Data sourced from the U.S. Dept. of Energy, Energy Star, and the EIA.

Heat Pump vs Furnace: Which Is Cheaper to Run in 2026?

A cost-first comparison of heat pumps and gas furnaces in 2026, with modelled running costs, upfront prices, tax credits, and payback math for a typical U.S. home.

By TrimWatt Editorial Teamwho we arePublished July 10, 2026Verified August 1, 202610 min readNot yet independently reviewed — how we review
Key takeaways
  • Against oil, propane, or electric resistance heat, a heat pump wins easily on running cost.
  • Against natural gas it's close: at U.S. average prices, a heat pump (seasonal COP 3) costs about $18.01 per million BTU versus about $15.41 for a 96% AFUE furnace.
  • A heat pump needs a seasonal COP above roughly 3.5 to beat cheap natural gas on running cost.
  • State electricity prices range from 12¢ to 52¢/kWh — your own two rates decide the answer, not a national average.
  • Replacing electric resistance heat with a heat pump saves roughly $2,160 a year on this baseline — the clearest win in the comparison.
Side-by-side cutaway comparing heat flow from a furnace and a heat pump.
On this page
  1. Compare cost per unit of heat delivered, not efficiency
  2. What that means over a year
  3. Why your own rates decide this, not ours
  4. Where the heat pump wins decisively
  5. Installation cost is a separate question
  6. What changes in a cold climate
  7. What to do next

Most comparisons of these two systems open by asserting that a heat pump is dramatically cheaper to run. Against oil, propane and electric baseboard, that is true and not close. Against natural gas at current U.S. prices it is not true, and the arithmetic below shows why — along with how to redo it with your own two rates, which is the only version that matters.

Data and assumptions current as of August 2026
Electricity price: 18.44¢/kWh, the U.S. residential average for May 2026 from EIA's Electric Power Monthly. Natural gas: $15.34 per thousand cubic feet, EIA's 2025 U.S. residential annual average. These are the most recent of each that EIA publishes, and they move — gas especially, which is strongly seasonal.

Compare cost per unit of heat delivered, not efficiency

Efficiency ratings can't be compared across fuels: 96% AFUE and a COP of 3 are measured differently and priced differently. The comparable number is what it costs to put one million BTU of heat into your house, which folds the fuel price and the equipment efficiency into a single figure.

Cost per million BTU delivered — the three systems

StepCalculationResult
1. Electricity, per million BTU1,000,000 ÷ 3,412 BTU/kWh = 293.07 kWh × $0.1844$54.04
2. Electric resistance (COP 1.0)$54.04 ÷ 1.0$54.04 / MMBtu
3. Heat pump (seasonal COP 3.0)$54.04 ÷ 3.0$18.01 / MMBtu
4. Natural gas, per million BTU$15.34 per Mcf ÷ 1.037 MMBtu per Mcf$14.79
5. Gas furnace (96% AFUE)$14.79 ÷ 0.96$15.41 / MMBtu
6. Break-even COP against that furnace$54.04 ÷ $15.41COP 3.51

Steps 1 and 4 convert each fuel price to a common unit; steps 2, 3 and 5 divide by the equipment's efficiency to get delivered heat. Step 6 is the number worth remembering: at these two prices, a heat pump has to average better than a COP of 3.5 across the whole heating season to beat a high-efficiency gas furnace on running cost. Substitute your own electricity rate and your own gas price and the break-even moves.

What that means over a year

Multiply by how much heat the house actually needs. We use 60 million BTU of delivered heat a year — a mid-range figure for a 2,000 sq ft home in a mixed climate, chosen only to turn the per-BTU costs above into an annual number. A drafty house in Minnesota needs far more; a tight house in Georgia far less.

