Save Money — Updated April 2026
Tankless Water Heater Rebates & Tax Credits
You could save Up to $2,750+ with combined federal + state + utility rebates by combining federal, state, and utility incentives. Here's everything available in 2026.
Federal
Federal Energy Tax Credit (25C)
30% of cost, up to $2,000
Must meet ENERGY STAR Most Efficient criteria (UEF >= 0.95 for gas)
Through 2032
ENERGY STAR Rebate
Varies by utility — typically $200–$750
ENERGY STAR certified tankless units
State & Utility Rebate Programs
California
Self-Generation Incentive Program
Up to $1,000
New York
NYSERDA Residential Incentive
Up to $700
Massachusetts
Mass Save Rebate
Up to $750
Oregon
Energy Trust of Oregon
Up to $500
Minnesota
CenterPoint Energy Rebate
Up to $400
Colorado
Xcel Energy Rebate
Up to $500
How to Claim the Federal Tax Credit
- Purchase and install a qualifying ENERGY STAR Most Efficient tankless water heater
- Keep all receipts including unit purchase and installation labor
- Obtain the manufacturer's certification statement (usually available on their website)
- File IRS Form 5695 “Residential Energy Credits” with your tax return
- The credit reduces your tax liability dollar-for-dollar (not just a deduction)
Example: Maximum Rebate Scenario
Rinnai RU199iN installed cost$4,500
Federal tax credit (30%)-$1,350
California SGIP rebate-$1,000
Local utility rebate-$300
Your net cost$1,850
Finding Your Local Rebates
The programs listed above are examples — availability changes frequently. To find current rebates in your area:
- Visit the DSIRE database (dsireusa.org) for a comprehensive list of state and local incentives
- Check your utility company's website for current rebate programs
- Ask your installer — experienced plumbers know which local programs are active
- Visit energystar.gov for the latest qualifying product lists
Important Notes
- The federal tax credit is non-refundable — it can reduce your tax to $0 but won't generate a refund. Unused credit cannot be carried forward.
- You can claim the credit in the tax year the installation is completed.
- State rebates and federal credits can usually be combined — they're independent programs.
- The $2,000 limit is per year, so if you install other qualifying equipment (heat pump, insulation), the combined credit is still capped at $2,000 for water heaters specifically.