Heat Pump vs Gas Furnace in 2026: Installed Cost and Cost to Run

The decision is two separate comparisons that people mash into one. The first is what it costs to buy and install: a heat pump does the job of a furnace and an air conditioner, so it is compared against a furnace plus an AC, not a furnace alone. The second is what a unit of heat costs to produce, and that depends almost entirely on the ratio of your electricity price to your gas price. This post does both with the arithmetic shown, so you can substitute your own utility rates.

It does not repeat the price tables or the repair-versus-replace decision from our other pages. For installed-cost ranges by system and size, use the HVAC installation cost calculator and the furnace and AC replacement cost calculator. If your current system is still running and the question is whether to replace it at all, that is a separate repair-or-replace decision this post does not cover. What follows is the head-to-head: heat pump against gas furnace, on installed cost and on running cost.

Installed cost: a heat pump replaces two machines

The RealCostIQ calculators price replacement jobs from a single national table, which cites Angi's 2026 HVAC replacement cost guide (updated August 3, 2026, read by us on 2026-09-24). It is the table used by the replacement calculators and the repair-or-replace guide, so the figures below match those pages. These are national installed ranges; your metro, house size, ductwork condition and brand move them.

Read the table as a purchase decision, not a shopping list. If the furnace is dying and the AC is also near the end of its life, a heat pump at $4,200–$7,600 is being compared with a furnace-plus-AC job at $5,000–$12,500. If the AC is fine and only the furnace failed, the comparison is a heat pump against a $3,800–$10,000 furnace, and the heat pump has to justify itself on running cost and on the AC you would otherwise keep. The range for a furnace is wide because a basic 80% unit and a modulating 98% condensing unit are very different products, a point we come back to under AFUE below.

What ductless mini-splits cost

Search demand for "mini split heat pump installation cost" is high because a ductless system is the heat pump option for homes with no ducts, additions, and rooms the furnace never heated well. The mini-split installation cost calculator prices a heat-pump mini-split as condenser, indoor head units and labor. At mid-range brand and standard install difficulty, its model produces the estimates below. They are RealCostIQ calculator estimates built from component bands, not quotes, and they exclude any electrical work beyond what the labor band assumes.

A mini-split is not automatically the cheaper heat pump. Per zone the equipment is cheaper, but covering a whole house takes several heads, and once you are at four zones the total overlaps with or exceeds the ducted heat pump range in the first table. The mini-split wins where ducts do not exist or are badly leaking, or where only part of the house needs conditioning. If the ducts exist and are sound, a ducted heat pump usually reuses them. New or repaired ducts can change that answer, and Angi's figure above notes new ductwork can push a full system toward roughly $22,000.

What dual-fuel adds

A dual-fuel system pairs an electric heat pump with a gas furnace and switches between them. You pay for both pieces of equipment plus the controls. In the RealCostIQ HVAC installation cost calculator, the dual-fuel system type carries a higher equipment line and a higher labor line than a heat pump alone, which is the structural reason it costs more up front: you are buying a heat pump and a furnace, with one outdoor unit and one indoor coil still shared. What you get for the premium is covered in the dual-fuel section below.

What changed when the 25C credit ended

The federal Energy Efficient Home Improvement Credit (Internal Revenue Code section 25C) covered qualifying heat pumps up to $2,000 per year. The IRS states that the credit applies to property placed in service before December 31, 2025, and that the $2,000 annual cap applied to heat pumps, heat pump water heaters and biomass stoves or boilers. A heat pump placed in service in 2026 does not qualify. Our home energy tax credits 2026 guide tracks the status of all of the federal home-energy credits and is the page to check for whether any rule has changed.

How much that matters is a function of price. Using the installed range above, the maximum $2,000 credit was worth roughly 26% to 48% of a $4,200–$7,600 heat pump (2,000 divided by 7,600, and by 4,200), and the credit was capped at that dollar amount regardless of how expensive the job got. It was a meaningful discount on a purchase, but it was never the main reason one system beat the other on lifetime cost. The ending of the credit changes the payback timeline, not the direction of the comparison. If a heat pump was cheaper to run for your prices, it still is; the break-even just moves out by the amount of the lost discount divided by your annual savings.