SystemEfficiency usedCost per MMBtuAnnual cost at 60 MMBtu
High-efficiency gas furnace96% AFUE$15.41≈ $925
Cold-climate heat pumpSeasonal COP 3.0$18.01≈ $1,081
Electric resistance / baseboard100% (COP 1.0)$54.04≈ $3,242
Annual heating cost = cost per million BTU × 60 million BTU delivered. Arithmetic from EIA national average prices (electricity May 2026, natural gas 2025 annual) and the stated efficiencies. Not a measurement, and not a prediction for your home.
Annual heating cost at 60 MMBtu delivered
Annual heating cost at 60 MMBtu delivered. Values in $. Bars are proportional and start at zero; the exact value is given in the third column of each row.
Gas furnace (96% AFUE)$925
Heat pump (COP 3.0)$1,081
Electric resistance$3,242

Same arithmetic as the table above. The gap that matters is not between the first two bars — it is between either of them and the third. Replacing electric resistance heat is where a heat pump pays back fastest. Derived from EIA residential electricity and natural gas prices; efficiencies as stated.

Why your own rates decide this, not ours

The two figures above sit within 17% of each other, which means almost any local variation flips the result. EIA's state data for residential electricity runs from 12.35¢/kWh in Idaho to 52.00¢/kWh in Hawaii. At 12.35¢ the heat pump costs about $12.06 per MMBtu and beats the gas furnace comfortably. At 30¢ it costs about $29.30 and loses badly. Nothing else in this comparison has that kind of leverage.

Do this with your own two numbers
Take the effective rate off your electricity bill — total dollars divided by total kWh, not the headline rate — and your gas price per therm or per Mcf off the gas bill. Then run steps 1 to 5 above. Ten minutes of arithmetic on your own bills beats any national average, including this one.

Where the heat pump wins decisively

None of the above weakens the case against the other fuels. Replacing electric resistance heat saves roughly $2,160 a year on this baseline — more than twice what the entire gas comparison is arguing about. Oil and propane sit between the two, and we have not costed them here because we have no equally current national delivered price and would rather leave a gap than invent one. If you heat with either, price your last delivery per gallon and run the same arithmetic.

TrimWatt Savings Score — Replacing electric resistance heat with a cold-climate heat pump62/ 100Good
ComponentPointsWhy
Payback speed28 / 40Pays back within 5 years
Materiality of the saving15 / 15$500+ a year — material for most households
Effort to do2 / 20Licensed trade required by code (gas, refrigerant, service panel); permit and/or inspection likely.
Comfort impact8 / 10Small improvement, or added convenience with no offsetting downside.
Data confidence9 / 15Figures come from a primary federal source, but the result depends on climate, local rate, or existing equipment, so real outcomes vary widely.

Inputs used: ≈$8,800 upfront · ≈$2,160/yr modelled saving · ≈4.1 yr payback · difficulty 5/5 · comfort +1 · medium data confidence. These come from the assumptions stated in this guide, not from your home.

The TrimWatt Savings Score is an editorial decision-support tool based on published assumptions. It is not an engineering rating, a guarantee of savings, or a prediction for a specific home. The weights and band boundaries are our editorial choices — see the method (v1.1) and disagree with them if you like; the component scores are shown above so the parts remain useful even if you reject the total.

Installation cost is a separate question

Running cost and installed cost are different decisions and should be kept apart. A heat pump replacing an existing furnace may need electrical work, and in an all-electric retrofit it may need panel capacity that isn't there. A furnace replacement in a home that already has gas service and venting is usually the simpler job. Neither the running-cost table above nor any national average can tell you what your house will need — that comes from quotes.

Chase the rebates, not the expired credit
The federal 25C credit ended for equipment placed in service after 31 December 2025. What remains is state, local and utility programs, several of which are substantial for heat pumps specifically. Check DSIRE and your own utility before signing anything, and ask each contractor which programs they file for on your behalf.

What changes in a cold climate

Seasonal COP is where cold climates bite. A cold-climate unit keeps producing heat well below 0°F, but its COP falls as the outdoor temperature drops, and any hours served by electric backup heat run at a COP of 1 — the most expensive heat in the house. A system averaging COP 3 over a mild winter might average appreciably less over a severe one, which pushes it further from the 3.5 break-even against gas. This is the reasoning behind dual-fuel systems: heat pump for most of the season, existing furnace for the coldest stretch.

