontinued all residential 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, funded by approximately $153 million in federal IRA allocations. The program operates through qualified contractors statewide and runs through September 30, 2031, or until funds are exhausted. Applications are processed at efficiencyarizona.com.
Why did APS stop offering heat pump rebates?
Arizona Public Service discontinued all residential energy efficiency rebate programs effective January 1, 2026, following Arizona Corporation Commission Decision No. 81584. APS customers in the Phoenix metro area currently have no utility-level heat pump rebate. Income-qualifying APS customers can still access Efficiency Arizona HEAR rebates, and the upcoming HOMES program will serve all income levels.
Sources
- Efficiency Arizona — HEAR Program
- Arizona Governor’s Office of Resiliency — Efficiency Arizona
- SRP — Air Conditioner Rebates (Cool Cash)
- SRP — Heat Pump Water Heater Rebates
- APS — Residential Energy Options (rebates discontinued)
- TEP / UniSource — Efficient Home Program
- 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)