Heat Pump vs Furnace Cost Calculator 2026: Yearly Savings
A heat pump usually beats propane, oil and resistance heat and rarely beats gas at 95% AFUE — enter your annual heating spend and fuel prices for the yearly figure.
· Source: EIA Electric Power Monthly Table 5.6.A (July 2026 data) · next EIA update ~Oct 23
On this page: CalculatorTableHow we calculatedSources
Jump to calculator ↓— optional preset from the Sept 2026 STEO (residential, Oct–Mar simple average): electricity 18.2¢/kWh, natural gas ≈$1.36/therm, propane $2.44/gal, heating oil $5.30/gal. Your own bill beats any national average.
Secondary control: the slider nudges the rate field above (numeric input stays the precise, primary way in). The URL keeps your scenario.
Why this number
The federal heat-pump credit ended after 2025, so the decision now rests on running cost — which depends entirely on your fuel prices. This compares them using your numbers:
Where the seasonal COP comes from
The three climate options are not rules of thumb. They are load-weighted seasonal efficiencies calculated from the median capacity-COP curve of 1,418 deduplicated cold-climate heat pumps in the NEEP database — a 3-ton ducted unit delivers COP 3.20 at 47°F, 2.17 at 17°F and 1.90 at 5°F, and those points are weighted by how much of a season’s heating energy falls in each temperature band.
That matters because a single fixed COP is where most heat-pump comparisons go wrong. Efficiency falls exactly when you need the most heat, so an average that ignores the cold end systematically overstates savings in northern climates — which is precisely where the switch is being considered.
If you want the temperature at which a furnace becomes the cheaper option rather than a whole-season average, that is a different and sharper question: use the dual-fuel switchover calculator , which solves it against the same curves.
One thing this tool still does not model: electric resistance backup. If your heat pump is undersized or your climate is severe enough that resistance strips engage, the blended efficiency drops fast — resistance heat has a COP of exactly 1.0. The switchover calculator explains that arithmetic in full.
How the comparison works
Fuels are sold in different units — therms, gallons, kilowatt-hours — so the only fair comparison is the cost to deliver the same amount of heat into your home . The tool does that in three steps:
- Heat you actually use. Your annual heating spend ÷ fuel price = units burned; × the energy per unit × your system’s efficiency = the useful heat delivered (in Btu). A 92%-efficient gas furnace wastes 8% up the flue; old systems and electric resistance differ.
- What a heat pump needs. That same heat ÷ 3,412 Btu per kWh ÷ your heat pump’s COP = the electricity it would draw. A COP of 2.8 means it delivers 2.8 units of heat per unit of power — the leverage that makes heat pumps efficient.
- The cost, side by side. Heat-pump electricity × your rate, versus what you pay now.
Is a heat pump cheaper than a furnace in 2026?
At the typical 2026 prices the calculator loads by default, the pattern looks like this:
| Current system | Typical price / efficiency | Heat pump (seasonal COP ~2.6–3.0) verdict |
|---|---|---|
| Electric resistance | 17¢/kWh · 100% (COP 1.0) | Almost always cheaper |
| Heating oil | ~$4.00/gal · ~85% furnace | Almost always cheaper |
| Propane | ~$3.00/gal · ~90% furnace | Almost always cheaper |
| Natural gas | ~$1.50/therm · ~92% furnace | Close — swings on your local prices |
Against electric resistance, heating oil, and propane, a heat pump almost always costs far less to run. Against cheap natural gas, it’s a close call that swings on your local gas price and electricity rate — so use your own figures above, not a headline claim. Cold climates lower the COP; if your winters are harsh, drop it toward 2.0–2.5 for a realistic number.
The 2026 cost reality
Because the §25C federal credit ended after 2025, a 2026 heat-pump install no longer gets up to $2,000 back from the IRS — see what energy credits are left in 2026 . Many states and utilities still run rebates, so check those. Weigh the yearly running-cost saving above against the full install price and how long you’ll stay. If your bills are high year-round, also check what solar could do for them .
Going deeper: the sizing estimator brackets what capacity your home needs, the crossover temperature tool finds the exact outdoor temperature where gas overtakes a named NEEP-listed unit, and after install the performance check tests whether the added kWh sits inside the rated envelope.
Frequently asked questions
Is a heat pump cheaper than a gas furnace in 2026?
It depends on your gas price and electricity rate. Against electric resistance, oil, or propane heat, a heat pump almost always wins because it moves roughly 2.6–3x more heat per unit of energy. Against cheap natural gas it’s closer and can go either way — which is exactly why this tool uses your own prices instead of a national assumption.
Is there still a heat pump tax credit in 2026?
Not federally. The §25C Energy Efficient Home Improvement Credit (up to $2,000 for heat pumps) ended for equipment placed in service after December 31, 2025. A 2026 install gets $0 federal §25C. Some states and utilities still offer heat-pump rebates — check your local programs, as those are separate from the federal credit.
What is COP and why does it matter?
COP (coefficient of performance) is how many units of heat a heat pump delivers per unit of electricity it uses. A COP of 3 means 3 kWh of heat for every 1 kWh of power — that leverage is why heat pumps can beat direct fuel burning. COP falls in very cold weather, so cold-climate homes should use a lower seasonal figure (2.0–2.5).
Does this include installation cost?
No — this compares yearly running cost, which is what recurs. Installation is a one-time cost (and, in 2026, no longer offset by a federal credit). Use the annual saving here against the install quote and your years in the home to judge the payback.
How we calculated this
Your annual heating spend is converted to delivered heat: MMBtu delivered = spend ÷ (10 × price per therm-equivalent ÷ AFUE), with propane at 91,452 Btu/gal and oil at 138,500 Btu/gal. The heat pump then needs kWh = MMBtu × 293.07 ÷ seasonal COP, and its cost is that kWh × your electricity rate. The saving is the difference; §25C is $0 for 2026 installs.Sources: U.S. Energy Information Administration (EIA) electricity rates · DSIRE incentive records · public IRS/OBBBA guidance. Figures are modeled estimates, not quotes or tax advice. See our methodology.
Where to go next
- Winter heating cost: gas vs propane vs oil vs electric — All five heating options per MMBtu at EIA’s September outlook, plus 20 cold-state pages from their own prices.
- Gas vs heat pump heating cost — Every state with a published gas price, ranked by which side wins per MMBtu.
- Propane vs heat pump cost — Propane homes: the electricity price ceiling under which the heat pump is cheaper.
- Dual-fuel switchover calculator — Keep the furnace as backup and set the changeover temperature from real NEEP curves.
- Heat pump sizing estimator — Bracket the capacity your home needs before pricing the running cost.