For the last few years, a lot of Bay Area homeowners have been nudged toward heat pumps by rebates and tax credits: TECH Clean California, local CCA programs, and the federal 25C Energy Efficient Home Improvement Credit.
But by the end of 2025, that landscape changes:
The TECH Clean California incentives for heat pumps have been fully reserved statewide.
The 25C federal tax credit for qualifying high-efficiency HVAC upgrades is currently set to end after December 31, 2025 (no credit for equipment placed in service in 2026 under current law).
So a fair question is:
“With fewer rebates and no federal tax credit, what will people actually install in 2026 – gas furnace + AC or heat pumps?”
At Bay Area Climate Control, we see three clear “tiers” of homeowners emerging. Each group has a different priority, and a different system type that usually fits best.
This article isn’t about pushing one answer for everyone. Instead, we’ll walk through:
- The three main types of Bay Area homeowners
- Which systems we expect each group to choose in 2026
- How Carrier® systems (our main line) fit into each path
By the end, you should have a better feel for which tier you’re in – and which system is most likely to be a good fit for your home and budget.
Why the Market Is Shifting (Even Without Rebates)
Even with rebates fading, a few big forces still shape HVAC decisions in the Bay Area:
Local rules and reach codes are pushing new construction toward all-electric and making gas a little less attractive each code cycle.
Title 24 energy code keeps tightening efficiency expectations, duct design, and fan power – which favors high-efficiency heat pumps and well-designed systems.
Electricity is getting cleaner over time, and many homeowners are thinking ahead about future gas restrictions and resale value.
So while we expect some households to drift back to “cheapest gas furnace + AC” once rebates disappear, we also see strong, growing demand for heat pumps and higher-end systems, especially for people planning to stay in their homes.
Let’s talk about the three tiers.
Tier 1: “Just Make It Work” — Budget & Landlord Tier
Who this is for:
- Landlords and property managers
- Homeowners planning to sell soon
- People who care most about lowest upfront cost and code-compliant basics
Main priorities:
- Get the heat and cooling back on
- Pass inspections
- Keep tenants reasonably comfortable
- Don’t overspend on a property they might not keep long
What they’re likely to install in 2026
Most people in this tier will still choose a standard gas furnace + basic AC:
- Gas Furnace: 80% or 96% AFUE, single-stage, single-speed
- AC: 14–16 SEER range, single-stage
In the Carrier world, that often means a system built around:
- A Comfort™ series gas furnace
- Paired with a Comfort™ series air conditioner
This combo is:
- Familiar
- Simple to service
- Usually the lowest upfront cost option that still meets code
Pros for Tier 1
- Lower initial price than high-end heat pumps
- Easy to explain and budget for
- Works well for tenants who “just want it to turn on”
Trade-offs
- Less even temperature room-to-room
- More noticeable on/off cycling and noise
- Less future-proof if local gas rules tighten further
- No help breaking free from gas if that’s a long-term goal
If you’re a landlord or on a tight budget, this route can still be perfectly reasonable. The key is making sure it’s installed correctly, sized properly, and vented safely – cut corners there, and even a “simple” furnace can cause headaches.
Tier 2: “We’re Staying, But We’re Practical” — Comfort & Value Tier
Who this is for:
- Typical Bay Area homeowners planning to stay 5–15 years
- Families who care about comfort, noise, and bills, but still watch the budget
- People who might like a heat pump, but also feel comfortable with gas
Main priorities:
- A system that feels noticeably better than the old one
- Good efficiency and reasonable monthly bills
- Something that won’t look outdated in a few years
What they’re likely to install in 2026
We see two very popular paths for this group:
Option A: Higher-end gas furnace + better AC (or dual-fuel)
- Two-stage or modulating gas furnace for more even heating
- Two-stage or variable-speed AC for quieter, better cooling
- Sometimes paired as a dual-fuel system (heat pump + gas furnace) for flexibility
On the Carrier side, that could look like:
- A Performance™ or Infinity® series furnace with multi-stage or modulating heat
- Paired with a Performance™ or Infinity® air conditioner or heat pump
This keeps gas in the picture but massively upgrades comfort.
Option B: Full heat pump system, mid–high end
- A variable-speed Carrier® heat pump providing both heating and cooling
- Often a side-discharge outdoor unit in tight Bay Area lots
- Indoor unit matched for proper airflow and dehumidification
Here, think in terms of:
- A high-efficiency Carrier heat pump from the Performance™ or Infinity® lineup
Our own customers who switch from older gas + AC to a well-designed heat pump often report:
- Much more even temperatures
- Quieter operation
- And, in many cases, noticeable savings on annual heating costs compared with older gas systems – especially if they had inefficient ductwork or very old equipment.
