Free standard shipping on orders over $149.97
The federal tankless water heater tax credit has ended, but utility rebates can still cut the cost. Here’s what changed and where to look.
From 2023 through 2025, homeowners could claim the Energy Efficient Home Improvement Credit (Section 25C) for qualifying water heaters, including high-efficiency gas tankless units that met ENERGY STAR requirements. The credit was 30% of the cost, capped at $600 for a water heater.
The 2025 federal budget law (H.R. 1, often called the One Big Beautiful Bill Act) repealed 25C for property placed in service after December 31, 2025. A tankless water heater installed in 2026 does not qualify for this federal credit.
If you installed a qualifying unit in 2025, you may still claim it on your 2025 return using IRS Form 5695. Keep your invoice and the manufacturer’s qualification statement, and consult a tax professional.
Many gas and electric utilities fund their own efficiency programs. Rebates for tankless water heaters typically:
Examples of programs that have offered tankless water heater rebates include SoCalGas and other California utilities, Mass Save in Massachusetts, and PSE&G in New Jersey. Check your own utility’s website for current offers.
The Inflation Reduction Act funded state-run Home Electrification and Appliance Rebates (HEAR). These programs mainly target heat pump water heaters for income-qualified households, not gas tankless units. If you are open to a heat pump, compare options in tankless vs heat pump water heaters. Program availability varies by state.
Brands such as Rinnai, Navien and Rheem sometimes offer seasonal mail-in rebates or extended warranties through dealers. These are separate from utility programs and can sometimes be combined. We list any active promotions on the product page.
Most rebates require a condensing gas tankless water heater with a high UEF. Read condensing vs non-condensing tankless water heaters and check the UEF on each product page.
This is general information, not tax advice.
Product pages list UEF so you can compare against your utility’s rebate requirements.
No. The 25C credit, which allowed 30% of the cost up to $600 for qualifying gas water heaters including tankless units, was repealed by the 2025 budget law (H.R. 1) for property placed in service after December 31, 2025.
Generally yes, on your 2025 tax return, if the unit met the efficiency requirements and was placed in service by December 31, 2025. Keep your invoice and the manufacturer’s certification, and check with a tax professional.
Manufacturers sometimes run seasonal promotions, but most rebates come from local gas and electric utilities. Check the manufacturer’s website and your utility’s rebate page when you buy.
SoCalGas and other California utilities have offered rebates for qualifying high-efficiency tankless water heaters. Program rules and amounts change, so check the current offer on the utility’s website before you buy.
This guide is general information for U.S. homeowners, not professional advice. Gas, electrical and venting work must follow the manufacturer’s instructions and local codes, and in most areas requires a licensed plumber, electrician or gas fitter and a permit. Specifications and prices change; always confirm details on the product page and in the installation manual.
