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Heat Pump vs Furnace Cost Calculator
Your HVAC contractor swears heat pumps are the future. Your boomer
neighbor says gas is
cheaper. Let's run the actual numbers—install costs, monthly bills, and that
sweet $2,000 federal tax credit.
Your Home Details
System Costs
15-Year Cost Comparison
🏆 Winner:
Heat Pump vs Gas Furnace: The Math
This isn't about saving the planet (though you will). It's about money. Heat pumps cost more up front but crush gas furnaces on monthly bills. The question: Do the long-term savings justify the higher install cost? Spoiler: usually yes, especially with the federal tax credit.
💡 Real Talk from Carlos Rivera, 15-Year HVAC Tech
The game changed in 2022. Old heat pumps sucked in the cold. They'd switch to expensive electric backup heat at 35°F. Modern cold-climate units (Mitsubishi, Fujitsu, Carrier Greenspeed) work efficiently down to -15°F. I install them in upstate NY now—no problem. And the Inflation Reduction Act's $2,000 tax credit? Makes heat pumps a no-brainer for 80% of homeowners. Gas is only cheaper if you're in Oklahoma with $0.60/therm gas rates.
How Heat Pumps Are "300% Efficient"
Gas furnace: Burn 1 unit of gas → Get 0.95 units of heat (95% efficient, best case)
Heat pump: Use 1 unit of electricity → Move 3-4 units of heat from outside (300-400% efficient)
How is this possible? Heat pumps don't CREATE heat. They MOVE it. Your fridge does the same thing—pumps heat OUT of the fridge. A heat pump is a reversible fridge: summer = pump heat out (AC), winter = pump heat in (heating).
This is why even "100% efficient" electric resistance heat (baseboard heaters, space heaters) costs 3-4x more than a heat pump. Heat pumps are thermodynamic magic.
⚠️ Common Mistakes to Avoid
- Assuming heat pumps don't work in cold: "It's too cold for a heat pump!" False. Modern cold-climate units work down to -15°F. Only in extreme climates (Alaska, North Dakota) do you need gas backup.
- Not sizing for backup heat: If you DO hit -20°F, the heat pump stops. If you don't have electric strips or a gas furnace backup, your pipes freeze. Always have a "Plan B" heat source for the 1% coldest days.
- Ignoring the "Defrost Cycle": In winter, the outdoor unit freezes over. It runs in reverse for 10 mins to melt the ice. You might feel cool air inside for a bit. This is normal—don't call a repairman.
- Setting back the thermostat at night: Gas furnaces love setbacks (68°F -> 60°F). Heat pumps HATE them. Recovering 8 degrees takes hours and uses backup heat (expensive). Set it and forget it.
When Gas Furnaces WIN
Gas is cheaper IF:
- Natural gas costs <$0.80 /therm AND electricity is>$0.18/kWh
- You're in a state with insanely cheap gas (OK, TX, parts of LA)
- You already have gas lines (free connection) vs $5k to run electric
- You're in a rental and landlord won't upgrade to heat pump
Example: Oklahoma City
- Gas: $0.65/therm
- Electric: $0.11/kWh
- 2,000 sq ft home, moderate climate
- Gas furnace annual cost: ~$450
- Heat pump annual cost: ~$550
- Gas wins by $100/year. Over 15 years, gas saves ~$1,500.
But... factor in: heat pump replaces AC too (save $3k on AC unit). Still might break even.
When Heat Pumps DOMINATE
Heat pumps are cheaper IF:
- Electric rate <$0.18 /kWh and gas>$1.00/therm (most of the country)
- You're replacing electric resistance heat (heat pump is 75% cheaper)
- You don't have gas lines (avoid $3k-8k to run gas service)
- You live in moderate climates (South, Southwest, Pacific Coast)
Example: North Carolina
- Gas: $1.30/therm
- Electric: $0.12/kWh
- Gas furnace annual: ~$720
- Heat pump annual: ~$450
- Heat pump saves $270/year × 15 years = $4,050 savings
- Plus $2,000 tax credit = $6,050 total advantage
The $2,000 Federal Tax Credit (2024-2032)
Thanks to the Inflation Reduction Act, heat pumps qualify for a 30% tax credit, capped at $2,000.