State and utility rebates

What replaced the federal credit is a patchwork. Some states, utilities, municipal utilities and co-ops offer rebates or low-interest financing for heat pumps; many offer nothing; and amounts, caps, income rules and program funding change often. We do not list dollar figures here because any figure we printed would be stale or wrong for your address. The database to use is DSIRE, run by the N.C. Clean Energy Technology Center at N.C. State University, which lets you search incentives and policies by state or ZIP code. Treat it as a starting point: DSIRE does not state how often it is updated on the page we read, so confirm the current amount and whether funds remain on the program administrator's own page before you sign. Rebate programs are often first-come, first-served against an annual budget.

Two ordering mistakes cost people money. The first is signing a contract before checking whether the program requires pre-approval, which some do. The second is buying the lower-priced unit that misses a program's minimum efficiency or cold-climate listing requirement. Check the qualifying-equipment list first, then choose the contractor.

Operating cost per million BTU, with the math

Gas is sold by the thousand cubic feet and electricity by the kilowatt-hour, so the only fair comparison puts both in the same unit: dollars per million BTU (MMBtu) of heat delivered into the house. The conversions come from the U.S. Energy Information Administration: 1 cubic foot of natural gas is about 1,036 Btu, and 1 kWh of electricity is 3,412 Btu.

Step 1: price inputs from EIA

• Natural gas. EIA's U.S. residential natural gas price series reports an annual 2025 average of $15.34 per thousand cubic feet (Mcf). Its monthly series shows the winter months lower: $13.96 per Mcf for January 2026, against $26.45 in July 2026.
• Electricity. EIA's Electric Power Monthly, table 5.6.A puts the U.S. average residential price at 18.31 cents per kWh for July 2026, up from 17.45 cents a year earlier. EIA's annual figure for 2024 was 16.48 cents.

The summer gas figure looks absurdly high because EIA's residential price is total gas revenue divided by volume, and in July households burn little gas while the fixed monthly customer charge stays the same. That is why we use the annual 2025 average of $15.34 for the main comparison rather than the most recent month. The same fixed-charge effect applies to electricity but is smaller per unit. It also means the "marginal" gas price, what the last unit you burn in January adds, can be below these averages. Both are national averages; your own bill is what matters.

Step 2: convert both to dollars per MMBtu of fuel

• Gas: 1 Mcf = 1,000 cubic feet x 1,036 Btu = 1.036 MMBtu. So $15.34 / 1.036 = $14.81 per MMBtu of gas burned.
• Electricity: 1 kWh = 3,412 Btu, so 1 MMBtu = 1,000,000 / 3,412 = 293.1 kWh. At 18.31 cents per kWh, 293.1 x $0.1831 = $53.66 per MMBtu of electricity.

Electricity is about 3.6 times the price of gas per unit of energy in these two inputs (53.66 divided by 14.81). That ratio is the whole story. Straight electric resistance heating, a baseboard heater or an electric furnace, turns every kWh into heat and so delivers heat at $53.66 per MMBtu. A gas furnace burns cheap energy but loses some up the flue. A heat pump bridges the gap by moving heat instead of making it, getting more than one unit of heat per unit of electricity. The whole comparison reduces to whether the heat pump's multiplier is bigger than the price ratio after the furnace's losses are counted.

Step 3: divide by efficiency to get the cost of heat delivered

Furnace efficiency is stated as AFUE, annual fuel utilization efficiency: the share of the fuel's energy that becomes usable heat over a heating season, so a 95% AFUE furnace turns 95% of the gas into room heat and loses 5%. Heat pump efficiency is stated as HSPF2, heating season performance factor, which DOE states in Btu of heat per watt-hour of electricity. Divide HSPF2 by 3.412 (Btu per Wh) and you get the seasonal coefficient of performance (COP), the units of heat per unit of electricity.

Three things stand out. First, at these national averages a high-efficiency gas furnace is cheaper per unit of heat than any heat pump rated at the common HSPF2 levels. Second, the gap against an old 80% furnace is much smaller: an HSPF2 9.0 heat pump comes within about $1.83 per MMBtu of an 80% furnace, and a seasonal COP of 3 beats it. Third, no heat pump comes close to the cost of electric resistance, which is why switching from baseboard or an electric furnace to a heat pump is the strongest economic case for the technology. The table shows it: 22.60 is a 58% reduction from 53.66 at HSPF2 8.1.

