Utility rebates, a state heat pump program, income-based help, and a federal credit that has ended. Here is what is real, what each one requires, and where the rules are unclear.
Get Connected Or call now: (401) 324-9590If you are replacing a water heater in Rhode Island in 2026, three things can lower the bill, and one cannot.
| Program | Amount for water heaters | Who it is for |
|---|---|---|
| RI Energy: electric heat pump water heater | Up to $625 (55 gallons or less, UEF 3.3+). $150 for larger units (over 55 gallons, UEF 2.7+). | Replacing an existing electric storage water heater, or new construction. |
| RI Energy: gas water heater | $600 for an ENERGY STAR tankless (UEF 0.87+). $70 for an ENERGY STAR gas storage tank. | Residential natural gas heating customers. |
| Clean Heat RI (state) | $2,500 flat for a qualifying heat pump water heater. | Replacing a gas, propane, or oil water heater. Household income under 150% of state median. |
| RI Energy Income-Eligible program | No-cost improvements. Water heater coverage not listed on the program page. | Income under the posted guidelines, or on a Rhode Island Energy discount rate. |
| Federal 25C credit | Ended. | Not available for 2026 installs. |
Rhode Island Energy runs separate rebate programs for electric and gas customers, paid for by the energy efficiency charge on gas and electric bills. Both use the same basic rules for 2026.
The rebate is $625 for a heat pump water heater of 55 gallons or less with a Uniform Energy Factor (UEF) of 3.3 or higher, and $150 for a unit over 55 gallons with a UEF of 2.7 or higher. It applies when you replace an existing electric storage water heater or install one in a newly built home. The form states plainly that rebates are not available when you replace oil, propane, or gas water heating.
Rhode Island Energy's 2026 gas heating rebate form lists $600 for an ENERGY STAR certified on-demand (tankless) water heater with a UEF of 0.87 or higher, and $70 for an ENERGY STAR certified gas storage water heater (UEF 0.64 or higher for medium draw, 0.68 or higher for high draw). A combined condensing boiler and on-demand water heating unit is listed at $950. You must have an active Rhode Island Energy residential gas heating account.
These rebates are paid to you after the job, not taken off the plumber's price. Treat them as a reimbursement you apply for, and keep your invoice.
Clean Heat RI is the state program run by the Office of Energy Resources. For hot water it pays a flat $2,500 for an integrated 240-volt heat pump water heater (ENERGY STAR, UEF 3.30), with a lower UEF of 2.20 required for 120-volt or split-system units. The conditions are tighter than the utility rebate:
As of 2026 the original federal pandemic-relief money is fully allocated, and the state says funding now comes from the Regional Greenhouse Gas Initiative. The program's funds page showed the low-to-moderate income program receiving an additional $1,474,999 on September 1, 2026, and was last updated October 8, 2026. We could not confirm how much is left, so check the funds page before counting on it.
Rhode Island Energy's Income-Eligible Energy Savings Program offers a no-cost home energy assessment and, based on what the assessment finds, improvements that may include insulation, air sealing, and appliance upgrades. You may qualify if you are on a Rhode Island Energy discount rate, or if your pre-tax household income is within the posted guidelines (effective October 2025): $42,252 or less for one person, $55,252 for two, $68,253 for three, and $81,254 for four. To start, call 401-351-1800 to schedule the assessment.
What we could not confirm: the program page does not specifically promise a free water heater, so do not assume one. Ask the energy specialist directly. We also did not verify the status of any federal home energy rebate funds passing through the state, so we are not listing them. If a program is not on this page, that means unverified, not nonexistent.
The Energy Efficient Home Improvement Credit (Section 25C) used to cover part of the cost of qualifying heat pump water heaters. The IRS describes it as available for property placed in service on or after January 1, 2023 and before December 31, 2025, and the One Big Beautiful Bill Act ended it for property placed in service after December 31, 2025. A water heater installed today does not qualify.
The only exception is timing: equipment that was placed in service by December 31, 2025 can still be claimed on a 2025 return using IRS Form 5695. For anything installed in 2026, plan your budget without it, and ask a tax professional if you have a question about a 2025 install.
It is not fully clear, so ask before you buy. The Clean Heat RI page lists Rhode Island Energy rebates as additional incentives and says it does not guarantee eligibility for them. But Rhode Island Energy's own heat pump rebate form says the rebate may not be combined with any other utility or energy efficiency service provider offer. Because Clean Heat RI covers gas, propane, and oil replacements and the Rhode Island Energy heat pump rebate covers electric replacements, you will rarely be in a position to claim both on the same unit anyway.
Not sure which option fits? See the electric vs gas comparison and the cost guide for what the equipment itself runs.
No. Section 25C ended for property placed in service after December 31, 2025. Equipment placed in service by that date can still be claimed on a 2025 return. Anything installed in 2026 does not qualify.
Not from the Rhode Island Energy heat pump rebate, which excludes replacing oil, propane, or gas units. Clean Heat RI does offer $2,500 for that swap, but only for households under 150% of state median income who use a network installer and are approved before installation.
The 2026 forms say payment arrives about 8 to 10 weeks after Rhode Island Energy receives a complete application. You must submit within 90 days of installation, and by February 28, 2027 for installs completed in December 2026.
No. Both utility forms say offers are subject to funding availability and can change or end without notice. Confirm on the program page before you buy equipment.
Tell us what you're planning and we'll connect you with a local Rhode Island plumber who can give you a real quote.
We'll pass your request to a local plumber. For anything urgent, call (401) 324-9590.
Figures on this page come from the sources below. Prices and program terms change, so confirm with the program or a plumber's written quote before you decide.