Pros for Tier 2
- Big improvement in comfort and noise over basic systems
- Better long-term efficiency and operating costs
- More future-friendly (especially if you choose dual-fuel or full heat pump)
- Carrier’s higher-tier systems offer smart controls, humidity management, and better airflow
Trade-offs
- Higher initial price than Tier 1 “basic” systems
- More components/controls to set up correctly (install quality really matters)
- You’ll want a contractor who takes time to size, design, and commission the system – not just swap boxes
If you’re a typical Bay Area homeowner planning to stay a while, Tier 2 is where the best “comfort per dollar” usually lives. You’re not going crazy high-end, but you’re investing in a system you’ll notice every single day.
Tier 3: “We’re All-In on Comfort & Electrification” — Future-Proof Tier
Who this is for:
- Homeowners who talk about carbon footprint, EVs, induction stoves, solar, and batteries
- People planning to stay long-term and optimize their house as a system
- Families sensitive to noise, drafts, and indoor air quality
Main priorities:
- Maximum comfort: consistent temps, quiet, clean air
- Reduced or eliminated natural gas dependence
- A system that will still feel “modern” 10–15 years from now
What they’re likely to install in 2026
This tier is where premium heat pumps shine.
We expect many of these homeowners to choose:
- A high-efficiency, variable-speed Carrier® heat pump system
- Often paired with:
- Smart thermostat / zoning
- High-MERV filtration or air cleaners
- Possibly a heat pump water heater and panel upgrade over time
These systems:
- Modulate capacity to match the home’s needs
- Run longer at low speeds for super even temperatures
- Are extremely quiet compared to older on/off units
- Take full advantage of the Bay Area’s mild climate, where heat pumps are in their element
Pros for Tier 3
- Top-tier comfort, quiet, and control
- Strong alignment with electrification goals and possible future gas limitations
- Great fit with other upgrades (EV charger, solar, battery, etc.)
- Very attractive from a resale and marketing perspective: “all-electric, modern comfort system”
Trade-offs
- Highest upfront cost of the three tiers
- Requires careful design: load calculations, duct evaluation, airflow testing
- Not every contractor has deep experience designing and commissioning these systems properly
But for the right household, a premium Carrier heat pump system isn’t just an HVAC upgrade – it’s a step toward the kind of comfortable, efficient, low-carbon home many Bay Area residents are aiming for.
So… What Do We Expect to Be Popular in 2026?
Putting it all together, here’s our honest prediction:
Tier 1 (Budget/Landlords):
Many will still choose basic gas furnace + AC using Carrier Comfort™ series equipment or similar.
Highest priority: price and simplicity.
Tier 2 (Practical Homeowners):
A strong mix of:
- Better gas furnace + higher-efficiency AC (Performance™ / Infinity®)
- And mid–high-end Carrier heat pumps
Priority: comfort, quieter operation, and long-term value.
Tier 3 (Electrification-Minded):
Mostly premium variable-speed Carrier heat pumps and all-electric designs.
Priority: top comfort, electrification, and future-proofing.
Even without TECH Clean checks arriving in the mail, we don’t see heat pumps disappearing. Instead, we expect the decision to shift away from “What rebate can I get?” toward “What kind of home do I want to live in for the next 10–15 years?”
How to Decide Which Tier You’re In
Ask yourself a few questions:
How long do I plan to stay here?
- Less than 5 years → Tier 1 might be enough.
- 5–15 years → Tier 2 is usually the sweet spot.
- 10+ years and you care about carbon/comfort → Tier 3.
What bothers me most about my current system?
- “It’s broken and old” → any properly installed new system will feel better.
- “It’s loud, drafty, and uneven” → look to Tier 2 or 3.
- “I hate gas and high winter bills” → heat pumps (Tier 2 or 3).
How important is future-proofing and resale?
If you do any of the following: drive an EV, talk about solar, or care about gas bans…
Then at least consider a heat pump or dual-fuel design.
How Bay Area Climate Control Can Help
At Bay Area Climate Control, we work with Carrier® systems across all three tiers, and our job isn’t to push you into the most expensive option. It’s to help you:
- Understand which tier you’re really in
- Compare systems side-by-side (gas + AC, dual-fuel, and full heat pump)
- See the differences in:
- Comfort and noise
- Estimated operating cost
- Future-proofing and flexibility
We can:
- Evaluate your current equipment, ducts, and electrical
- Run a proper load calculation so you’re not over- or under-sized
- Design good / better / best Carrier options that match your priorities
- Explain everything in plain English, not just model numbers and acronyms
Ready to Explore Your 2026 Options?
If you’re thinking about replacing your furnace and AC – or switching to a heat pump – in the next 12–24 months, this is the perfect time to start planning.
Even as rebates and tax credits change, you still have real choices, and each tier has its own benefits when it’s matched to the right household.
Bay Area Climate Control is here to help you choose the path that makes the most sense for your home, your budget, and your future plans.
Want to talk through your options? Reach out to Bay Area Climate Control for a no-pressure consultation, and we’ll help you map out what Tier 1, Tier 2, and Tier 3 would look like specifically for your house – not just in theory.
Contact us today to schedule your consultation and discover which heating system tier is right for your Bay Area home.