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State guide

Heat Pump Water Heaters in Texas

B
Heat pumps make financial sense in Texas. Estimated savings: $586/yr vs a standard electric tank.
$586/yr savings/4.1 yr payback/1 rebate program/16.0¢/kWh (11% below avg)
Utility rebates available now. IRA HEAR has not launched in Texas yet.
Score breakdown: 61/100
Savings
36/55
Rebates
4/20
Climate
15/15
Install
6/10

RatingPlate Score. Based on EIA energy prices, ENERGY STAR data, state rebate programs, and permit research. Not a government rating or purchasing recommendation. FAQ

Texas electricity is 11% below the national average. Here's what that means for heat pump operating costs.

Running cost in Texas

At Texas's 16.0¢/kWh electricity rate, the most efficient heat pump water heater saves an estimated $586 per year compared to a standard electric tank.

Texas electricity
16.0¢
per kWh (EIA, 12-month avg. through Aug 2026)
US average
18.0¢
per kWh
Best HP annual cost
$133
A. O. Smith HPTS-50-2
Electric resistance
$719
~4,500 kWh/yr baseline
Warmer inlet water (67°F annual average) means heat pump efficiency may exceed rated UEF in Texas. Less temperature rise needed, lower energy consumption.

Heat pump vs gas tank in Texas

At Texas prices (16.0¢/kWh electricity, $2.20/therm gas), a heat pump costs about $244 less per year to run than a standard gas tank, on the same DOE rated hot water load. See replacing a gas water heater in 2026 and all 50 states compared.

Heat pump
$137/yr
855 kWh/yr (median 50-gal)
Gas tank
$381/yr
173 therms/yr (UEF 0.64)
Difference
$244/yr
heat pump cheaper

Both use the DOE medium draw test load (55 gallons a day). Gas price: EIA, 12-month avg. through Aug 2026. Replacing gas with a heat pump also means adding a 240V circuit (or choosing a 120V model) and a condensate drain, and the federal HEAR rebate no longer covers gas replacements.

Why Texas changes the call

01Energy cost
Texas electricity is 11% below the national average. That directly affects how much a heat pump saves compared to a standard electric tank.
02Climate impact
Incoming water averages 67°F annually and drops to about 56°F in winter. Colder water means the heat pump works harder and real efficiency is slightly lower than rated.
03Available incentives
State and utility rebates can significantly change the payback period. Check what's currently available before finalizing your decision.

Rebates in Texas

Texas has 1 rebate program as of November 2026.

The federal $2,000 tax credit (IRA Section 25C) expired December 31, 2025. State and utility rebates listed below may still be available. Verify current status at the links provided.

Austin Energy Heat Pump Water Heater Rebate

$1,000
Who: Austin Energy
Eligibility: Austin Energy electric customer. ENERGY STAR hybrid/heat pump water heater with Energy Factor of 2.0 or better. At least 40 gallons. New equipment installed to code.
https://austinenergy.com/energy-efficiency/rebates-incentives/residential/appliances-equipment/hp-water-heater

IRA HEAR Rebate (Point-of-Sale)

Not yet available in Texas as of November 2026. Up to $1,750 for income-qualified households when available. Under federal guidance effective May 29, 2026, this rebate covers replacing an existing electric water heater (or new construction). Replacing a gas, propane, or oil water heater no longer qualifies.
Texas has not launched its IRA HOMES or HEAR rebate programs as of October 2026. The State Energy Conservation Office says a launch date will be set after the state receives U.S. Department of Energy approval.

Install requirements in Texas

Electrical

Dedicated 240V, 30A circuit (most models). Some newer 120V plug-in models exist but most residential units require 240V. Check the unit's nameplate for exact requirements.

Condensate drain

Heat pump water heaters produce condensate during operation. A condensate drain line to an approved location (floor drain, condensate pump, or exterior) is required.

Air space

Approximately 700 cubic feet of surrounding air (roughly a 10x10x7-foot room). The heat pump extracts heat from surrounding air. Insufficient air volume reduces efficiency and can cause the unit to underperform. Some manufacturers allow ducting to supplement air supply in smaller spaces.

Noise

Heat pump water heaters produce operational noise similar to a window AC unit (45-55 dB). Consider placement away from bedrooms.

Best fits for Texas

Common questions: Texas

Is a heat pump water heater worth it in Texas?
Yes. Texas scores B on RatingPlate's analysis, with estimated savings of $586 per year compared to a standard electric tank. Payback on the higher upfront cost is roughly 4.1 years before rebates.
What rebates are available for heat pump water heaters in Texas?
Texas has 1 rebate program. The IRA HEAR program has not launched in Texas yet. Verify amounts and eligibility at the links in the rebates section above.
How much does a heat pump water heater cost to run in Texas?
At Texas's electricity rate of 16.0 cents per kWh, the most efficient heat pump water heater costs about $133/yr to run. A standard electric tank costs about $719 per year.
Do I need a permit for a heat pump water heater in Texas?
Texas does not have unusual state-level requirements beyond standard plumbing and mechanical permits. Check with your local building department for jurisdiction-specific rules.
What is the payback period for a heat pump water heater in Texas?
Without rebates, the payback period in Texas is approximately 4.1 years based on $586 in annual savings versus a standard electric tank. With available rebates, payback could be significantly shorter.

Your next click

Sources

Electricity and natural gas rates: U.S. Energy Information Administration, residential sector (EIA, 12-month avg. through Aug 2026).

Rebate data compiled from state energy offices, utility program pages, DSIRE, and ENERGY STAR. Rebate amounts and eligibility change frequently. Verify at listed program URLs.

Inlet water temperatures estimated from NOAA climate normals using the Burch-Christensen mains water temperature model (NREL).

Model specifications from ENERGY STAR certified product data and manufacturer spec sheets.

Page updated November 1, 2026. Data freshness varies by source.

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