Appliance Efficiency Rules Face Rollback. What It Means for Your Next Purchase

On July 2, 2026, the Energy Department proposed rewriting how it sets appliance efficiency standards, describing the move as a step to "permanently end" appliance mandates. For your next purchase, it changes nothing yet: it covers how future standards are written, and the minimums adopted in 2023 and 2024 for furnaces, water heaters, refrigerators, washers, dryers, dishwashers and cooktops still take effect between 2027 and 2030. What did change is the money: federal tax credits ended for equipment installed after December 31, 2025, and federal rebates narrowed in May 2026.

Key takeaways

Federal regulations still require 95% efficiency for most gas furnaces made from December 18, 2028 and heat-pump-level efficiency for most electric tank water heaters made from May 6, 2029.
Standards apply by manufacture date, so older inventory can still be sold after a deadline. Central air conditioners in the Southeast and Southwest are the exception: there, installation date counts.
The furnace standard is back in court after the Supreme Court's June 8, 2026 order, and gas groups have asked DOE to move its deadline to at least January 1, 2030.
The 25C and 25D federal tax credits do not apply to property installed after December 31, 2025. State-run federal rebates (HEEHR) now generally cover electric-to-electric upgrades only, and availability varies by state.
In an illustrative water heater swap saving 3,600 kWh a year, savings run from about $445 a year at North Dakota's 2026 average power price to $1,197 at California's and $1,666 at Hawaii's, before any extra home-heating cost.

What it means for you

Replacing a water heater now: no new federal limit applies to models made before May 6, 2029, so federal rules allow any unit on the market today; local rules, such as the Bay Area's, can still restrict gas models. The payback section shows whether a heat pump model pays off.
Replacing a furnace, AC or heat pump: the 2028 gas furnace minimum is in legal limbo, and the federal tax credit worth up to $2,000 a year for a heat pump is gone. Central air conditioners installed in the Southeast or Southwest regions, which include California, Nevada, Hawaii, Maryland and Delaware, must meet regional minimums.
Buying a refrigerator, dishwasher, washer or dryer: new limits start in 2027–2030 and change little today. Savings between models are often small, so compare kWh before paying a premium. Room air conditioners and microwaves made since May 26 and June 22, 2026, respectively, must already meet tighter limits.
Buying a gas stove: a 2028 cooktop standard exists on paper, but DOE proposed rescinding it in May 2025. Nothing about it affects a purchase made now.
Renting: standards never force a landlord to replace a working appliance; they matter when a failed water heater or furnace is replaced after a compliance date.
Living in California or another state with its own rules: federal law generally blocks state efficiency levels for federally covered products. The Bay Area's air-quality rule for gas water heaters is the change to watch (see the FAQ).

Which rules still stand

An efficiency standard is a federal minimum every new unit of a product type must meet. DOE adopted a batch of tougher ones in 2023 and 2024; since January 2025 it has delayed, withdrawn or proposed rescinding many rules, and its May 12, 2025 announcement listed 47 deregulatory proposals. The table checks each major product against the current federal standards at 10 CFR 430.32 and a Federal Register search through October 13, 2026.

Product	What the rule requires	Applies to units made on or after	Status in October 2026
Gas furnaces (non-weatherized and mobile home)	95% AFUE (annual fuel utilization efficiency), which requires a condensing design	December 18, 2028	In the regulations; under renewed court review and a petition to delay
Electric tank water heaters	Heat-pump-level efficiency, except a small-tank class (20–35 gallons, low output)	May 6, 2029	In the regulations
Gas tank water heaters	A modest increase	May 6, 2029	In the regulations
Gas tankless water heaters	A December 2024 tightening was voided by Congress	Not applicable	Withdrawn May 20, 2025; the older standard continues
Refrigerators and freezers	Lower maximum yearly kWh	January 31, 2029 or 2030, by type	In the regulations
Dishwashers	Lower energy and water use per cycle	April 23, 2027	In the regulations; a 2025 proposal to drop water limits is not final
Clothes washers and dryers	Higher efficiency ratings	March 1, 2028	In the regulations; a 2025 proposal to drop washer water limits is not final
Gas and electric cooktops	New energy limits	January 31, 2028	In the regulations; proposed for rescission in May 2025, not final
Room air conditioners	Higher combined efficiency ratings (CEER)	May 26, 2026	In effect
Microwave ovens	Lower standby power: 0.6 watts for microwave-only and countertop convection models, 1.0 watt for built-in and over-the-range convection models	June 22, 2026	In effect; proposed for rescission in May 2025, not final

The furnace and water heater dates come from the final rules published in the Federal Register on December 18, 2023 and May 6, 2024. DOE found that makers of about 95% of gas tank water heaters shipped already sold models meeting the new gas level. The gas tankless rule is the only consumer standard in this group that Congress voided: President Trump signed the resolution on May 9, 2025, and DOE withdrew the rule on May 20, 2025.

