Quick Answer: The federal 25C tax credit for tankless water heaters expired for any unit installed after December 31, 2025, but state and utility rebates fill part of the gap. SoCalGas pays up to $1,300 for a qualifying gas tankless install through the end of 2026 (sliding down to as little as $80 depending on the unit’s UEF rating, per Rinnai’s own published SoCalGas rebate breakdown), and New York’s NYSEG pays up to roughly $1,250 — but most utilities nationwide offer only $50–$250 for an ENERGY STAR-certified unit. One notable exit: Massachusetts’s Mass Save program discontinued rebates for gas, oil, and propane equipment in 2024, so gas tankless units no longer qualify there at all — its current $750 water-heater rebate is for heat pump units only. The fastest way to check what applies to your address is the ENERGY STAR Rebate Finder at energystar.gov/rebate-finder.
The federal credit going away changed the math on a tankless purchase — our cost guide covers what that means for total spend. What it didn’t do is eliminate every incentive. Rebates now live at the state and utility level instead, which means the amount you can claim depends entirely on where you live and which company delivers your gas or electricity. This guide breaks down what’s actually available in 2026, since “check for rebates” isn’t useful advice without knowing which programs are real money and which are marketing copy.
Why the incentive landscape shifted to states and utilities
Through 2025, the federal 25C Energy Efficient Home Improvement Credit paid up to $600 for a qualifying gas tankless unit with a UEF of 0.95 or higher. The One Big Beautiful Bill Act repealed that credit, and it expired for any equipment placed in service after December 31, 2025 — a fact already covered in detail in our cost breakdown. What that guide doesn’t cover is what fills the gap: state energy offices and individual utilities, who were already running their own rebate programs alongside the federal credit and, for the most part, kept doing so after it disappeared.
The programs actually worth checking
| Program | Region | Typical rebate | Notes |
|---|---|---|---|
| SoCalGas | Southern California | $80–$1,300 (UEF-tiered) | Gas tankless; first-come, first-served through Dec 31, 2026; top tier needs 0.98+ UEF |
| NYSEG | New York (upstate) | Up to ~$1,250 | Utility-administered, ENERGY STAR required |
| Mass Save | Massachusetts | $0 for gas — $750 for heat pump only | Discontinued all fossil-fuel equipment rebates in 2024; gas tankless no longer qualifies |
| Pacific NW utilities | Washington & Oregon | $700–$1,100 | Varies by individual utility |
| Most other utilities | Nationwide | $50–$250 | ENERGY STAR certification required; check local provider |
| HEEHRA (IRA) | State-administered | Varies, income-qualified | Built for heat pump water heaters, not gas tankless; CA Phase I already waitlisted |
Rebate amounts and program availability change through the year as funding pools deplete — confirm current status directly with the program before budgeting around it.
The spread here is the whole story: a household in SoCalGas territory buying a top-tier 0.98-UEF unit and a household on a small regional utility are looking at over a $1,000 difference for a comparable install, which is a bigger swing than most of the price gap between competing tankless brands — and it’s worth noting that spread exists within SoCalGas’s own program too, since a 0.98-UEF unit nets $1,300 while a 0.82-UEF unit that just barely clears the high-efficiency bar nets only $80.
Confirm ENERGY STAR certification before you buy
- Not every SKU from a certified brand carries the certification — cross-check the exact model number on the ENERGY STAR product database first.
- Our best tankless water heater roundup notes ENERGY STAR status for each pick.
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HEEHRA: the federal program that mostly doesn’t apply here
The Inflation Reduction Act funded HEEHRA — an income-qualified rebate administered separately by each state — but it’s structured around electrification, so nearly all of the money targets heat pump water heaters rather than gas tankless units. California’s Phase I allocation is already fully reserved, with only a waitlist available; Phase II funding is still under development by the California Energy Commission. If a household is weighing a heat pump water heater specifically because HEEHRA makes the math better, our heat pump vs. tankless water heater comparison covers how the two technologies differ beyond the incentive gap — HEEHRA availability alone shouldn’t decide which one fits a given house. California households specifically should see our California tankless water heater rebate guide for the utility-by-utility breakdown (SoCalGas vs. PG&E vs. SCE) that this section only summarizes.
How to find what applies to your address
- Start with the ENERGY STAR Rebate Finder at energystar.gov/rebate-finder. Enter a zip code and it surfaces active federal, state, and utility programs for that specific location — the single best starting point since availability is hyperlocal.
- Check your gas and electric utility’s own rebate page directly. Some programs, like SoCalGas’s, are large enough to be worth confirming straight from the source rather than trusting a third-party aggregator’s cached listing.
- Ask your installer. Plumbers who install tankless units regularly in a given region usually know which local rebates are live and which have already run out of funding for the year — funding pools like SoCalGas’s are first-come, first-served and can close before the program’s official end date.
- Check for a manufacturer rebate on top. Rinnai, Navien, and Rheem all run their own periodic cash-back promotions directly through their sites, and these are typically stackable with a separate state or utility rebate since the funding sources are independent.
The bottom line
The $600 federal credit is gone for good in 2026, but treating that as “no incentives exist” leaves real money on the table in the right zip codes — up to $1,300 with SoCalGas (UEF-tiered, so the exact model matters as much as the utility), over $1,000 with several Northeast and Pacific Northwest utilities, and at minimum a modest $50–$250 almost everywhere else for an ENERGY STAR-certified unit. One state-level exception worth flagging: Massachusetts’s Mass Save program no longer rebates gas tankless units at all as of 2024, so don’t budget around that $700+ figure if you’re in Mass Save territory and buying gas — its money now goes exclusively to heat pump water heaters. Run your address through the ENERGY STAR Rebate Finder before buying, confirm the exact model’s certification status, and check whether a manufacturer promotion stacks on top. For the full installed-cost picture rebates get subtracted from, see our tankless water heater cost guide, for what the unit actually costs to run every month after that rebate-subsidized install, see our tankless water heater operating cost guide, for current-generation picks that qualify for ENERGY STAR programs, start with our best tankless water heater roundup, and for the retail sale windows that stack with these rebates, see our tankless water heater deals guide. If rebates still don’t close the gap you need, see our rent vs. buy guide for the no-money-down alternative and its real long-term cost.