Oregon homeowners replacing old HVAC systems in 2026 have several incentive programs to stack. The federal Inflation Reduction Act offers tax credits for heat pumps, heat pump water heaters, and efficiency upgrades. The Oregon Department of Energy has state-level rebates for income-qualified households. Energy Trust of Oregon offers direct rebates through your utility (PGE, Pacific Power, NW Natural) for high-efficiency equipment. Combining these can meaningfully offset the upgrade cost on a heat pump or high-efficiency furnace. Eligibility, amounts, and paperwork vary by program — here’s what to know.
Why 2026 Is a Good Year to Upgrade
Federal and state incentive programs for heating and cooling equipment are more generous right now than they’ve been in years. The Inflation Reduction Act created or expanded tax credits for efficiency upgrades that run through 2032. Oregon added state-level rebates targeted at income-qualified households. Energy Trust of Oregon continues to offer straightforward utility rebates on high-efficiency equipment.
After 30+ years of doing HVAC work in the Mid-Willamette Valley, I can tell you this is the best incentive environment we’ve seen for homeowners considering a heat pump or a high-efficiency system. For Salem, Keizer, or Dallas homes replacing aging equipment, stacking these programs can turn an expensive project into a more manageable one.
A caveat: programs change. Funding runs out. Requirements shift. Everything in this article reflects conditions as of 2026 — before you commit to a project, verify the current rules with your tax professional or the program administrator. I’ll point you to where to check.
The Federal Credits (Inflation Reduction Act)
The federal IRA expanded two main homeowner tax credits through the end of 2032.
Energy Efficient Home Improvement Credit (Section 25C)
Covers HVAC upgrades including heat pumps, high-efficiency furnaces, and heat pump water heaters. The credit is a percentage of qualifying costs, capped annually. For most single-family homes:
- Heat pumps (air-source) — qualifying models get a meaningful credit, capped per year
- Heat pump water heaters — separate credit, also capped
- High-efficiency gas furnaces and ACs — smaller credit available for qualifying efficiency tiers
- Insulation, air sealing, and windows — separate credits, stackable in the same tax year
The credit is claimed on your federal tax return (Form 5695). It’s a non-refundable credit, meaning it reduces what you owe but won’t create a refund beyond that.
Residential Clean Energy Credit (Section 25D)
Covers larger systems — geothermal heat pumps, solar, and battery storage. Not typical for standard Willamette Valley residential HVAC projects, but worth knowing exists.
For current credit amounts and qualifying equipment lists, check IRS Publication 5886-A or consult your tax professional.
Oregon State Rebates
Oregon has added programs targeted at specific homeowner groups.
Oregon Heat Pump Rebate Program
Managed by the Oregon Department of Energy, this program offers direct rebates for heat pump installations. The largest rebates go to income-qualified households. Homes in rural and underserved communities — which includes much of the Mid-Willamette Valley outside Salem and Keizer — may qualify for additional rural incentives.
Check oregon.gov/energy for current rebate amounts, income thresholds, and application instructions.
High-Efficiency Home Program (HEHRA and HOMES)
These federal-funded state-administered programs are rolling out in Oregon in phases. They provide additional rebates for income-qualified homeowners making whole-home efficiency upgrades. The programs are complex — coordinating them with federal tax credits requires planning, and not every contractor is set up to process the paperwork.
Energy Trust of Oregon (ETO) Rebates
Energy Trust is the nonprofit that administers rebate programs funded through a small charge on your utility bill. If you’re a PGE, Pacific Power, or NW Natural residential customer, you’re already paying into it. The rebates are there to claim.
Current ETO rebates typically cover:
- Qualifying air-source heat pumps
- Ductless heat pump systems
- High-efficiency gas furnaces
- Smart thermostats
- Home energy assessments
- Duct sealing
ETO rebates are paid as a check after installation — not as a discount off the install price. Your contractor provides documentation, you submit the paperwork, and the rebate arrives a few weeks later. We handle the paperwork for our customers; not every contractor does.
Rebates change periodically. Check energytrust.org for the current amounts and eligible equipment.