In May 2025, DOE proposed returning gas and electric cooktops to the only requirement Congress set, a ban on constant-burning pilot lights, and returning standard dishwashers to a 6.5-gallon-per-cycle water cap. It also proposed eliminating the microwave oven standards. None of these had been finalized by October 13, 2026, so the microwave standby limit took effect on schedule on June 22, 2026, as did a room air conditioner standard on May 26, 2026. The July 2026 process rule proposal (comments closed August 21) would add a definition of "significant energy savings" and economic thresholds for future standards; it does not by itself remove any adopted standard.

Why the furnace rule is in limbo

Gas groups argue the 95% minimum illegally removes chimney-vented, non-condensing furnaces. The D.C. Circuit upheld the rule on November 4, 2025, but after the Solicitor General said DOE now considers it flawed, the Supreme Court on June 8, 2026 vacated that judgment and sent the case back (No. 25-879). DOE also asked for comment in April 2026 on a petition to push the furnace compliance date to at least January 1, 2030.

The same petition covers commercial gas water heaters, whose standard took effect October 6, 2026. A DOE enforcement policy posted May 5, 2026 says DOE will delay enforcing the thermal efficiency standards for those units made from October 6, 2026 to October 5, 2027. DOE had posted no comparable policy for home furnaces as of October 13, 2026; their compliance date is still about two years away.

When a rule actually applies

The furnace rule, like the others, applies to products "manufactured in, or imported into, the United States" from the compliance date. Units built earlier can be sold and installed afterward while inventory lasts.

Split-system and packaged central air conditioners are the exception. Under 10 CFR 430.32(c), those installed on or after January 1, 2023 in the Southeast or Southwest must meet higher regional SEER2 minimums (SEER2 is the seasonal cooling rating used since 2023), whatever their manufacture date.

For furnace and water heater replacements, the bigger issue is installation. A condensing furnace vents cooler, wetter exhaust through plastic pipe and needs a condensate drain. Replacing a chimney-vented unit often means retrofit work. A heat pump water heater needs room air to draw heat from and a drain. DOE's Building America installation guide (2012) notes that units switch to less efficient resistance heating when incoming air falls below about 45°F.

Running the payback numbers

The yellow EnergyGuide label lists an estimated yearly kWh (or therms) figure. That number, multiplied by the price on your own bill, is more useful than the label's dollar estimate, which uses a national average price. Payback is the extra purchase and installation cost divided by the yearly savings:

annual savings = (kWh_A − kWh_B) × price per kWh
payback years  = (cost_B − cost_A) ÷ annual savings

kWh_A and kWh_B are the label estimates for the less and more efficient model; price per kWh is your all-in rate including delivery; cost_B − cost_A is the extra installed cost. For gas, use therms and your price per therm.

The national average residential price was 17.99 cents per kWh over the 12 months ending July 2026, according to the EIA. State averages for January–July 2026 ranged from 12.36 cents in North Dakota to 46.28 cents in Hawaii; California was the highest in the lower 48 at 33.25 cents (EIA table 5.6.B). All 2026 figures are preliminary.

Illustrative example (water heater). Assume a resistance tank labeled at 4,800 kWh a year and a heat pump model labeled at 1,200 kWh a year, a 3,600 kWh difference.

Electricity price	Yearly savings	Payback if the heat pump costs $1,500 more	Payback if it costs $3,000 more
12.36¢ (North Dakota)	$445	3.4 years	6.7 years
17.99¢ (US average, 12 months to July 2026)	$648	2.3 years	4.6 years
33.25¢ (California)	$1,197	1.3 years	2.5 years
46.28¢ (Hawaii)	$1,666	0.9 years	1.8 years

Every row pays back within about seven years, but only if the unit runs in heat pump mode most of the time. A cold garage shrinks the 3,600 kWh gap. In a heated room the opposite problem appears: the unit pulls heat from the house, and DOE's Building America guide finds a net space-heating penalty for most US climates, with a cooling benefit mainly in hot climates such as Houston, Orlando and Phoenix. Count that extra heating cost before relying on the table.

