Smart Thermostats Cut Heating and Cooling Bills About 8% on Average

On August 13, 2026, New York's Public Service Commission opened a proceeding for a statewide program that would pay new smart-thermostat participants a $25 monthly bill credit in their first year, in exchange for letting utilities ease demand at peak times. The program isn't running yet, and for most households the practical question is smaller: how much a certified thermostat saves on average, what a rebate does to the payback, and what you give up when you enroll.

Key takeaways

ENERGY STAR says certified smart thermostats save approximately 8% of heating and cooling bills, or $50 a year, on average. Homes that are always occupied save less.
The certification test measures cuts in run time (at least 8% heating, 10% cooling), a pass mark for products rather than a bill forecast.
At $50 a year, a $99.99 thermostat (after an Energy Trust of Oregon rebate) pays back in about 2 years, against about 4 years at the $199.99 retail price.
Demand-response programs pay modest amounts (for example $50 plus $20 a summer in Rhode Island) and let you opt out of individual events.
The federal 25C credit no longer applies to property placed in service after December 31, 2025, and first- and second-generation Nest Learning Thermostats lost app control on October 25, 2025.

What it means for you

Own a 1st or 2nd gen Nest Learning Thermostat: it still runs its stored schedule without the app.
Renters: the program pages checked don't address renters, so ask the landlord before replacing a thermostat.
Homes with heat pumps: deep setbacks can switch on costly backup electric heat.
Someone home all day: ENERGY STAR says always-occupied homes see less savings, so expect less than the $50 average.
Offered a demand-response program: events are short, and both programs below let you override or opt out.
Tight budget: a basic programmable thermostat can deliver a setback too, but only if you actually program it.

What ENERGY STAR measures

ENERGY STAR says the average American household spends more than $900 a year on heating and cooling, almost half of its annual energy bill, and that certified smart thermostats are independently certified, based on actual field data, to deliver energy savings. Its smart thermostat FAQ gives the typical figure: "On average, savings are approximately 8% of heating and cooling bills or $50 per year."

The same FAQ lists what moves that number. Homes with extreme seasonal temperature swings generally save more, temperate climates slightly less, and "homes that are always occupied will see less savings." Homes with variable-capacity heat pumps or air conditioners generally do best with the thermostat the equipment maker recommends, certified or not. The two averages also don't line up exactly: 8% of $900 is $72, not $50, so treat both as rough.

Certification works differently. Under the key product criteria, service providers use EPA software on a year of data from hundreds of customers' homes, and a model must show these annual run-time reductions:

Measure	Heating	Cooling
Lower 95% confidence limit of the weighted national average	at least 8%	at least 10%
Weighted national average of 20th percentiles	at least 4%	at least 5%

The FAQ says these reductions are measured against the installed base of all other thermostats in the US. A home that already runs a steady setback starts from a better baseline and has less to gain. The 20th-percentile row is, roughly, the reduction four in five sampled homes beat, averaged across regions. Run time is not dollars either: energy prices and equipment efficiency decide what a shorter run is worth. Certified models must also allow a schedule, report run time and work with utility programs while preserving the customer's ability to override grid requests.

What a setback does by itself

DOE's Energy Saver Guide (2022 edition) says you can save as much as 10% per year on heating and cooling by turning the thermostat down 7°F to 10°F for 8 hours a day in fall and winter, and up in spring and summer. ENERGY STAR's FAQ notes that homeowners generally don't understand how programmable thermostats work and may not program them at all, which is the gap a learning or occupancy-aware model is meant to close.

Heat pumps and backup heat

The same DOE guide says that with a heat pump, you shouldn't use that setback without a smart or programmable thermostat designed for heat pumps. It also says not to set a heat pump back manually if that brings on backup electric-resistance heat, which is more expensive.

A payback example with a rebate

Illustrative example, not a forecast for any home. The savings come from ENERGY STAR's average of $50 a year, plus a high-use case that applies its 8% to an assumed $1,800 heating and cooling bill. The price comes from Energy Trust of Oregon's marketplace, which on October 20, 2026 listed the ecobee Smart Thermostat Enhanced at $199.99 retail and $99.99 with the incentive for eligible gas-heated homes.

payback (years) = price after rebate / annual saving

Average home, $50 a year:
  with rebate     $99.99 / $50  = 2.0 years
  without rebate  $199.99 / $50 = 4.0 years

High-use home, 8% of $1,800 = $144 a year:
  with rebate     $99.99 / $144  = 0.69 years (about 8 months)
  without rebate  $199.99 / $144 = 1.39 years

The rebate halves the payback in both cases. Bill size matters as much: at $144 against $50 a year, the high-use home earns the price back about 2.9 times faster. A home that is always occupied, or already runs a steady setback, may save less than either figure. To run your own numbers, use the payback calculator.

