By Meraj Uddin Provat · Last reviewed May 23, 2026 · Editorial Standards
Heat pumps are 2 to 4 times more efficient than gas furnaces, but their upfront cost is often double — and the right answer depends on your climate, your local electricity rates, and whether you'll need an electric panel upgrade. This calculator compares heat pump vs gas furnace 15-year lifetime cost for your state, applies any state and utility rebates, and shows whether switching saves you money. The federal 25C tax credit ended for equipment placed in service after December 31, 2025, so it is no longer included in the math.
Heat Pump vs Gas Furnace Lifetime Cost
15-year comparison: equipment cost, fuel cost, state rebates, and optional electric panel upgrade. Federal 25C credit ended for 2026 installs.
15-year verdict
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Adjust the inputs to compare lifetime cost.
Heat Pump
Current System
Estimates only. Real quotes depend on home insulation, ductwork, refrigerant type (R-32 vs R-410A), and local labor rates. The federal 25C credit ended for equipment placed in service after December 31, 2025, and no longer applies to 2026 installs. Not financial advice.
How to use this calculator
- Select your state. Sets winter heat pump COP (efficiency) and your state's electricity rate.
- Pick your current heating system. Options: standard gas furnace, high-efficiency gas, oil, propane, or electric resistance.
- Enter home size and current annual heating cost. Pull this from your utility bills. Used to estimate your home's heating energy demand.
- Confirm electricity rate (auto-filled from state average) and heat pump install cost ($6,000–$15,000 typical).
- Add state/utility rebate. Varies wildly — Massachusetts $10K+, Vermont $4K, most others $500–$2K.
- Indicate if panel upgrade needed. Older homes with 100A service often need a 200A upgrade ($2,500–$4,000) before installing a whole-home heat pump.
- Review the 15-year verdict. The headline shows which system costs less over 15 years, and by how much.
What is a heat pump and why is it more efficient?
A heat pump is an electric system that moves heat instead of generating it. In winter, it extracts heat from outside air (or ground, with geothermal) and pumps it inside. In summer, it reverses to provide air conditioning.
The efficiency advantage comes from the fact that moving heat takes much less energy than creating it. A gas furnace converts each unit of fuel into roughly 0.80–0.95 units of heat (the rest is lost up the chimney). A modern air-source heat pump delivers 2.5 to 3.5 units of heat per unit of electricity consumed, depending on outside temperature.
That ratio is called the Coefficient of Performance (COP). A COP of 3.0 means 1 kWh of electricity delivers the same heat as 3 kWh of resistance heating.
When heat pumps win
The math favors heat pumps in these situations:
- You currently heat with oil, propane, or electric resistance. All three are more expensive per BTU than natural gas. Heat pumps almost always win.
- You live in moderate or warm climates. COP stays above 2.5 year-round, so operating cost is competitive.
- Your state has stacked incentives. Federal 30% / $2,000 + state rebate of $2,000+ + utility rebate of $500+ can drop net upfront cost below a gas furnace replacement.
- Your old furnace is dying anyway. If you're replacing equipment, the marginal premium for a heat pump is just $3,000–$5,000 over a new gas furnace — much smaller than installing a heat pump in a working-furnace home.
- You also need AC. Heat pumps provide cooling too. Replacing both a furnace AND an AC unit makes the heat pump's price premium effectively disappear.
When gas furnaces win
Honest cases where heat pumps don't pencil out:
- You're in a very cold climate (Maine, Minnesota, Montana, North Dakota) without a cold-climate heat pump. Standard heat pumps lose efficiency below 25°F and may switch to electric resistance backup, killing the savings.
- Your gas rates are very cheap (below $1.00/therm) and electricity rates are high. Some Midwest and Texas markets fit this.
- Your furnace is brand new and working fine. Replacing a 5-year-old, efficient gas furnace just to switch to a heat pump rarely pays back.
- Major electrical work is required. If panel upgrade + new circuits + ductwork modifications total $8,000+, the upfront swing wipes out the operating savings.
The federal 25C tax credit — ended for 2026
The Section 25C Energy Efficient Home Improvement Credit used to give homeowners 30% of installed heat pump cost, capped at $2,000/year (separate from geothermal's uncapped Section 25D credit). Under the One Big Beautiful Bill Act, both 25C and 25D ended for property placed in service after December 31, 2025. If your heat pump goes in during 2026, there is no federal tax credit — which is why this calculator no longer applies one.
If your system was placed in service by December 31, 2025, you can still claim the credit (30% up to $2,000 for air-source, 30% uncapped for geothermal) on that year's Form 5695 — the mechanics work the same way described in our solar tax credit guide, which covers the identical OBBBA cutoff.