Utility-Specific Programs
Your utility may have additional programs.
PGE
Residential customers can access rebates through Energy Trust and may qualify for additional PGE-specific incentives on heat pumps and efficiency upgrades.
Pacific Power
Similar setup — ETO rebates plus occasional utility-specific incentives for heat pumps in rural Oregon, including areas around Silverton, Stayton, and Dallas.
NW Natural
Offers rebates for qualifying high-efficiency gas furnaces, tankless water heaters, and other gas appliance upgrades. Run through ETO’s joint program structure.
How the Incentives Stack
The programs are designed to stack. A typical high-efficiency heat pump installation for a homeowner in Salem or Keizer might combine:
- Energy Trust of Oregon rebate (utility-funded, stacked as a direct rebate)
- Federal IRA tax credit (claimed on your 1040 for the tax year of installation)
- Oregon state rebate (if income-qualified)
- Manufacturer rebate (occasional, varies by brand and timing)
Each program has its own paperwork, timing, and rules. The more of them you stack, the more documentation you need.
What Qualifies Matters
Not every piece of equipment qualifies for every program. Here’s the general pattern:
- Heat pumps need to meet specific SEER2, HSPF2, and EER2 ratings — current programs typically require tier levels equivalent to ENERGY STAR Most Efficient.
- Gas furnaces need 95% AFUE or higher to qualify for most rebates.
- Air conditioners need SEER2 ratings above the federal minimum.
- Heat pump water heaters need Uniform Energy Factor (UEF) ratings at specified tiers.
- Smart thermostats need to be on the ENERGY STAR approved list.
Before committing to equipment, verify it’s on the qualifying list for every program you plan to claim. The lists update — equipment that qualified in 2025 may not qualify in 2026, and vice versa.
Paperwork Matters
Each program has its own documentation requirements. Common items:
- Manufacturer’s Certification Statement confirming the equipment qualifies
- Itemized invoice showing equipment, labor, and permit costs separately
- Proof of payment
- Installer’s CCB license number on the invoice
- Installation date
- Homeowner’s tax ID or program registration number
Your contractor should provide everything on this list as part of the install packet. If they don’t, push for it.
Common Mistakes to Avoid
Assuming every heat pump qualifies
The efficiency tier matters. A minimum-qualifying heat pump won’t hit the top-tier rebate. We walk through the options during the estimate and tell you what qualifies for what.
Forgetting the federal credit at tax time
The federal IRA credit is claimed on your next federal return. Keep the invoice, Manufacturer’s Certification Statement, and any ETO or state rebate correspondence together in a file. Give it all to your tax professional in April.
Missing rebate deadlines
Most ETO rebates must be submitted within 60 to 90 days of installation. Procrastinating can cost you the rebate entirely.
Not confirming eligibility before installing
Income-qualified programs require pre-approval. Install first, apply second — and you may find you don’t qualify.
How We Do It at CHS
We quote qualifying equipment explicitly and flag which programs apply to your install. We handle the Energy Trust paperwork and provide the documentation you need for the federal credit. We can’t give tax advice — you’ll want a tax professional for that — but we can make sure your paperwork is ready when you sit down with them. Family-owned in Salem since 2001. Licensed and insured under CCB# 147550.
Related Reading
- Why Homeowners Are Switching to Heat Pumps
- Why a High-Efficiency Furnace Is Worth It
- How to Pay for a New HVAC System
Ready to Talk to Stan?
No pressure, no surprises — just honest advice from a team that’s been keeping Salem homes comfortable since 2001.
Call or text: (503) 581-6999
Email: chssatt@gmail.com
Service area: Salem, Keizer, Dallas, Monmouth, Independence, Silverton, Stayton, Aumsville, Sublimity, Albany, Woodburn, Scio, and surrounding Mid-Willamette Valley communities.
Licensed & insured: CCB# 147550
Call or text for a free estimate. We’ll quote the equipment that qualifies for the programs you’re eligible for and walk you through stacking the rebates and tax credits that apply to your install.