Advertising Disclosure: This site may receive compensation for service connections made through this page. Content is editorially independent.
Which is cheaper to run depends on your local electricity and gas prices and on how efficiently the heat pump runs in your climate. At 2025 U.S. average residential prices (EIA), a heat pump has to average a COP of about 3.3 to match the heating cost of a 95% AFUE gas furnace, or about 2.7 to match an 80% AFUE furnace — and a heat pump replaces both heating AND cooling. The federal 25C tax credit ended for equipment placed in service after December 31, 2025 (OBBBA), and federal HEEHR rebates no longer cover replacing a gas furnace with a heat pump. Plug your own utility rates into the COP-vs-AFUE comparison below before deciding.
Replacing an HVAC system is one of the biggest bills a homeowner faces (installed price ranges are in our cost guide), and the heat-pump-vs-gas-furnace question now sits at the center of it. The 2026 reality is more complicated than either side admits: cold-climate heat pumps are built to keep working in freezing weather, but the federal 25C tax credit that helped pay for heat pumps in 2023-2025 expired for equipment placed in service after December 31, 2025. This guide is the honest math — what the comparison actually looks like for your specific climate and utility rates, what the OBBBA tax-credit reality means today, and the 15-year total-cost picture both vendors leave out of their pitch decks.
If you're weighing the broader repair-or-replace question (not just heat pump vs furnace specifically), start with our repair-or-replace decision framework — the C5 pillar covering the 5-question framework, cost thresholds, and system-type modifiers. For the cost side of either choice, the reference is our 2026 HVAC Cost Guide — every installed price in this article comes from it.
The Honest Side-by-Side Comparison
The two technologies do different things. A gas furnace burns natural gas to make heat — that's it. A heat pump moves heat from outside air into your home (and reverses to cool in summer), so it replaces BOTH a furnace AND an AC system. That structural difference matters for the cost comparison.
| Factor | Heat Pump | Gas Furnace |
|---|---|---|
| Upfront install | $7,600–$9,500 (ducted, 2–3 ton, standard efficiency); cold-climate models cost more | $2,500–$6,500 (80K BTU) |
| Replaces AC? | Yes — one system handles heating + cooling | No — you also need a central AC ($3,200–$7,000 for 3 tons) |
| Combined heat + cool cost | $7,600–$9,500 (same system) | $5,800–$12,000 (AC + furnace bundle) |
| Operating cost | Depends on your electricity rate and the COP it achieves in your climate | Depends on your gas rate and the furnace's AFUE |
| Break-even vs. gas (2025 EIA prices) | Needs an average COP of about 3.3 (vs. 95% AFUE) or 2.7 (vs. 80% AFUE) | — |
| Service life (DOE assumption) | 15 years | 21 years |
| Federal tax credit (2026) | Terminated 12/31/2025 (OBBBA) | Terminated 12/31/2025 (OBBBA) |
| State / utility rebates | HEEHR generally not available when replacing gas equipment; ask your utility | Ask your utility about furnace rebates |
| Indoor air quality / safety | No combustion in the heating system | Combustion appliance — needs working CO alarms and regular venting checks by a technician |
Installed price ranges from our cost guide; actual costs vary by region, provider, and home. Service-life figures are DOE's federal purchasing assumptions for an air-source heat pump and a furnace, not a promise of how long any one unit will last. Break-even COPs are derived in the next section.
Operating Cost Math: When Each One Wins
Here is the comparison most articles skip. Heat pump efficiency is measured in COP (coefficient of performance): units of heat delivered per unit of electricity used. ENERGY STAR says a heat pump can deliver up to three times more heat energy to a home than the electrical energy it consumes, because it moves heat rather than converting it from fuel — in COP terms, up to about 3. Performance is not constant: DOE notes that a traditional heat pump can suffer from performance decline in colder climates, which is why the COP it averages over your heating season matters more than its best-case rating. Gas furnace efficiency is measured in AFUE (annual fuel utilization efficiency), the share of the gas's energy that becomes usable heat; check the AFUE on your furnace's label or the quote for a new one.
