SMUD pays $3,000 when a qualifying variable-stage heat pump replaces gas heating, $2,000 for a qualifying two-stage system of at least 15.2 SEER2, and $1,000 when an existing electric system is upgraded to a two- or variable-stage heat pump. Single-stage equipment earns nothing. The money is subject to funding.
Tule Sacramento Heat Pump installs ducted heat pumps in SMUD territory and the rest of the Sacramento region, with the work carried out by licensed and insured contractors. Rebate-qualified installations are available on request. This guide sets out what SMUD requires, step by step, so you can tell early whether a project will qualify.
What SMUD pays, by system
The amount depends on two things: what the heat pump replaces, and how its compressor runs.
| What the heat pump replaces | Compressor | SMUD rebate |
|---|---|---|
| Gas heating (furnace) | Variable-stage | $3,000 |
| Gas heating (furnace) | Two-stage, 15.2 SEER2 or higher | $2,000 |
| An existing electric system (older heat pump or electric resistance heat) | Two-stage or variable-stage | $1,000 |
| Anything | Single-stage | Not eligible |
Why the compressor tier matters
A single-stage compressor runs at full output or not at all. Two-stage units add a low setting, and variable-stage (inverter) units adjust continuously, running slowly for long stretches. SMUD’s tiering rewards equipment that can meet a small load on a mild spring or fall day without constant cycling, and run slowly through its 5 to 8 p.m. summer peak instead of at full power. The variable-speed heat pump page explains how the compressors differ in practice.
Who qualifies
The rebate is tied to the electric account, not the city on the mailing address.
- An active SMUD account on a home individually metered by SMUD.
- SMUD territory. The Energy Commission’s utility maps put Sacramento, Elk Grove, Folsom, Citrus Heights, Rancho Cordova, Galt, Carmichael, Fair Oaks, Arden-Arcade, Orangevale, Antelope, North Highlands and Rio Linda in it. SMUD also serves small adjoining parts of Placer and Yolo counties, so edge parcels are confirmed by the bill.
- Not Roseville or PG&E areas. Roseville Electric customers and PG&E electric customers in West Sacramento, Davis, Rocklin and El Dorado Hills can’t use it. Their options are in the California rebate guide.
The equipment and installation rules
Each of these is a condition of payment, and most of them are also good practice for any change-out.
Equipment
- A two-stage or variable-stage compressor; two-stage systems need at least 15.2 SEER2.
- A Wi-Fi, seven-day programmable connected thermostat.
Ducts
- A passing Title 24 verification, recorded by an ECC-Rater on the CF3R form. For a heat pump change-out that means duct leakage, refrigerant charge and airflow.
- Any new ductwork insulated to at least R-8.
Existing ducts can stay; homeowners ask whether old ductwork blocks the rebate, and SMUD’s terms don’t require new ducts, only a passing test. The ductwork page covers sealing and repair when the test fails.
Permit and installer
- A building permit with its inspections closed.
- Qualifying equipment installed by a participating contractor in the SMUD Contractor Network, who also submits the rebate. Efficiency First California may carry out a field quality-control check on the finished job.
How a rebate-qualified project runs
The order matters, because the claim depends on records created along the way.
- Confirm the account and the fuel. SMUD electric service, and whether the heat pump replaces gas heat or an electric system, which sets the amount.
- Size and select. A load calculation, then a two- or variable-stage system that meets the SEER2 floor, with a connected thermostat.
- Pull the permit. City of Sacramento, Sacramento County, Elk Grove, Folsom, Citrus Heights or Rancho Cordova, depending on the parcel. The permit guide lists each office.
- Install and commission. Refrigerant charge and airflow are set, and any new ducts go in at R-8.
- Verify. The ECC-Rater tests the system and registers the CF3R.
- Close and submit. The inspector signs off, and the contractor submits the rebate.
Go Electric: panels, subpanels and circuits
On top of the heat pump rebate, SMUD’s Go Electric program offers additional rebates for electrical work that supports going electric. Its rules are narrower than the main rebate.
- Gas-to-electric only. The project must replace an existing gas furnace or gas water heater with a qualifying heat pump. A heat pump-for-heat pump replacement does not qualify.
- Circuits and subpanels require that gas-to-electric conversion.
- A panel upgrade of up to 200 amps counts toward the program when the home is made all-electric ready, with the panel plus circuits for future electric appliances.
- Listed circuits include a dryer, a cooktop or range and an EV charger; the heat pump’s own circuit is not on SMUD’s list.
SMUD’s own pages state different caps for the combined Go Electric amount, so the figure for a given project is confirmed with SMUD rather than assumed. The electrical panel guide explains when an upgrade is needed in the first place.
Stacking, income programs and timing
SMUD says its rebates can be combined with statewide and federal incentives. In practice there is little left to combine with: TECH Clean California and the federal HEEHRA rebates are closed, and the federal 25C tax credit ended for equipment placed in service after December 31, 2025.
Income-qualified help
For income-qualified customers, SMUD offers the Energy Assistance Program Rate, a monthly bill discount, and an Energy Saver Bundle with a no-cost in-home energy evaluation. Neither is an equipment rebate, and no income-qualified heat pump bonus was found in SMUD’s programs.
Funding
SMUD pays subject to funding availability and lists no deadline. Terms can change, which is why eligibility is confirmed per project against SMUD’s current page before equipment is ordered.
What the rebate means for a budget
On a typical Sacramento-area conversion of about $15,000 to $24,000 before rebates, the $3,000 variable-stage rebate narrows the price gap between variable-stage and two-stage equipment. The conversion cost guide and the replacement cost guide show where it fits.
To plan a qualifying system, call (916) 516-1454 or request an estimate, or start with the cost estimator, which shows SMUD’s rebate next to the budget range.
