Heat Pump vs Gas Furnace: Which Is Cheaper to Run in 2026?
By Vinay S · Updated October 13, 2026
A heat pump is cheaper to run than a gas furnace only when your electricity rate is low enough compared with your gas rate. With gas at $1.44 per therm and a 95% AFUE furnace, a heat pump with a seasonal COP of 2.8 breaks even at about 14.5 cents per kWh. The U.S. average residential rate in July 2026 was 18.31 cents, so for many households the furnace still costs less per winter. In cheap-electricity states the heat pump wins easily.
A thread in r/heatpumps asks why heating with a heat pump costs so much more than it did with gas. The answer is almost always arithmetic, and you can do it yourself in five minutes with two numbers from your utility bills.
The formula
Both systems deliver heat. You want the cost of 100,000 BTU of heat inside the house, which is one unit that works for either fuel.
- Furnace: gas price per therm, divided by AFUE.
- Heat pump: 29.3, divided by COP, times your price per kWh.
The 29.3 is the number of kWh in 100,000 BTU. AFUE is a percentage, so 95% goes into the formula as 0.95. COP is how many units of heat the pump moves for each unit of electricity it uses. A COP of 2.8 means 2.8 kWh of heat for every 1 kWh you pay for.
Setting the two equal gives the break-even electricity price: (gas price ÷ AFUE) × (COP ÷ 29.3). If your electricity costs less than that number, the heat pump is cheaper to run. This is the same math the Heat Pump vs Gas Furnace Calculator does, with your own rates plugged in.
A worked example with 2026 prices
For gas I used the EIA residential price for February 2026, $14.95 per thousand cubic feet. One thousand cubic feet is about 10.4 therms, so that is $14.95 ÷ 10.4 = $1.44 per therm. For electricity I used the EIA’s July 2026 residential averages by state.
The furnace first: $1.44 ÷ 0.95 = $1.52 per 100,000 BTU.
Now the heat pump at COP 2.8, where 29.3 ÷ 2.8 = 10.46 kWh per 100,000 BTU:
| Where | Electricity price | Heat pump cost per 100,000 BTU | Furnace cost per 100,000 BTU |
|---|---|---|---|
| Washington | 14.71 cents/kWh | $1.54 | $1.52 |
| Texas | 15.88 cents/kWh | $1.66 | $1.52 |
| U.S. average | 18.31 cents/kWh | $1.92 | $1.52 |
| New York | 29.90 cents/kWh | $3.13 | $1.52 |
| California | 33.61 cents/kWh | $3.52 | $1.52 |
To turn that into a yearly bill, use a heating load. A planning guide from PickHVAC assumes a home needs 50 million BTU of delivered heat a year, which is 500 units of 100,000 BTU. On the U.S. average rate that works out to:
- Furnace: 500 × $1.52 = $760 a year.
- Heat pump: 500 × $1.92 = $960 a year.
In California the same house would pay 500 × $3.52 = $1,760 with a heat pump against $760 with gas. In Washington the two are within about $10 of each other. Your own load depends on climate and insulation, so treat the 50 million BTU as a placeholder. The Heat Loss Calculator gives a better estimate for your house.
Why the COP number matters so much
The 2.8 above is a seasonal average. A heat pump is more efficient on a mild 45°F day than on a 5°F night, so the COP moves around all winter. PickHVAC puts seasonal COP for typical units between about 2.0 and 3.5. Here is what that range does to the break-even price with gas at $1.44 and a 95% furnace:
| Seasonal COP | Break-even electricity price |
|---|---|
| 2.0 | 10.3 cents/kWh |
| 2.8 | 14.5 cents/kWh |
| 3.5 | 18.1 cents/kWh |
A well-installed unit in a mild climate sitting near COP 3.5 roughly ties the furnace at the national average rate. One working at COP 2.0 needs electricity near 10 cents to compete. That gap explains much of the disagreement you see online. People are quoting different COPs and different rates.
Why gas can win even in a mild climate
Climate and price are separate questions. Southern California is mild, so a heat pump would run at a high COP most of the winter. Electricity there still costs 33.61 cents per kWh in the EIA data. To break even at COP 3.5 you would need power at about 18 cents, and the price is nearly double that. Mild weather helps the COP. It does not fix the rate.
Two caveats on my numbers. The gas figure leaves out the fixed monthly charge many gas utilities add. The July 2026 residential gas price was $26.45 per thousand cubic feet, almost double February’s, partly because fixed charges are spread over very little summer use. Use your winter bills for the gas rate.
Cold-climate heat pumps
Standard heat pumps lose output as it gets colder, and many rely on electric resistance strips below a certain temperature. Those strips use 1 kWh of electricity for 1 kWh of heat, a COP of 1, which is the most expensive way to run the system.
