Colorado’s Ultra-Low NOx Furnace Rule Is Now Live: Insights from Colorado Springs' Absolute Comfort

A Colorado law that quietly reshaped the heating market took full effect on January 1, 2026. Under House Bill 23-1161, new gas furnaces and water heaters sold or installed in the state must now meet ultra-low NOx (nitrogen oxide) emission limits or carry a qualifying ENERGY STAR certification. For most homeowners, that means the standard 80% efficiency furnace is gone, and the replacement is a higher-efficiency, lower-emission unit that costs more up front. Absolute Comfort, Inc., a Colorado Springs HVAC contractor with more than three decades in the local market, is helping homeowners understand what changed and how to plan for it.

The rule caps NOx emissions at 14 nanograms per joule (ng/J) for fan-type central furnaces and 10 ng/J for residential water heaters under 75,000 BTU/hr. Manufacturers stopped shipping non-compliant 80% units at the end of 2025, so contractors are now installing condensing furnaces rated at roughly 95% AFUE and higher. Existing equipment is grandfathered — no one is required to tear out a working furnace — but the next replacement will follow the new standard.

Why This Rule Matters More Than the Headlines Suggest

Asked how significant the change is for homeowners, Simoff frames it as a shift that most people won’t notice until the day their furnace quits — which is the worst time to learn about it.

“This isn’t a future proposal — it’s already the law, and it’s already changed what we can put in your basement. The 80% furnaces people grew up with aren’t on the truck anymore. For a homeowner, the practical impact is simple: your next furnace will be cleaner, it will be more efficient, and it will cost more than the one it replaces. The people who get hurt are the ones who find that out at 6 a.m. on the coldest day of the year.”

— Nick Simoff, Owner, Absolute Comfort, Inc.

OLD STANDARD VS. NEW STANDARD AT A GLANCE

Factor

Pre-2026 (80% AFUE)

HB23-1161 Compliant (≈95%+ AFUE / ULN)

NOx emissions

Unregulated

≤ 14 ng/J furnaces; ≤ 10 ng/J water heaters

Efficiency

~80% AFUE

~95%+ AFUE (condensing)

Availability

Discontinued after Dec 31, 2025

Standard for all new installs

Typical annual energy savings

Baseline

~$225–$300/yr vs. an 80% unit

Venting

Metal flue

Often requires new PVC venting + condensate drain

Figures reflect published Colorado market data for 2026; actual results vary by home, fuel rates, and installation.

The Real Cost Impact: Plan for $1,000 to $2,000+ More

The most common question Simoff’s team fields is about price. Industry reporting across Colorado puts the added cost of a compliant furnace or water heater replacement at roughly $1,000 to $2,000 or more over a comparable pre-2026 system. The increase comes from the condensing heat exchanger, sealed-combustion design, and the extra labor for new venting and a condensate line.

“I won’t sugarcoat the sticker. A compliant system runs a homeowner more than the old 80% units did, and a chunk of that is labor we can’t skip — new venting, a condensate drain, sometimes electrical. What I tell people is to look at the ten-year number, not the one-day number. A 95% furnace gives back roughly $225 to $300 a year in gas, and the rebates and tax credits knock the gap down further. During our installs this winter, the customers who planned ahead came out fine. The ones who were caught in an emergency paid a premium for speed.”

— Nick Simoff, Owner, Absolute Comfort, Inc.

What Happens If You Wait Until the System Dies

Simoff’s core warning is about timing. A furnace that fails in a Colorado cold snap forces an emergency decision, and emergencies cost more and offer fewer choices.

FIELD NOTE — THE COMMON FAILURE POINT

The failure point we see repeatedly: a homeowner nurses a 20-year-old furnace through one more season, it dies mid-January, and now they’re choosing a $6,000+ system in an afternoon with no time to compare equipment, stack rebates, or schedule around their life. Replacing on your own timeline — ideally before the unit fails — is the single biggest lever a homeowner controls.

“When a system fails in a cold snap, you’ve lost your leverage. You take whatever we can get here fastest, you’re not shopping efficiency tiers, and you’re often paying emergency rates. If your furnace is 15 to 25 years old, don’t wait for it to make the decision for you. Let’s look at it in the fall, on your schedule, when we can size it right and line up every incentive you qualify for.”

— Nick Simoff, Owner, Absolute Comfort, Inc.

Absolute Comfort offers furnace services and heating installation across the Colorado Springs area, along with furnace repair for homeowners who want to buy time before a planned upgrade.

Rebates and Incentives That Cut the Cost

Several programs can offset the higher price of a compliant system. Amounts and eligibility change, so Simoff’s team confirms current offers at the time of install. As of mid-2026, homeowners should ask about:

• Federal Energy Efficient Home Improvement Credit (25C): up to $600 for a qualifying high-efficiency gas furnace and up to $2,000 for a qualifying heat pump.

• Colorado state tax credits: a state income-tax credit for qualifying heat pump and heat pump water heater installations.

• Colorado Home Energy Rebate Program: federally funded rebates administered by the Colorado Energy Office for high-efficiency electric appliances and whole-home efficiency upgrades, with larger amounts for income-qualified households.

• Local utility rebates: Colorado Springs Utilities and other Colorado utilities offer equipment rebates on qualifying high-efficiency furnaces, heat pumps, and heat pump water heaters.

“Most homeowners leave money on the table because they don’t know these stack. You can often pair a federal tax credit with a utility rebate and, for the right household, a state program on top. We map out what a specific home qualifies for before we quote the job — that’s the number that actually matters.”

— Nick Simoff, Owner, Absolute Comfort, Inc.

HOMEOWNER DECISION GUIDE

If your situation is…

Then the practical move is…

Furnace is 15–25 years old but still running

Schedule an off-season assessment and budget now; replace on your timeline to maximize rebates.

Building or renovating

Confirm the contractor is installing ULN or ENERGY STAR-compliant equipment from the start.

System replaced in 2025 or later

You’re likely already compliant — focus on maintenance to protect the investment.

Furnace just failed

Ask specifically which incentives apply before authorizing an emergency install.

Simoff’s Advice for Homeowners Deciding Right Now

“Get ahead of it. Have someone who knows the code look at your system before the weather turns, get the honest lifespan on it, and build the compliant replacement into your plan instead of your panic. Ask for the all-in number — equipment, venting, and every rebate applied — and ask what the efficiency actually saves you each year. A good contractor will show you the math and let you decide. That’s the whole game right now.”

— Nick Simoff, Owner, Absolute Comfort, Inc.

THE BOTTOM LINE

HB23-1161 is in effect today. The 80% furnace is off the market, compliant systems cost roughly $1,000–$2,000+ more, and they return about $225–$300 a year in efficiency. Homeowners who plan the replacement before failure — and stack federal, state, and utility incentives — keep the most control and pay the least. Waiting for a breakdown surrenders both.