Rebates and the federal credit

ENERGY STAR runs a Rebate Finder on its smart thermostat page, where a ZIP code brings up rebates that partner utilities sponsor on certified products. Amounts and rules vary by utility. For Oregon customers, Energy Trust pays $100 for a self-installed thermostat, or $250 if an actively licensed contractor installs it. Eligible homes are single-family, manufactured, duplex to fourplex, or townhome, primarily heated by a gas furnace with gas from NW Natural, Cascade Natural Gas or Avista. The model must be on Energy Trust's qualified list and connected to the internet, and each residence gets one incentive.

Do not budget for a federal credit. The IRS states that the 25C energy-efficient home improvement credit will not be allowed for any property placed in service after December 31, 2025. This is general information, not tax or financial advice, and program terms change, so confirm with your utility before you buy.

Utility programs that adjust it

Bring-your-own-thermostat (BYOT) programs pay you to let the utility nudge your setting for a few hours at peak times. Rhode Island Energy's thermostat program page gave these terms as of October 20, 2026:

A $50 virtual prepaid card per thermostat for enrolling, plus $20 at the end of each summer season for participating.
The Wi-Fi thermostat must control a central air conditioner or a central heat pump; homes with window or portable units don't qualify.
Events typically run between 3 and 8 p.m. for up to three hours, with about 15 in most summers.
You can opt out of any event.

New York's plan, the Excelsior Power Program (Case 26-M-0525), would consolidate the utilities' existing direct load control programs into one statewide platform. The commission's release limits the $25 monthly credit to new participants. Customers who were already in a utility smart thermostat or BYOT program before the 2026–2027 State Budget passed can't get it. Customers may override utility control during events without penalty, though overriding can reduce their bill credits. The budget includes $33 million for the program. The utilities must file a two-phase implementation plan within 30 and 120 days of the order, so enrollment terms are not final.

Neither the release nor the Rhode Island page describes what thermostat data the utility or its vendor receives. Read the enrollment terms for that point before you agree.

If you own an older Nest

Google's support page says the 1st and 2nd generation Nest Learning Thermostats, including the 2nd generation Europe version, were unpaired from the Nest and Home apps on October 25, 2025. That ended remote control, status checks, notifications, Home/Away Assist and third-party assistant integration, and disconnected Nest Protect links and emergency shut-off. On the wall, Google says pre-set schedules keep working, and temperature modes and other on-device settings remain available. The devices no longer get software or security updates. Google says affected owners were emailed an offer and should contact Google support if they didn't get one.

Frequently asked questions

Will a smart thermostat work with any heating system?

Not always. Energy Trust of Oregon says smart thermostats work with most heating systems, but not with zonal systems such as baseboards and cadet heaters, or with ductless heat pumps. Its page links to compatibility checkers from ecobee and Google.

Does a smart thermostat need a C wire?

Not always, but many recommend one. ENERGY STAR's technical bulletin says certified models are no harder to install than other thermostats, though many recommend a C wire (a wire that supplies continuous power) for new installations. It adds that the thermostat must be connected to Wi-Fi to deliver its full benefits.

Can I claim a rebate after buying the thermostat?

It depends on the program. Energy Trust of Oregon accepts applications within 60 days of purchase, with a copy of the receipt or invoice, and allows six to eight weeks for the check. Other utilities set their own deadlines, so confirm before buying.

Can I leave a demand-response program?

Yes, under the two programs checked. Rhode Island Energy says to unenroll by emailing your name, address and thermostat type to the address on its page. New York's release says customers may de-enroll without penalty, though credits not yet earned stop.

When must I enroll to be paid for a summer?

In Rhode Island, you must be enrolled on or before August 15 to receive an incentive for that summer season. The $50 enrollment card typically takes four to six weeks to process.

Before you buy or enroll

Identify your system: central air, furnace, heat pump, baseboard or ductless. Then run the maker's compatibility checker.
Enter your ZIP code in the ENERGY STAR Rebate Finder, and check the utility's page for model lists, gas or electric supplier rules, deadlines and installer requirements.
Compute payback with your own bill, a saving no higher than ENERGY STAR's 8% average, and the price after rebate. If someone is home all day, assume less.
Before joining a demand-response program, note the event hours, the opt-out method and the data terms.
With a heat pump, confirm heat pump support and avoid setbacks that bring on backup electric heat.