State rebates and the HEEHRA program
Beyond federal credits, the IRA also funded HEEHRA (High-Efficiency Electric Home Rebate Program) — a $4.5 billion pool distributed to states for income-qualified heat pump rebates:
- Up to $8,000 off heat pump install for households at ≤80% area median income
- Up to $4,000 for households at 80–150% AMI
- Plus separate amounts for electric panel upgrades ($4,000), wiring ($2,500), insulation ($1,600)
Rollout has been state-by-state and slow. Massachusetts, New York, Colorado, Maine, and California have active programs as of 2026. Check DSIRE.org for your state's current status.
Cold-climate heat pumps
For Massachusetts, New York, Vermont, Maine, Minnesota, etc., you specifically want a cold-climate heat pump (CCHP) with these specs:
- Variable-speed inverter compressor
- Rated for at least 100% capacity at 5°F
- Some models maintain useful capacity down to −15°F or lower
The Northeast Energy Efficiency Partnerships (NEEP) maintains a list of cold-climate qualified heat pumps. Mitsubishi Hyper-Heat, Fujitsu HFI, and Daikin Aurora are common picks.
A standard (non-cold-climate) heat pump in Vermont would switch to expensive electric resistance backup below 25°F — completely defeating the efficiency advantage. Don't skip this distinction.
Frequently asked questions
How long do heat pumps last?
15–20 years for air-source heat pumps with regular maintenance. Compressor replacements (around year 10–12) cost $1,500–$3,000. Ground-source (geothermal) systems last 25+ years for the indoor equipment and 50+ years for the underground loops.
Does a heat pump work below freezing?
Yes — modern cold-climate heat pumps work efficiently down to −5°F to −15°F. Even non-cold-climate units work below freezing but lose capacity rapidly below 25°F. The "heat pumps don't work in cold weather" reputation comes from older single-speed units that did struggle.
Do I need backup heat?
Not if you size your heat pump correctly for your design heating load and live where temperatures rarely drop below the unit's rated low. In very cold climates, hybrid systems (heat pump + small gas furnace as backup) are common — the heat pump handles 90%+ of heating hours, and gas kicks in only on the coldest days.
What's the difference between SEER, HSPF, and COP?
SEER (Seasonal Energy Efficiency Ratio) rates cooling efficiency. HSPF (Heating Seasonal Performance Factor) rates annual heating efficiency. COP is a point-in-time efficiency ratio (heat output ÷ electricity input). SEER2 ≥ 16 and HSPF2 ≥ 9 were the efficiency thresholds for the federal 25C tax credit, which ended for equipment placed in service after December 31, 2025.
Can I install a heat pump in an apartment?
A ductless mini-split heat pump is ideal for apartments, additions, or homes without existing ductwork. One outdoor unit pairs with 1–4 indoor heads. Install cost $3,000–$8,000 per head. The federal 25C credit no longer applies to 2026 installs — check for state or utility rebates instead.
What about geothermal?
Ground-source (geothermal) heat pumps have higher upfront cost ($20,000–$35,000) but 30–50% better efficiency than air-source. Their separate, uncapped 30% federal credit (Section 25D) ended for the same reason 25C did — property placed in service after December 31, 2025 no longer qualifies. State credits and utility rebates may still apply.
Will a heat pump cool my house too?
Yes — heat pumps reverse for air conditioning. If you currently have a gas furnace + central AC, replacing both with a heat pump is often the most cost-effective upgrade path.
What about my hot water?
Standard heat pumps don't make hot water — you'd need a heat pump water heater (separate device, $1,500–$3,500 installed). HPWHs are 2–3× more efficient than electric resistance water heaters; their separate federal 25C credit ended for 2026 installs along with the rest of the program.
Methodology and sources
Heating efficiency for heat pumps uses AHRI 210/240 HSPF2 ratings averaged by climate zone, validated against NREL's Cold Climate Heat Pump field data. State electricity rates use EIA Form 861 2024 residential averages. Fuel price assumptions: natural gas $13/MMBTU (EIA STEO 2026), heating oil $30/MMBTU at $4.20/gallon, propane $35/MMBTU at $3.10/gallon. Current heating system efficiencies follow DOE appliance standards: 80% AFUE non-condensing gas, 95% AFUE condensing gas, 85% propane, 80% oil. The federal 25C heat pump credit (IRA 2022, 30% up to $2,000/year) and the geothermal 25D credit ended for property placed in service after December 31, 2025, per the One Big Beautiful Bill Act (P.L. 119-21). HEEHRA rebate program rules sourced from DOE Office of State and Community Energy Programs guidance documents (final implementation rolled out state-by-state through 2024–2026). Equipment lifetimes from ASHRAE service-life database (15–20 years air-source, 25+ years ground-source).
Reviewed by the CalcCottage editorial team. Updated May 14, 2026.
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