Quick Answer
A heat pump and a gas furnace should be compared from a specific home’s heating and cooling loads, installed equipment proposal, utility tariffs, fuel availability, and local program terms. Do not assume a universal savings result, break-even period, or climate winner—but do not accept “it depends” as an answer either, because the deciding math is short enough to run yourself (below).[1][2]
Two facts frame everything else. First, the federal 25C tax credit that paid 30% (up to $2,000) for heat pumps ended for equipment placed in service after December 31, 2025—any contractor or article still quoting it is working from stale information.[10] Second, whether a heat pump or a furnace is cheaper to run is decided by your local electricity-to-gas price ratio, not by the equipment labels: at January 2026 national averages a 96% furnace wins comfortably; at other regional ratios the heat pump wins. The formula is in “The Math That Decides It.”
Start With a Load Calculation
Ask a qualified HVAC professional for a documented heating and cooling load calculation, not a recommendation based only on floor area or the capacity of the existing equipment. DOE Building Science Education material says right-sizing begins with determining the home’s heating and cooling loads.[12]
Provide information about insulation, windows, ducts, air leakage, occupancy, equipment location, and any comfort problems. The written scope should identify the design assumptions and the equipment proposed.
The Ratings You’ll See, Decoded
| Rating | Applies to | What it measures | Verified benchmarks |
|---|---|---|---|
| HSPF2 | Heat pumps (heating) | Heating output per watt-hour over the season | Federal minimum 7.5 (split systems, since 2023); ENERGY STAR requires 8.5 for cold-climate ductless[1] |
| SEER2 | Heat pumps + AC (cooling) | Cooling output per watt-hour over the season | Federal minimum 14.3 for split heat pumps[1] |
| AFUE | Furnaces | Percent of fuel converted to heat | Federal minimum 80%; ENERGY STAR requires ≥95% in the South, ≥97% in the North[3][4] |
The 2023 switch from HSPF/SEER to HSPF2/SEER2 reflects a stricter federal test procedure—ratings from before 2023 are not directly comparable to today’s numbers.[1] New to these terms entirely? The site’s AFUE vs SEER vs HSPF vs COP explainer decodes all four.
Cold-Climate Reality Check
A heat pump’s heating output falls as outdoor temperature drops. The honest way to compare in a cold climate is per-model data, not brand promises:
- The NEEP cold-climate air-source heat pump list publishes, for each listed model, the heating capacity and COP at 5°F—usable to compare real winter performance across brands.[5]
- The NEEP cold-climate specification requires a COP of at least 1.75 at 5°F for listed systems.[5]
- Manufacturer example, as a claim not a guarantee: Mitsubishi states its H2i systems hold 100% heating capacity down to -5°F.[6] Widely repeated “-13°F” and “-22°F” operation figures could not be verified on manufacturer pages—treat them as marketing until a spec sheet shows them.
If a heat pump would be your only heat source in a cold climate, the proposal should state its capacity at your design temperature and the backup-heat plan.
The Math That Decides It
Everything above sets the stage; this is the act. Heating cost per unit of useful heat:
Heat pump: $ per MMBtu = 293.08 × (¢/kWh ÷ 100) ÷ COP
Furnace: $ per MMBtu = 10 × ($/therm) ÷ AFUE
A heat pump is cheaper to run when your ¢/kWh ÷ your $/therm is less than 3.41 × COP ÷ AFUE. Run it with your own bill’s numbers—the national average is only an example:
- January 2026 U.S. averages: electricity 17.45 ¢/kWh, natural gas ≈ $1.35/therm (EIA; ratio ≈ 12.9). Against a 96% AFUE furnace, a heat pump needs seasonal COP above 3.6 to win—the furnace wins clearly; a strong cold-climate unit only matches an old 80% furnace.[7][8]
- Recent monthly averages (electricity 18.34 ¢/kWh, June 2026; gas ≈ $1.92/therm, May 2026; ratio ≈ 9.6). Against a 96% AFUE furnace, any heat pump above COP 2.7 wins (9.6 × 0.96 ÷ 3.41 = 2.70). Against the full 95–98% AFUE range high-efficiency furnaces actually ship at, the cutoff sits between COP 2.67 (95%) and 2.76 (98%).[7][8]
Two honest cautions: use winter-month gas prices (residential $/Mcf rises in the off-season as fixed costs spread over low volumes), and treat COP 2.5–3.5 as an illustrative seasonal band—a HSPF2 7.5 minimum unit lands near 2.2; strong cold-climate units run higher.[5][7]
Geography moves the ratio more than equipment choice: in cheap-gas regions (much of the Midwest and South) high-efficiency furnaces win on fuel cost—the American Gas Association, an industry group, claims a least-efficient furnace beats a most-efficient heat pump in 36 states—while the Pacific Northwest and some Southeast cooperatives flip the math, and versus propane, oil, or electric resistance a heat pump wins essentially everywhere.[7][8]
What a Winter Costs, by Fuel
EIA’s Winter Fuels Outlook (October 2025 edition, winter 2025–26 — the most recent edition as of this page’s August 2026 update; EIA’s next round of winter forecasts arrives in October) forecast average U.S. heating-season expenditures: natural gas $642 (−1% vs the prior winter), electricity $1,133 (+4%), heating oil $1,390 (−8%), propane $1,210 (−9%). Natural gas heats 46% of U.S. homes; electricity was the only fuel forecast more expensive, as rising power prices offset heat-pump efficiency gains.[9] Note what that $642-vs-$1,133 gap is and is not: it compares fuel bills across different homes and heating systems, not a heat pump versus a furnace in your home—the ratio math above is the tool for that question.