Illustrative example (refrigerator). Two models labeled at 630 and 480 kWh a year differ by 150 kWh. At 17.99 cents, that is about $27 a year, so a $200 premium takes about 7.4 years to recover; at California's average it is about $50 a year and 4 years. Here the gap is small, so fit, features and price matter more.

Illustrative example (gas furnace). A home burning 700 therms a year in an 80% AFUE furnace gets 560 therms of heat. A 95% furnace delivers the same heat from about 589 therms, saving about 111 therms. At the 2025 average residential gas price of $15.34 per thousand cubic feet, about $1.48 per therm using the EIA's 1,036 Btu per cubic foot, that is about $164 a year. A $2,000 premium, including any venting work, would take about 12 years to recover.

Credits and rebates in 2026

The IRS confirms that the One Big Beautiful Bill Act (Public Law 119-21, signed July 4, 2025) ended the energy efficient home improvement credit (25C) for property placed in service after December 31, 2025. The residential clean energy credit (25D), covering geothermal heat pumps, solar water heaters and batteries, ended for expenditures made after that date, and an expenditure counts as made when installation is completed.

The state-run High-Efficiency Electric Home Rebate program (HEEHR) changed on May 29, 2026. DOE's Program Notice 26-2 removed rebates for fuel switching (replacing gas, propane or oil equipment with electric), allowing heating, cooling and appliance rebates only when replacing existing electric equipment or in new construction. It also requires insulation and air sealing before heating and cooling upgrades unless the home already meets a state-set level.

Rebate reservations approved under the old guidance can still be paid, and programs already running had three months to switch. Under the statute, HEEHR is limited to households earning less than 150% of area median income. It caps a heat pump water heater rebate at $1,750, a heat pump at $8,000 and a household total at $14,000. From 80% to 150% of median income, rebates cover at most half the project cost; below 80%, up to the full cost. In California, the Energy Commission reports that single-family HEEHR funds were fully reserved as of February 24, 2026.

ENERGY STAR survived the 2025 plan to end it. Congress funded it for fiscal 2026 with a floor of about $33 million in a law signed January 23, 2026, Facilities Dive reported. A March 2026 agreement made DOE the lead agency from June 1, 2026, and a transition plan finalized August 28, 2026 commits to minimal disruption and a full transfer within 12 months, with the program's IT systems moving before July 2027. Funding for fiscal 2027, which began October 1, 2026, had not been confirmed as enacted when this was checked.

This is general information, not tax or financial advice; confirm eligibility with your state energy office or a tax professional.

Frequently asked questions

Can I still claim a credit for a heat pump installed in December 2025?

Yes, if it was placed in service by December 31, 2025, it can qualify for 25C on your 2025 return, claimed on Form 5695. The IRS caps heat pumps and heat pump water heaters at $2,000 a year, and for 2025 the unit must come from a qualified manufacturer whose identification number you report on the return. Anything placed in service on January 1, 2026 or later does not qualify, whenever you paid.

Can my state require more efficient appliances than federal law?

Generally not for products DOE already regulates. Under 42 U.S.C. 6297, once a federal standard takes effect, state efficiency rules for that product are preempted unless DOE grants a waiver or the rule fits narrow exceptions such as certain building codes for new construction.

Does the Bay Area gas water heater rule still start in 2027?

On paper, yes: the air district's zero-NOx rule for gas water heaters under 75,000 Btu per hour was set to start in January 2027. On July 14, 2026, the district published draft amendments that would delay it to January 2028 and exempt some low-income owners and homes with space or electrical-panel limits. The board was expected to vote this fall; check the district's site before you buy.

Will DOE's July 2026 proposal cancel the 2028 and 2029 deadlines?

Not by itself. It changes how DOE sets future standards; removing an adopted one would take a separate rulemaking, a court ruling or an act of Congress, as with the gas tankless rule in 2025.

Do the standards stop me from buying a used appliance?

No. The prohibition in 42 U.S.C. 6302 is aimed at manufacturers and private labelers that distribute new products failing an applicable standard. It does not reach a homeowner reselling a used furnace or refrigerator, so a secondhand unit can be bought whatever its efficiency. Local permits for gas or electrical work still apply.

Before you buy: a checklist

Find the product's compliance date in the table, and ask the seller for the unit's manufacture date or check its rating plate.
For central air in the Southeast or Southwest regions, have the contractor confirm the equipment combination meets the regional SEER2 minimum.
Multiply each EnergyGuide kWh or therms figure by your own rate and run the payback formula.
For a furnace or heat pump water heater, get a quote that itemizes venting, drain, electrical and space work.
Check your state energy office and utility for open rebates before signing.