To translate that into actual dollars, you compare cost per million BTU of delivered heat on each side:
- Heat pump cost per million BTU = (electricity price per kWh × 1,000,000) ÷ 3,412 ÷ COP
- Gas furnace cost per million BTU = (gas price per therm × 10) ÷ AFUE
At 2025 U.S. average residential prices — 17.30 cents per kWh for electricity (EIA Electric Power Monthly, Table 5.3, preliminary) and $15.34 per thousand cubic feet of natural gas (EIA), about $1.48 per therm using EIA's 1,036 Btu per cubic foot — the math comes out to:
- Heat pump at a seasonal COP of 3.0: about $16.90 per million BTU
- Gas furnace at 96% AFUE: about $15.42 per million BTU
- Gas furnace at 80% AFUE: about $18.51 per million BTU
Put another way, at those average prices a heat pump has to average a COP of about 3.3 to match a 95% AFUE furnace, or about 2.7 to match an 80% AFUE furnace. The answer is highly sensitive to local prices. EIA's 2025 residential electricity averages (Electric Power Monthly, February 2026, Table 5.6.B, year-to-date through December 2025, preliminary) were 15.41 cents per kWh in West Virginia, 15.32 in Arizona, 20.01 in Michigan and 27.78 in Maine. At a COP of 3.0, that puts heat pump heat at about $15.05 per million BTU in West Virginia, $14.97 in Arizona, $19.55 in Michigan and $27.14 in Maine. Compare those against your own gas bill's price per therm using the furnace formula above.
The honest answer is: plug your actual local utility rates into the formulas above before deciding. Generic "heat pumps are cheaper" or "gas is cheaper" claims ignore the variables that matter most.
Climate Matters: Heat Pump in Bangor vs. Phoenix
Climate changes the calculation as much as utility prices do. Four examples from the cities this article links to (climate zones and average winter lows are from our city data; electricity prices are EIA's 2025 state averages cited above):
Bangor, Maine (Zone 6A cold-humid, average winter low 10°F): A standard heat pump loses capacity and efficiency as temperatures fall, and a cold-climate model is the one to price here. To earn ENERGY STAR's Cold Climate designation, a heat pump must keep at least 70 percent of its 47°F heating capacity at 5°F and reach a COP of at least 1.75 at 5°F (ENERGY STAR v6.2 specification). Maine's 27.78-cent electricity also raises the heat pump's operating cost, so a dual-fuel system — heat pump for milder days, gas furnace for the coldest weather — is worth pricing alongside a full conversion. ENERGY STAR advises working with your contractor on sizing and on any back-up heating system.
Grand Rapids, Michigan (Zone 5A cool-humid, average winter low 19°F): Michigan's 2025 residential electricity average of 20.01 cents per kWh was above the 17.30-cent national figure, which pushes up the COP a heat pump needs to beat gas. Compare the break-even against your gas bill before converting. One option here is a heat pump that replaces the AC and handles milder heating days, with the gas furnace kept for the coldest weather — the same dual-fuel pattern, sized differently.
Charleston, West Virginia (Zone 4A mixed-humid, average winter low 25°F): Milder winters mean the heat pump spends less of the season in the cold conditions where its efficiency drops, and West Virginia's 2025 electricity average of 15.41 cents per kWh was below the national figure. That combination makes a full conversion from gas worth pricing out — run the break-even with your own gas rate.
Phoenix, Arizona (Zone 2B hot-dry, average winter low 46°F): Heating demand is light and cooling demand is heavy (the NOAA climate normals on our Phoenix page show several times more cooling degree days than heating degree days), so the case here is mostly about summer. A heat pump replaces the central AC and also covers the short heating season, and Arizona's 2025 electricity average of 15.32 cents per kWh was below the national figure.
For broader climate-by-climate maintenance considerations on either technology, see our year-round HVAC maintenance playbook. If your existing furnace is the trigger for this decision, our furnace not working diagnostic guide walks through whether the furnace is salvageable or replacement-only.
Get connected with a technician in your ZIP code.
Call Now — (844) 582-1795Disclosure: We are a referral service and may receive compensation for qualified calls. Calls may be routed to an independent provider network and may be recorded. Pricing and availability vary by provider and location.