Gas vs Electric Heating: The Broader Comparison
The ratio math above is the tool for the heat-pump-vs-furnace question, but “gas vs electric heating” is often asked more broadly — by renters who can’t pick equipment, by households weighing an all-electric home, by anyone comparing bills across fuels. This section answers that broader framing.
First, the units, so the comparison is honest. Natural gas is billed in therms; one therm equals 100,000 BTUs. Electricity is billed in kWh; one kWh equals 3,412 BTUs. Those conversions put both fuels on one energy scale — then system efficiency decides how much of that energy becomes usable heat: a furnace’s AFUE is the fraction that reaches your rooms, while a heat pump’s COP means it can deliver more heat than the electricity it consumes. And compare total bills, not just energy charges (below).
A worked example at national-average rates. Suppose gas costs $1.35/therm (January 2026 U.S. average[8]) and electricity 17.45 ¢/kWh[7], with a 96% AFUE furnace against a heat pump at seasonal COP 2.5:
| Assumption | Natural gas (96% furnace) | Electric heat pump (COP 2.5) |
|---|---|---|
| Fuel price | $1.35 per therm | $0.1745 per kWh |
| Cost per 100,000 BTU delivered | 1.35 ÷ 0.96 = $1.41 | 0.1745 × (100,000 ÷ (3,412 × 2.5)) = $2.05 |
Under mid-winter 2026 national rates, gas wins this example — consistent with the January breakeven above — but your local numbers can flip it in high gas-price or cheap-electricity regions, which is exactly what your own ratio run will show. A well-insulated home with a modern heat pump can spend less than a drafty home with an older gas furnace even when gas is cheaper per unit of energy: the fuel price is only half the story, as the load-calculation section above argued.
Fixed charges can carry the comparison. Gas service usually carries a monthly customer charge you pay even with the furnace off. A household that ends gas service entirely eliminates that charge — for some, $15–$30/month — while electricity’s fixed charges are unavoidable if you already power the rest of the home. (What those line items are: your electric bill, decoded.) Always compare the full bill, not just the energy rate: fuel prices also move seasonally, so a full 12 months of rates beats a single month’s snapshot when you budget.
Comfort, noise, and air quality. Gas furnaces deliver hotter supply air, which some people prefer in deep cold; heat pumps deliver gentler, more constant heat that can feel cooler at the vent even when the room is comfortable. Outdoor heat-pump units add fan noise the furnace never had — placement matters. Indoor air quality depends more on maintenance than fuel type: clean filters, sealed ductwork, and proper ventilation matter for both, and a humidifier helps dry winter air either way.
Renters, most of this page isn’t yours to act on — but not all of it. You may not control the system, so the practical levers are reducing heat loss through windows and doors and understanding your rate structure. Reviewing a year of bills still shows how your seasonal costs compare.
The federal upside is real but narrower than headlines suggest: DOE cites peer-reviewed national-lab research finding that for over 90% of households studied, replacing worn-out heating equipment with a right-sized heat pump lowers energy bills — savings greatest versus oil, propane, and older electric resistance, with about 13 million gas-heated homes also saving. Envelope upgrades (insulation and air sealing first) can cut the installed cost of a right-sized heat pump by up to $3,700.[15] Note what that research is and is not: it compares replacement scenarios across homes, not a furnace-versus-heat-pump verdict for your address — your ratio does that.
What Installation Actually Costs
Manufacturer-published national ranges (equipment + labor, before any incentives):
| System | Range | Source |
|---|---|---|
| Standard heat pump (ducted tiers) | $7,369–$15,608 | Trane pricing guide[11] |
| Cold-climate heat pump | $7,983–$17,012 | Trane pricing guide[11] |
| Gas furnace, 80% AFUE | $5,093–$6,386 | Trane pricing guide[11] |
| Gas furnace, 96% AFUE | $6,630–$8,390 | Trane pricing guide[11] |
| Heat pump, all classes (incl. geothermal/high-efficiency) | $6,000–$25,000 | Carrier cost guide[13] |
Dual-fuel (heat pump + furnace sharing a system) has no honest single range: expect roughly the heat-pump tier plus the furnace tier, minus the air conditioner you no longer need. The thermostat’s balance point—where the system switches fuels—should be set using your actual ratio from the math above, which is one reason the control matters (below).
