If you’re shopping for a Rheem RTEX-24 in 2026 expecting a federal tax credit like the ones widely advertised in previous years, there’s an important update you need before you factor that into your budget. This changed recently, and a lot of older articles still floating around haven’t caught up.
As of 2026, there is no federal tax credit specifically for electric tankless (instantaneous) water heaters like the Rheem RTEX-24, since the relevant federal equipment tax credits sunset as of December 31, 2025, according to the IRS and multiple water heater manufacturers including A.O. Smith. Federal credits remain available for qualifying electric heat pump water heaters (a different technology, up to 30% of cost capped at $2,000) if installed by that same deadline, but standard electric tankless units do not qualify for this specific federal credit.
What Changed
Federal tax credits for energy-efficient home improvements, including certain water heaters, were available for installations completed through the end of 2025. According to A.O. Smith’s own consumer guidance, “federal tax credits for heat pump and gas tankless water heaters ended on December 31, 2025,” a clear statement that these specific federal incentives are no longer available for new installations in 2026.
It’s worth being precise here: even during the period when these credits existed, standard electric resistance tankless units like the RTEX-24 were generally not the primary beneficiary of the biggest incentives, those tended to favor heat pump water heaters and high-efficiency gas tankless models meeting specific Energy Star or CEE efficiency thresholds. The RTEX-24, as a standard electric resistance unit without Energy Star certification, was likely never eligible for the largest federal incentives even when they were active.
What’s Still Potentially Available
While the specific federal equipment tax credit has sunset for 2026 installations, a few other avenues are worth checking before you assume no savings exist:
State and local utility rebates often operate independently of federal tax credit programs and may still be active in your area. According to Rheem’s own product listing, “energy provider rebates may be available” depending on your location, this is a genuine, standing recommendation to check with your local utility company directly.
If you installed a qualifying system before the December 31, 2025 deadline, you may still be able to claim credits on your tax filing using IRS Form 5695, along with the manufacturer’s certification statement and detailed receipts, according to IRS guidance.
Some state-level electrification incentive programs remain active even after federal programs sunset, and these vary significantly by state, so checking your specific state’s energy department resources is worth the time.
How to Check for Rebates in Your Area
Before assuming no incentives exist, contact your local electric utility directly and ask about rebates for electric water heater upgrades. Many utilities maintain their own rebate programs independent of federal tax policy, and these can change or get renewed even as federal programs expire. Your state’s energy office website is another useful resource for identifying any active local electrification incentive programs.
Budgeting Without Assuming a Tax Credit
Given that the primary federal incentive has sunset, it’s most realistic to budget for the Rheem RTEX-24’s full cost, the $549 unit price plus installation, without counting on a federal tax credit to offset that cost. If you do find an active state or utility rebate, treat it as a bonus rather than assuming it exists before confirming directly with the relevant program.
For the complete cost picture including installation, see our full price breakdown.
Rheem RTEX-24 24kW 240V Electric Tankless Water Heater - Check Current Price on Amazon
The Bottom Line
There is no federal tax credit for standard electric tankless water heaters like the Rheem RTEX-24 in 2026, since the relevant federal incentives sunset at the end of 2025. Check directly with your local utility company and state energy office for any active rebate programs, but budget for the full cost of the unit and installation without assuming a federal credit will apply.
Frequently Asked Questions
Is there a federal tax credit for the Rheem RTEX-24 in 2026? No. Federal tax credits for electric tankless water heaters sunset as of December 31, 2025, according to IRS guidance and multiple manufacturer statements, including from A.O. Smith.
Did electric tankless water heaters ever qualify for federal tax credits? Standard electric resistance tankless units like the RTEX-24, without Energy Star certification, were generally not eligible for the largest federal incentives even before the 2025 sunset, which favored heat pump water heaters and high-efficiency gas tankless models.
What water heaters still qualify for federal tax credits after 2025? If installed by December 31, 2025, qualifying electric heat pump water heaters remain eligible for up to 30% of project cost, capped at $2,000, a different technology than standard electric tankless units.
Are there other rebates available for the Rheem RTEX-24? Possibly. Rheem’s own product listing notes that energy provider rebates may be available depending on your location, so check directly with your local utility company.
How do I check for tax credits or rebates in my state? Contact your local electric utility directly, and check your state’s energy department website for any active state-level electrification incentive programs, which can operate independently of federal tax policy.
What form do I need to claim a qualifying tax credit? IRS Form 5695 is used to claim residential energy credits, along with the manufacturer’s certification statement and detailed receipts, for installations that qualified before the relevant deadline.
Can I still claim a credit if I installed my unit in 2025? If your installation was completed on or before December 31, 2025, and met the qualifying criteria at that time, you may still be able to claim the credit on your relevant tax filing using IRS Form 5695.
Does the Rheem RTEX-24 qualify for Energy Star tax credits? No, the RTEX-24 is not Energy Star certified, and Energy Star certification was generally a requirement for the larger available federal incentives even before the 2025 sunset.
Should I budget for a tax credit when buying a Rheem RTEX-24 in 2026? No, given that the federal equipment tax credit has sunset, it’s more realistic to budget for the full cost of the unit and installation without assuming a tax credit will offset that expense.
Are state rebates for electric tankless water heaters common? This varies significantly by state and local utility. Checking directly with your specific utility company and state energy office is the only reliable way to know what’s currently available in your area.
References
- A.O. Smith consumer guidance on federal tax credit sunset for tankless water heaters, accessed July 2026: https://www.hotwater.com/water-heater-rebates
- IRS.gov, Energy Efficient Home Improvement Credit guidance, accessed July 2026: https://www.irs.gov/credits-deductions/energy-efficient-home-improvement-credit
- Rheem RTEX-24 product listing noting potential energy provider rebates, Amazon.com, accessed July 2026: https://www.amazon.com/dp/B01MS9DVEE