The 2026 Reality: OBBBA, HEEHR Rebates, and What's Actually Available
If you read a heat-pump-vs-furnace guide written before 2026, it may cite the federal Section 25C Energy Efficient Home Improvement Credit as a major financial argument for heat pumps. That credit is gone for new installs. The One Big Beautiful Bill Act (Public Law 119-21, signed July 4, 2025) terminated 25C for property placed in service after December 31, 2025. Per the IRS Fact Sheet 2025-05, the credit "will not be allowed for any property placed in service after December 31, 2025" — so equipment installed in 2026 does not qualify on either side of this comparison.
If your HVAC was installed by December 31, 2025, you can still claim the credit on your 2025 tax return — see the IRS Section 25C page for filing details. For 2026 installs, the federal route is closed.
The federally funded, state-run High-Efficiency Electric Home Rebate (HEEHR) program remains, but it is unlikely to help with this particular decision. The statute (42 U.S.C. 18795a) caps HEEHR at up to $8,000 toward a heat pump for income-qualified households, and DOE says the rebates are available in select states only. More importantly, DOE's Program Notice 26-2 (effective May 29, 2026) removed "program allowances for upgrades for fuel-switching (i.e. replacement of non-electric appliances)." Under the current program design, HEEHR rebates cover upgrades "only from existing electric equipment to more efficient electric equipment," plus HVAC in new construction. So if you are replacing a gas furnace with a heat pump, plan on HEEHR not applying; if your home heats with electric resistance or an older heat pump, it may. Exact rules vary by state program — check your state energy office. Some utilities also run their own heat-pump or furnace rebates; ask yours what is currently offered.
The honest framing: do the heat-pump-vs-furnace math without counting on federal credits, then treat any state or utility rebate as a bonus. Be wary of any pitch that promises a federal tax credit on a 2026 install, or that counts a HEEHR rebate toward replacing a gas furnace — under Program Notice 26-2 that is fuel switching, which the program no longer covers. This is general guidance, not tax advice; consult a qualified tax professional and your state energy office for your specific situation.
Total 15-Year Cost of Ownership
Upfront cost is only one piece. The honest comparison adds installation, heating cost over the years you own the system, and repairs. Here is a worked example with every input stated, so you can swap in your own numbers. It assumes 50 million BTU of delivered heat per year — an illustrative figure, not a measured load; your home's actual load depends on its size, insulation and climate — plus the 2025 EIA prices above:
- Install: a ducted heat pump system (2–3 ton, standard efficiency) runs $7,600–$9,500; an AC + furnace split-system bundle runs $5,800–$12,000 (both from our cost guide). The ranges overlap, so the quotes you get matter more than the category.
- Heating cost per year: heat pump at a seasonal COP of 3.0 = 50 × $16.90 ≈ $845; gas furnace at 96% AFUE = 50 × $15.42 ≈ $771. Over 15 years (DOE's heat-pump service-life assumption) that is about $12,675 vs. $11,565, before any price changes.
- Sensitivity: if the heat pump averages a COP of 2.5 instead of 3.0, its heating cost rises to about $1,014 a year; at a COP of 3.5 it falls to about $724. Cooling cost is left out because both options need an efficient cooling system — compare the cooling efficiency ratings on the quotes.
At these inputs, the heating-cost gap is small next to the spread in installed prices. The decision usually turns on which technology fits your climate, your local electricity-vs-gas price ratio, comfort preferences, and indoor-air-quality concerns — and on the actual quotes. Repair costs vary by component; see the 2026 HVAC Cost Guide for current repair ranges.
When to Choose Heat Pump (and When Not To)
Choose a heat pump when:
- You need to replace the AC AND the furnace at the same time (one system instead of two)
- Your electricity price is low relative to your gas price, so the COP the heat pump will average beats the break-even from the formulas above
- Your winters are mild enough that the heat pump will seldom lean on back-up heat
- You want to remove combustion from your heating system
- State or utility rebates substantially offset the upfront premium
Stick with a gas furnace (or dual-fuel) when:
- You have long stretches of very cold weather and a cold-climate heat pump is not in the budget
- Your gas is cheap relative to your electricity, so the heat pump would need an unrealistically high COP to break even
- Your furnace is well short of ENERGY STAR's 15-year replacement flag and working well (replace the AC only and keep the furnace)
- Your home's electrical service may not support a heat pump plus electric back-up heat — have a technician or electrician check the service capacity before you commit
The dual-fuel option (heat pump + gas furnace) is the underrated compromise for cold-climate homes: the heat pump handles milder weather, and the furnace takes over below a switchover temperature the installer sets. ENERGY STAR notes that dual fuel systems let you heat with either the heat pump or the furnace and use each one where it works best on cost. Ask for a dual-fuel quote alongside the single-system quotes and compare them.
