2026 Arizona Heat Pump Water Heater Incentives: Efficiency Arizona & Utility Stacking Guide
Benefits of an ENERGY STAR® certified heat pump water heater
Heat Pump water heaters are ~70% more efficient that standard electric water heaters and save the average households in Arizona $424* every year on their electric bills. A Heat Pump water heater is the only water heater that quickly pays for itself (payback) with the energy savings.Â
Heat Pump water heaters pull heat from the surrounding ambient air and pass it on to the water. They operate like your refrigerator, just in inverse. They help cool the garage. It is much more efficient to transfer heat than to create heat.
Heat pump water heaters get installed exactly like a standard electric water heater. The only difference is the need for a condensate drain nearby (or use a condensate pump to a sink) and a minimum of ~700 cubic feet (i.e 10′ x 10′ x 7′) around the water heater (consult the specific manufacturers’ Use & Care manual, louvered doors and air ducting options exist for smaller enclosures).
To operate properly Heat Pump water heaters cannot reside on a recirculation system that runs continuously. Install a timer or a motion sensor.
*Based on DOE test procedure and Energy Guide comparison of 50-gallon nominal capacity pre-2015 standard electric (3,609 kWh) and ACiQ 50-gallon heat pump water heater (866 kWh) using DOE EF to UEF conversion rates. Annual energy savings of 2,743 kWh/year and average AZ residential electricity cost of 15.46 cts/kWh. Savings may vary. Source accessed March 2026: https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_5_6_a
âš¡ March 2026 Compliance Update:
The Federal 25C tax credit expired on 12/31/2025. This page covers the active 2026 HEAR Rebates and local utility stacking rebate options currently available to homeowners in Arizona.
Home Electrification and Appliance Rebates [HEAR]
The Home Electrification and Appliance Rebate [HEAR] Program is a State initiative funded Federally in 2022 that gives low-to-moderate-income households an instant discount of up to $14,000 to switch to high-efficiency electric appliances. Unlike a tax credit that you wait months for, this rebate is applied at the time of purchase, essentially acting like a high-value coupon.
1. High-Value Instant Savings in Arizona
You don’t get a check in the mail; you get a lower price on the invoice.
Heat Pump Water Heaters: Up to $1,750 off.
Heat Pump Heating/Cooling: Up to $8,000 off.
Electrical Panels/Wiring: Up to $4,000 off (if needed for new appliances). and more…
2. Eligibility is Income-Based
The program is designed for households earning less than 150% of the Area Median Income (AMI).
Low Income (<80% AMI): The rebate covers 100% of the cost (up to the caps above).
Moderate Income (80%–150% AMI): The rebate covers 50% of the cost (up to the caps above).
3. Point-of-Sale Convenience
Because this is a point-of-sale program, you must work with a state-approved contractor or retailer. You simply apply on the State portal and get your State Voucher. The contractor deducts the amount of the voucher directly from your quote.
How to Claim Your HERA Voucher in Arizona (4 Simple Steps)
To get the rebate, you must follow the state’s official process before you buy your new water heater.
1. Check Your Eligibility
Visit EfficiencyArizona.com to use their screening tool. You will need to know your household size and total gross annual income. If you are already on SNAP, LIHEAP, or Medicaid, you are likely pre-qualified.
2. Submit an Application
Complete the online application at the Efficiency Arizona portal. You will need to upload:
A copy of your utility bill (SRP, APS, etc.).
Proof of income (Tax returns, W-2s, or pay stubs).
3. Receive Your Coupon
Once the state approves your application, they will email you a Unique Rebate Coupon (Voucher). This is your “golden ticket” that guarantees your funding.
4. Ready to find a contractor?
Select a participating Contractor or retailer at EfficiencyArizona.com.
Alternatively, we invite you to come back to NewWaterHeaterDecisions.com and fill-in the form at the bottom of this page. We will connect you with 3 qualified Arizona installers who participate in the Efficiency Arizona HERA program and typically quote a competitive standard install flat price before stepping into your home. The HERA discount is only valid if a Qualified Contractor performs the work. If your Utility offers a rebate we show you how to redeem it. By clicking “submit” on the form below, you provide your express written consent to be contacted by up to the following 3 Contractors: Mason Pro Services, Advantage Home Performance, or American Home Water & Air regarding your quote request for a Heat Pump Water Heater. You agree to receive communications regarding my heat pump water heater quote via phone, text, or email, including the use of automated technology, even if you are on a Do Not Call list. Consent is not a condition of purchase.
5. Redeem your HERA voucher
Show your voucher to the participating contractor or retailer that you have selected.
They will verify the code and deduct the rebate amount directly from your final bill.
You only pay the remaining balance!
Prominent Utility Rebates for Heat Pump Water Heaters in Arizona
1/ If your electric Utility is Tucson Electric Power® you are probably eligible for a $400 post purchase rebate.Â
Learn how to claim your Tucson Electric Power $400 post purchase rebate.
Note for Tucson (TEP) residents: To secure the $400 utility credit, your heat pump water heater must include an integrated or external Wi-Fi/programmable controller.
2/ If your electric Utility is SRP® you are probably eligible for a $500 post purchase rebate.Â
Learn how to claim your SRP $500 post purchase rebate.
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Important Note: The Utility rebates are stackable with the HEAR instant discount
| Program | Amount | Eligibility | Best For… |
| Efficiency Arizona (HEAR) | Up to $1,750 | Low/Mod Income (<150% AMI) | Everyone (Point-of-Sale) |
| SRP Utility Rebate | $500 | SRP Residential Customers | Phoenix/Scottsdale Leads |
| TEP Utility Rebate | $400 | TEP Residential Customers | Tucson/Pima County Leads |
| Â | Â | Â | Â |
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âš¡ March 2026 News Update:
Local reports from Hoodline Phoenix confirm that the Efficiency Arizona program is now in high gear, with over 800 households already receiving a portion of the $14,000 state energy fund. Read the full report here.