- $8,000 heat pump install → $2,000 credit
- $12,000 heat pump install → $2,000 credit (capped)
- Works for air-source and geothermal (separate $2k limit for each)
What qualifies:
- Central heat pumps (whole-home systems)
- Mini-split ductless heat pumps
- Must meet ENERGY STAR "Most Efficient" or CEE Tier 2 standards
This credit is a GAME CHANGER. It drops \$8k heat pump installs to $6k effective cost. Suddenly payback period goes from 12 years to 6 years.
💡 Carlos's Favorite Thing: Dual-Fuel Systems
In cold climates (Chicago, Buffalo), I recommend dual-fuel: heat pump + small gas furnace backup. Heat pump handles 80% of winter (down to 20°F). When it hits 10°F or colder, gas furnace kicks in. Best of both worlds—cheap electric heat 90% of the time, reliable gas backup for polar vortex days. Costs $1k-2k more up front but worth it for peace of mind in harsh winters.
Installation Cost Breakdown
Heat Pump (whole-home):
- Equipment: $3,500-7,000
- Labor (2-day install): $2,500-4,000
- Electrical upgrade (if needed): $500-1,500
- Total: $6,500-12,500
- After $2k tax credit: $4,500-10,500
Gas Furnace + AC:
- Furnace equipment: $1,500-3,500
- AC unit: $2,000-4,000
- Labor (install both): $2,500-4,000
- Gas line (if new): $500-3,000
- Total: $6,500-14,500
Apples-to-apples, heat pump is same or cheaper up front post-tax-credit, plus eliminates future AC replacement ($3k-5k saved in 10-15 years).
Maintenance & Lifespan
Heat Pump:
- Lifespan: 15-20 years
- Maintenance: $150-300/year (filter changes, annual service)
- No carbon monoxide risk (no combustion)
Gas Furnace + AC:
- Furnace lifespan: 15-20 years
- AC lifespan: 10-15 years (you'll replace AC once during furnace's life)
- Maintenance: $200-400/year (two systems to service)
- Carbon monoxide risk (furnace needs annual safety check)
Heat pumps have slight edge on maintenance costs (one system vs two) and no combustion safety concerns.
Reviewed by Carlos Rivera
HVAC Technician (15 Years, EPA Certified)
Carlos has installed 300+ heat pumps in climates from Florida to Maine. His advice? Get 3 quotes, demand AHRI-certified Match ratings, and never let them talk you into an oversized unit (wastes energy).
Frequently Asked Questions
Are heat pumps really cheaper than gas furnaces?
Depends on your electric vs gas rates. In most of the US: yes, heat pumps are 30-50% cheaper to run. Why? A heat pump moves 3-4 watts of heat for every 1 watt of electricity (300-400% efficient). Gas furnaces burn fuel at 95% max efficiency. Do the math: heat pumps win unless your gas is dirt cheap (<$0.80 /therm) or electricity is insanely expensive (>$0.25/kWh).
Do heat pumps work in cold climates?
Modern cold-climate heat pumps work down to -15°F to -25°F. Older models struggled below 25°F. Brands like Mitsubishi, Fujitsu, and newer Carrier units are rated for Northern winters. Below their cutoff temp, they use electric backup heat (expensive) or you need a dual-fuel setup (heat pump + gas furnace backup). Minnesota? You'll want dual-fuel. Georgia? Heat pump only is fine.
What's the payback period for a heat pump?
Typical: 5-10 years. Fast payback (3-5 years) if: 1) Replacing electric resistance heat, 2) High electric rates + cheap install, 3) You get state rebates on top of federal tax credit. Slow payback (10-15 years): Cheap natural gas areas or DIY gas furnace install. The 2024 federal tax credit ($2,000 for heat pumps) dramatically improves payback for everyone.
Can a heat pump replace my AC and furnace?
YES. That's the whole point. A heat pump IS an air conditioner that can run in reverse. Summer: pumps heat out (AC mode). Winter: pumps heat in (heat mode). One system does both. You rip out your AC unit and furnace, install a heat pump + air handler. Bonus: no more maintaining two systems.