The break-even efficiency

To tie a 95% AFUE gas furnace on fuel cost, a heat pump needs a seasonal COP of 53.66 divided by 15.59, or 3.44, which is an HSPF2 of about 11.7 (3.44 x 3.412). To tie an 80% furnace, it needs a COP of 53.66 divided by 18.51, or 2.90, about HSPF2 9.9. Those are the national-average numbers. Change the price ratio and the answer moves: at the 2024 annual electricity price of 16.48 cents the electricity cost is $48.30 per MMBtu, and a COP of 3.0 delivers heat at $16.10, closer to the gas furnace. In a region with 10 cent electricity and expensive gas, a heat pump wins by a wide margin. In a region with 25 cent electricity and cheap gas, the furnace keeps winning.

Turning dollars per MMBtu into a seasonal bill

To get an annual figure, multiply by the heat your house needs. As an illustration only, assume a home that needs 60 MMBtu of delivered heat in a winter. That load is an assumption for the example, not a statistic, and your own load depends on climate, size and insulation. Then the seasonal heating bill would be about $935 with a 95% furnace (60 x 15.59), $1,111 with an 80% furnace (60 x 18.51), $1,356 with an HSPF2 8.1 heat pump (60 x 22.60) and $1,073 with a heat pump at a seasonal COP of 3 (60 x 17.89). The differences between these are a few hundred dollars a year, which is why installed cost and the air conditioner you no longer buy often matter as much as the running cost.

To redo the math with your own bills, find the price per therm or per CCF on your gas bill (a therm is 100,000 Btu, so $1.481 per therm is $14.81 per MMBtu) and your cents per kWh, then use the formula in the table. Do not use the bill total divided by usage unless you are comfortable that the fixed charges are part of the cost you would avoid, which for electricity you would not avoid.

HSPF2, SEER2 and AFUE, and why they are not comparable

AFUE is a ratio with a ceiling of 100% because a furnace cannot deliver more heat than the fuel contains. HSPF2 is Btu per watt-hour and can be well above 3.412 because a heat pump moves heat that already exists outside. That is why a heat pump can legitimately be more than 100% efficient in the plain-English sense while a furnace cannot, and also why you cannot compare the two numbers directly: divide HSPF2 by 3.412 first.

Since January 1, 2023, DOE uses a revised test procedure, so heat pumps are rated by HSPF2 and cooling by SEER2. The test changed, so do not compare an old HSPF figure to a new HSPF2 figure. ENERGY STAR's air-source heat pump page lists current requirements as effective January 1, 2023 and states that a heat pump can deliver up to three times as much heat energy as the electrical energy it consumes, which is the same as a COP of 3. The ENERGY STAR value for split systems quoted in DOE's federal purchasing guidance is 15.2 SEER2 and 7.8 HSPF2.

Two things the label does not tell you. HSPF2 is a seasonal average across a standardized climate, so it blends mild and cold days; a house in a colder place with more hours at low temperatures will see worse real COP than the label implies. For AFUE, ENERGY STAR notes that certified furnaces carry higher AFUE ratings and higher efficiency blower motors than standard models, and it describes up to 16% better efficiency in the South and up to 18% in the North versus baseline models, with estimated annual savings of about $60 and $160 respectively. That is the size of the prize in moving from a standard furnace to a high-efficiency one: tens of dollars to low hundreds, not thousands.

Cold-climate performance: what the field studies measured

The argument against heat pumps in cold regions used to be that they stop working. The field data say it is more nuanced: modern inverter-driven units keep working well below freezing, but how much backup heat gets used depends heavily on how the system was sized and set up. Three sources we read:

• ORNL field test, Ohio. Oak Ridge National Laboratory's field investigation of a cold-climate heat pump in an occupied Ohio home during winter 2015 found the system operated down to -13°F without resistance heat, with a measured seasonal COP of 3.16. Its tandem compressors were designed to provide 75% of rated heating capacity at -13°F, and it saved more than 40% energy in the peak heating month versus the single-speed heat pump previously in that home. One house, one winter: a data point, not a guarantee.
• NREL ductless study, Northeast. NREL's field performance study of inverter-driven heat pumps in cold climates (August 2015) monitored seven ductless units and notes that the question of how cold is too cold had no clear answer, an uncertainty it said could lead to skepticism among homeowners, poor savings estimates, suboptimal equipment selection by contractors and inconsistent energy modeling. The point of the study was to measure it rather than assume.
• NREL ducted study, Northwest and Colorado. NREL's field validation of air-source heat pumps for cold climates (Winkler and Ramaraj, May 2023) monitored 13 central variable-speed heat pumps in single-family homes in IECC climate zones 5 and 6, mostly in Washington and Montana plus one near Denver, and reports data on 12 of them. Electric resistance auxiliary heat exceeded 40% of compressor-based heating energy at 5 of the 11 all-electric sites it reported on, and at 2 of those 5 the auxiliary heat used more energy than the compressor, one because the system was undersized and one because of a control or sensor fault.