Incentives: What Changed in 2025
The 25C Energy Efficient Home Improvement Credit (30%, up to $2,000/year for heat pumps; $1,200 for most other items) is not available for property placed in service after December 31, 2025, under the July 2025 federal tax law; the solar/geothermal 25D credit ended on the same date.[10] What remains in 2026:
- State-administered Home Energy Rebate programs, where a state still runs them—income-capped, up to $8,000 for a heat-pump retrofit; availability genuinely varies by state, so verify with your program administrator before counting it.[10]
- Utility and state efficiency rebates (Mass Save-style programs, efficiency-district rebates)—often several thousand dollars for heat pumps and usually nothing for furnace-only swaps.
Confirm the administrator, qualifying equipment list, deadline, and whether offers stack—before signing.
Run Your Own Numbers
- From your electric bill: all-in ¢/kWh (total electric charges ÷ total kWh, not just the energy line).
- From your gas bill: $/therm (gas cost ÷ therms delivered; use a winter month).
- Candidate equipment: AFUE for the furnace; seasonal COP estimate for the heat pump (HSPF2 ÷ 3.4 gives a rough COP; or use the NEEP list’s 5°F COP as a cold-weather floor).
- Apply the breakeven rule above—and if the answer is close, weigh installation deltas and program money, not fuel alone.
Some state programs publish live comparators (Efficiency Maine’s heating-cost comparison page is the model—updated with in-state prices).[14]
The One Control Both Systems Share
Whichever system wins your math, the switchover and setback schedule decide much of the real-world result—and on a dual-fuel system the thermostat literally picks the fuel. One box covers both paths:
Works with gas forced air and heat pumps, including aux/backup heat and dual-fuel setups (up to 2 cool / 3 heat stages, per Google's compatibility docs). On a dual-fuel system this is the device that executes your balance-point decision from the math above.
Check price on Amazon Price & availability shown on Amazon.com — we may earn a commission.
For heat-pump owners specifically, a heat pump that seems to run all day in winter is usually a sizing, balance-point, or aux-heat question—not automatically a broken system.
Questions Before Signing
- What load calculation and design conditions support this equipment size?
- What work is included for ducts, electrical service, gas, controls, and permits?
- For heat pumps: what is this model’s capacity and COP at my design temperature (NEEP list)?[5]
- What maintenance and commissioning steps are required for warranty and safe operation?
- Which incentives are documented as applicable—and is anyone still quoting the ended 25C credit?
Action Checklist
Today
- Pull your all-in ¢/kWh and winter $/therm from the last bills.
- Compute your ratio against 3.41 × COP ÷ AFUE for the candidates.
- Note which fuel your region’s prices favor.
Before signing
- Request the load calculation in writing.
- Verify any rebate with its administrator (not the contractor’s brochure).
- For cold climates: confirm listed cold-climate equipment and the backup-heat plan.
Frequently Asked Questions
Is a heat pump or a gas furnace cheaper to run?
Is the federal heat pump tax credit still available?
Do heat pumps work in cold climates?
Is electric heat always more expensive than gas?
Should I switch from gas to electric heating?
Sources
- AHRI: 2023 Energy Efficiency Standards (SEER2/HSPF2 minimums and the test-procedure change)
- U.S. Department of Energy: Heat Pumps
- DOE FEMP: Purchasing Energy-Efficient Residential Furnaces (80% AFUE federal minimum)
- ENERGY STAR: Furnaces Key Product Criteria (≥95% South / ≥97% North)
- NEEP: Cold-Climate Air-Source Heat Pump Specification and Product List (COP ≥ 1.75 at 5°F)
- Mitsubishi Comfort: H2i systems — 100% capacity at -5°F (manufacturer claim)
- EIA: Electric Power Monthly Table 5.3 (June 2026: 18.34 ¢/kWh residential average; monthly series)
- EIA: Natural Gas Prices (May 2026: $19.83/Mcf residential; winter-month series)
- EIA: Winter Fuels Outlook, October 2025 (winter 2025–26 expenditures by fuel)
- IRS: Energy Efficient Home Improvement Credit and FAQs on 25C/25D termination after 12/31/2025 (Public Law 119-21)
- Trane: Heat Pump and Furnace Pricing Guide (national ranges, manufacturer-published)
- DOE Building Science Education: Proper Sizing of HVAC Systems
- Carrier: How Much Does a Heat Pump Cost (manufacturer cost guide)
- Efficiency Maine: Home Heating Cost Comparison (state-program comparator)
- U.S. Department of Energy, Office of Policy: For Most Americans, a Heat Pump Can Lower Bills Right Now (national-lab research: >90% of households save on replacement; up to $3,700 installed-cost reduction from envelope upgrades — published Feb 2024, before the July 2025 law ended the 25C credit its incentive discussion references)
