Austin Energy pays a flat rebate on a qualifying air-source heat pump, set by the equipment's efficiency tier rather than by tonnage. For 2026 the published tiers are $650 for a Tier 1 system (SEER2 15.2 / HSPF2 7.8), $750 for Tier 2 (SEER2 16.0 / HSPF2 8.0), and $950 for Tier 3 (SEER2 17.0 / HSPF2 9.0). Because it is a flat amount, the rebate is most valuable on a smaller system where it covers a larger share of the cost; on any system it rewards stepping up to a higher-efficiency unit with a larger check.
The program is aimed at genuine upgrades, not like-for-like swaps. The equipment must meet the Consortium for Energy Efficiency (CEE) 2025 requirements and appear in the AHRI Directory as a matched system, the existing system being replaced should be at least 10 years old, and the work has to be a full change-out — outdoor unit, indoor coil, and air handler — installed by a participating contractor. Austin Energy may inspect the install before paying, so the contractor's paperwork (model numbers and the AHRI reference number) needs to match what was actually put in.
Coverage is the detail to confirm first. Austin Energy is the municipal electric utility for the City of Austin and parts of Travis and Williamson counties; homes in the surrounding suburbs are frequently on Oncor or Pedernales Electric instead and are not eligible for this rebate. Check the electric account on the bill before counting it into a budget. The rebate is also one layer in a stack: an income-qualified household may add the state-run HEAR rebate once Texas launches it (still pre-launch as of mid-2026), and the contractor's own promotions can apply on top, subject to each program's rules.
One change to plan around: the federal Section 25C tax credit that used to add up to $2,000 for a heat pump ended for equipment placed in service after December 31, 2025, so for a 2026 Austin install the utility rebate (and HEAR, where eligible) is the incentive that remains. Submit within 90 days of install, and verify the current tier amounts on austinenergy.com, since the utility resets the program each year.