Put together: a cold-climate-rated variable-speed unit can run, and run efficiently, in the low single digits and below. But in the larger NREL sample, a substantial minority of installations leaned heavily on electric resistance backup. Resistance heat costs $53.66 per MMBtu on the prices above, more than three times what a gas furnace costs. So a heat pump that falls back on its backup strips will not deliver the savings the label implies. The variables are not exotic. They are equipment sizing relative to the home's heating load, where the thermostat and controls tell the backup to start, and whether the unit is a true cold-climate model.

ENERGY STAR's air-source heat pump page notes that its certification requires third-party-verified performance at low temperatures, with units tested down to 5°F. If you live where winter lows are below that, ask the installer for the manufacturer's published capacity and COP at your design temperature, and ask what the backup is set to do. A contractor who has done a heating load calculation instead of sizing by square footage or by matching the old furnace is the single best predictor of a system that behaves as advertised.

Dual-fuel: the hedge

Dual-fuel (sometimes called hybrid) keeps the gas furnace as the backup instead of electric resistance strips. A control switches heating from the heat pump to the furnace below a chosen outdoor temperature, called the balance point or lockout. The logic follows from the table above: the heat pump is efficient in mild weather, when the price ratio can favor it, and gas takes over when the heat pump's efficiency drops and electric resistance would be the expensive fallback. Replacing a $53.66 per MMBtu backup with a $15.59 backup is where the savings come from.

It costs more because you buy and maintain two heating appliances, as covered above. It makes the most sense in three situations: a cold climate where you want a gas safety net, an existing furnace that is young enough not to need replacing, and a home where the electrical service or the budget makes a full conversion hard. In a mild climate it adds cost for backup you will rarely use. In a very cold one with cheap gas it may mean the heat pump runs only in the shoulder seasons, in which case you should ask whether the heat pump's higher cost is actually earning its keep over a furnace plus a standard AC.

Where to set the changeover is a real economic variable. Because the heat pump's COP falls as it gets colder, there is an outdoor temperature at which its cost per MMBtu equals the furnace's. Your installer can compute that balance point from your two prices and the unit's capacity and COP data at various temperatures; it is a cheaper decision to make with a calculator than to leave at a factory default.

Decision table by climate

This table is qualitative guidance built from the price math and field studies above, not a computed ranking. It assumes a house with decent insulation. Your electricity-to-gas price ratio can overturn any row, so check it first.

How to decide for your house

1. Pull your two prices. Gas in dollars per therm (multiply by 10 for dollars per MMBtu of fuel) and electricity in cents per kWh (multiply by 2.931 to get dollars per MMBtu). Divide the electricity figure by the gas figure and multiply by 0.95: a 95% furnace beats any heat pump whose seasonal COP is below that number on fuel cost alone (3.44 at the national averages above).
2. Decide what you are replacing. If the AC is also due, compare the heat pump against furnace plus AC, not furnace alone. If you are replacing electric resistance, the heat pump almost always wins.
3. Get a load calculation, not a guess. Ask each contractor for a heating load calculation and the unit's rated capacity at your design temperature, and ask how the backup heat is controlled.
4. Ask for the price before incentives. Then look up state and utility programs on DSIRE and the program administrators' own pages. The federal credit is gone for 2026 installs.
5. Get at least three quotes and compare equipment, tonnage, efficiency ratings, warranty, and whether permits and electrical work are included.

Run both options through the RealCostIQ calculators as a sanity check on quotes: the HVAC installation cost calculator for heat pump and dual-fuel system types, the furnace and AC replacement cost calculator for the combined replacement, and the mini-split installation cost calculator if the house has no usable ducts. They produce estimates, which the contractor's line-item quote should land near or explain the difference from.