My city in California gave us a rebate for purchasing a heat pump in 2023. Apparently, according to the IRS, that rebate is taxable because it was paid by the city, NOT the utility (which would not be taxable). We received a 1099 form showing the amount of the rebate.
I can't find any information about whether the state of California also taxes this, or if it I can subtract it as an adjustment. No guesses, please, but if you know the answer and can back it up with a reference, appreciate it.