Cold-climate models handle low temperatures better. PickHVAC says many can operate down to between −5°F and −13°F while keeping a significant share of rated capacity at 5°F, and its Minneapolis example uses a seasonal COP of 2.4. A U.S. Department of Energy presentation on very cold climates reports chamber testing with a COP above 1 down to −35°F, though that data is preliminary. Cold-climate units also cost more up front. PickHVAC lists them at $10,000 to $20,000 installed, against $8,000 to $15,000 for a standard ducted heat pump.
Dual-fuel systems
A dual-fuel setup pairs a heat pump with a gas furnace. The heat pump runs while it is mild, and the furnace takes over below a switchover temperature. You choose that temperature from the same break-even math. If the heat pump at 15°F has a COP of 1.8, the break-even electricity price at the example gas rate is (1.44 ÷ 0.95) × (1.8 ÷ 29.3) = 9.3 cents. If you pay more than that, the furnace is cheaper at 15°F.
Dual-fuel also gives you the cooling side of a heat pump and keeps the furnace as backup when the weather turns bad. It costs more to install, because you are buying and maintaining two systems.
Installed cost and incentives
PickHVAC’s 2026 installed-cost ranges:
| System | Typical installed cost |
|---|---|
| Gas furnace, replacement only | $3,500–$7,500 |
| Heat pump, ducted, standard | $8,000–$15,000 |
| Cold-climate heat pump | $10,000–$20,000 |
| Central AC plus gas furnace | $9,000–$18,000 |
If you were already planning to replace both a furnace and an air conditioner, the comparison is a heat pump against the pair, which narrows the gap a lot. The Furnace and AC Replacement Cost Calculator lets you put in your own quotes.
On incentives, the federal 25C credit (30% of cost, up to $2,000 a year for heat pumps) applied to property placed in service before December 31, 2025, according to the IRS. It is gone for 2026 installs. State and utility programs differ. Income-qualified federal rebate money passed through state energy offices can reach up to $8,000 for a ducted heat pump, but funding is limited. A ServiceMag report says California’s single-family funds were fully reserved statewide as of February 24, 2026, with new requests going on a waitlist. Call your state energy office and your utility before you sign anything.
How to decide
- Find your gas price per therm and your electricity price per kWh from last winter’s bills. Subtract fixed charges first.
- Work out the break-even price with the formula above, using a COP of 2.4 if you get real winters and 3.0 if you do not.
- If your electricity price is under break-even, a heat pump saves on fuel. If it is over, the furnace is cheaper to run, and a dual-fuel system may still make sense.
- Add the installed cost difference. If the heat pump costs $5,000 more and saves $200 a year, the payback is 25 years, longer than the equipment lasts.
- Get at least two written quotes, and ask each contractor which seasonal COP they used for their savings estimate.
If you also need cooling, the heat pump replaces the air conditioner, and that changes the math in its favor. A furnace-only comparison undersells it.
Sources
- PickHVAC: Heat Pump vs Furnace, Costs, Efficiency, Comfort, and Climate Fit
- U.S. Energy Information Administration: Residential natural gas prices
- U.S. Energy Information Administration: Electric Power Monthly, average price by state
- IRS: Energy Efficient Home Improvement Credit
- U.S. Department of Energy: Detailed air source heat pump evaluation for very cold climates
- ServiceMag: California HEEHRA heat pump rebates go fully waitlisted statewide
Frequently asked questions
Is a heat pump cheaper to run than a gas furnace?
It depends on your two utility rates. With gas at about $1.44 per therm and a 95% AFUE furnace, a COP 2.8 heat pump wins when electricity costs less than about 14.5 cents per kWh. The U.S. average in July 2026 was 18.31 cents, so in many places gas is still cheaper to run.
What COP should I use to estimate heat pump running costs?
Use the seasonal figure, not the number on the brochure. Seasonal COP for ducted heat pumps generally falls between about 2.0 and 3.5 and drops on the coldest days. A cold-climate unit in a Minneapolis example comes out around 2.4.
Why can gas win in California even though heat pumps are efficient?
Electricity there averaged 33.61 cents per kWh in July 2026. At that rate a COP 2.8 heat pump costs about $3.52 per 100,000 BTU, roughly 2.3 times the $1.52 a 95% furnace costs with gas at $1.44 per therm.
Is the federal heat pump tax credit still available?
No for new installs. The 25C credit of 30% up to $2,000 applied only to property placed in service before December 31, 2025. Income-qualified state rebates of up to about $8,000 exist in some states, but funds run out. California's were fully reserved by February 2026.
What is a dual-fuel system?
A heat pump paired with a gas furnace. The heat pump heats the house in mild weather and the furnace takes over below a switchover temperature you set, so you avoid running the heat pump at its least efficient.