The Texas Commission on Environmental Quality (TCEQ) announced on April 29, 2026, that it is now accepting applications for the Texas Emissions Reduction Plan (TERP) Rebate Grants Program.
The program, managed from the agency’s headquarters in Austin, provides financial incentives to reduce nitrogen oxide (NOx) emissions from heavy-duty on-road vehicles and select non-road diesel equipment operating in eligible counties across the state.
This grant cycle makes $116 million in funding available to individuals, local governments, and other legal entities to accelerate the adoption of cleaner engine technologies. According to TCEQ, the program is a significant component of Texas’ strategy to improve air quality in nonattainment areas, where nitrogen oxide levels contribute to the formation of ground-level ozone.
By providing direct rebates for the replacement or repower of older, high-emitting internal combustion engines, the TCEQ aims to lower the financial barriers for fleet owners to transition to near-zero or zero-emission equipment.
According to the program guidelines, eligible projects include the replacement of on-road heavy-duty diesel vehicles with a gross vehicle weight rating greater than 8,500 pounds and select non-road diesel equipment with engines rated at 25 horsepower or greater. Grant recipients may be eligible for up to 80% of the incremental costs associated with purchasing or leasing new equipment. The program also offers optional add-on funding for onsite alternative refueling infrastructure, such as electricity, hydrogen, and natural gas, when associated with an eligible vehicle replacement. A portion of the total funding, approximately $30 million, is specifically set aside for small businesses that own and operate no more than five vehicles or pieces of equipment.
The TERP program was originally established by the Texas Legislature in 2001 and remains a tool for regions like the Dallas-Fort Worth (DFW) and Houston-Galveston-Brazoria areas to meet federal ozone standards.
The North Central Texas Council of Governments (NCTCOG) reports that such incentive programs are instrumental in reducing thousands of tons of NOx emissions over the life of the funded projects, with an average cost-effectiveness of approximately $6,115 per ton of emissions reduced. To qualify for the 2026 rebate grants, applicants must ensure that at least 55% of the operation of the grant-funded equipment occurs within eligible nonattainment or affected counties.
“By upgrading your vehicles and equipment and discarding the older models, you are helping to sustain Texas for the years ahead,” the TCEQ stated in its program overview, noting that the goal remains cutting emissions that affect the air quality of the state.