ENERGY STAR suggests it may be time to call a contractor about replacement if a heat pump or air conditioner is more than 10 years old, or a furnace is more than 15 years old, or if the equipment needs frequent repairs while energy bills are rising (ENERGY STAR).
Trusted Industry Sources
The guidance in this article is consistent with published recommendations from:
- U.S. Department of Energy — Cold Climate Heat Pump Challenge
- ENERGY STAR — Furnaces
- EPA Section 608 — Refrigerant Handling Regulations
- ENERGY STAR — Clean Heating & Cooling
- IRS Section 25C — for 2025 tax-year filings (terminated for 2026 installs)
A technician can assess your system and walk you through your options.
Call Now — (844) 582-1795Disclosure: We are a referral service and may receive compensation for qualified calls. Calls may be routed to an independent provider network and may be recorded. Pricing and availability vary by provider and location.
Frequently Asked Questions
It depends on your local electricity and gas prices and on how efficiently the heat pump runs in your climate. At 2025 U.S. average residential prices (EIA: 17.30 cents per kWh for electricity and $15.34 per thousand cubic feet of natural gas), a heat pump has to average a COP of about 3.3 to match the heating cost of a 95% AFUE gas furnace, or about 2.7 to match an 80% AFUE furnace. Cheaper electricity or pricier gas tips the math toward the heat pump; the reverse favors gas. Run the numbers with your own utility rates before deciding.
Heat pumps that earn ENERGY STAR's Cold Climate designation must keep at least 70 percent of their 47°F heating capacity at 5°F, with a COP of at least 1.75 at that temperature, and DOE describes cold climate heat pumps as operating with greater capacity and efficiency below 32°F. In very cold climates, a dual-fuel system (heat pump for milder days, gas furnace for the coldest weather) is one option; ENERGY STAR advises working with your contractor on sizing and on any back-up heating system.
Per our cost guide (/costs), a gas furnace (80K BTU) runs $2,500 to $6,500 installed, and a ducted heat pump system (2 to 3 tons, standard efficiency) runs $7,600 to $9,500 installed. Cold-climate and higher-efficiency models cost more, so get quotes for the specific unit. A heat pump also does the cooling, so compare it with a furnace plus a central AC: the same guide puts an AC + furnace split-system bundle at $5,800 to $12,000 installed.
The federal Section 25C Energy Efficient Home Improvement Credit was terminated for property placed in service after December 31, 2025 by the One Big Beautiful Bill Act (Public Law 119-21, signed July 4, 2025). Heat pumps installed in 2026 do not qualify for the federal 25C credit. The High-Efficiency Electric Home Rebate (HEEHR) program is available only in select states, and under DOE Program Notice 26-2 (effective May 29, 2026) it no longer covers fuel switching: a heat pump that replaces a gas furnace generally does not qualify. HEEHR can still help when replacing existing electric heating or cooling with more efficient electric equipment, and in new construction. Rules vary by state program; check your state energy office for current availability. This is general guidance, not tax advice; consult a qualified tax professional for your specific situation.
Often, yes. A properly sized heat pump handles both heating and cooling, so a home can convert fully from gas heating. Two scenarios where keeping the furnace can make more sense: (1) climates with long stretches of very cold weather, where a dual-fuel setup lets the furnace take over below a switchover temperature your installer sets; (2) homes where gas is cheap relative to electricity, so the operating-cost math favors gas. Run the break-even COP math with your own rates before deciding.
DOE's federal purchasing guidance assumes an average service life of 15 years for an air-source heat pump and 21 years for a gas furnace. These are life-cycle-cost modelling assumptions, not a promise of how long any one unit will last, and a heat pump also takes over the job of the central AC. ENERGY STAR recommends annual pre-season check-ups by a contractor: the cooling system in the spring and the heating system in the fall.
Local HVAC Service Areas
Cool Call Pro connects homeowners with independent HVAC technicians nationwide. Find a pro in Bangor (ME), Grand Rapids (MI), Charleston (WV), or Phoenix (AZ), or browse by state: Maine, Michigan, or all locations.