Which system fits your situation

1You heat with electric resistance, oil, or propane→ The heat pump case is strongest here and is not close. This is where the money is.
2You heat with natural gas and your electricity rate is below about 13¢/kWh→ The heat pump likely wins on running cost. Run steps 1 to 5 with your own two rates to confirm.
3You heat with natural gas at an average or high electricity rate→ Expect running costs to be close or to favor the furnace. Decide on other grounds — cooling, comfort, emissions, equipment age.
4You live in a severe-cold zone→ Look at dual-fuel, and ask specifically what seasonal COP the contractor is assuming and how many hours backup heat is expected to run.
5Your ducts leak or the house is poorly insulated→ Fix the envelope first. Both systems will be oversized and underperforming until you do, and the heat pump suffers more.
6Your furnace still has years left and works→ Wait, but plan. Emergency replacements remove your ability to compare quotes or wait for a rebate window.

What to do next

  1. Pull your effective electricity rate and your gas price off your last twelve months of bills.
  2. Run steps 1 to 5 above with those two numbers to get your own cost per million BTU for each system.
  3. Ask any contractor quoting a heat pump what seasonal COP they are assuming for your climate, and treat a vague answer as a warning.
  4. Get quotes for both systems as installed costs, itemized, including any electrical work.
  5. Subtract every state and utility incentive you actually qualify for before comparing.

What these numbers assume — and where they stop

Assumptions

  • A home needing about 60 million BTU of delivered heat per year — a mid-range figure for a 2,000 sq ft house in a mixed U.S. climate, used only to turn cost-per-BTU into an annual number.
  • A cold-climate heat pump at a seasonal COP of about 3, against a 96% AFUE gas furnace and a 100% efficient electric resistance system.
  • Energy prices are the U.S. averages published by EIA: 18.44¢/kWh residential electricity (May 2026) and $15.34 per thousand cubic feet of residential natural gas (2025 annual average).
  • Unit conversions used throughout: 1 kWh = 3,412 BTU, so 1 million BTU = 293.07 kWh; 1 thousand cubic feet of natural gas ≈ 1.037 million BTU.
  • No federal tax credit is applied: the 25C credit terminated for property placed in service after 31 December 2025. State and utility rebates are not included either.

Limitations

  • We have not installed or metered these systems ourselves. Every figure is arithmetic from published EIA prices and stated efficiencies, not a measurement of any home.
  • The natural gas comparison is genuinely close at national average prices and flips either way on local rates. EIA's own state data runs from 12.35¢/kWh in Idaho to 52.00¢/kWh in Hawaii — a 4-fold spread that swamps every other variable here.
  • Seasonal COP is the weak point of any heat pump estimate. A COP of 3 is reasonable in a mild climate; in a severe-cold region where the system leans on electric backup heat on the coldest days, the seasonal average falls and the comparison worsens.
  • The two prices come from different periods — electricity is a May 2026 monthly figure, gas is a 2025 annual average — because that is the most recent of each that EIA publishes. Gas prices in particular are strongly seasonal.
  • Oil and propane are not costed here. We have no equally current national delivered price for them, and inventing one would defeat the purpose of showing the arithmetic.

Sources

Frequently asked questions

Do heat pumps work in cold climates?

Yes. Cold-climate models are rated to hold capacity down to around 5°F and keep working below 0°F. What changes is efficiency: as the outdoor temperature falls the COP falls with it, and if the system calls in electric backup heat, that portion runs at a COP of 1. That is why seasonal COP, not the rated figure, is what should go into any cost comparison.

Is a heat pump cheaper to run than a gas furnace?

Not automatically, and at current U.S. average prices, not quite. A COP-3 heat pump costs about $18.01 per million BTU delivered against about $15.41 for a 96% AFUE furnace. It needs a seasonal COP above roughly 3.5 to break even nationally. Against oil, propane and electric resistance the heat pump wins comfortably.

So when does the heat pump win on running cost?

Whenever you are replacing electric resistance heat, oil or propane; wherever electricity is cheap relative to gas; and wherever the climate is mild enough to keep seasonal COP high. It loses where gas is cheap, winters are severe, and backup resistance heat runs often.

Is there still a federal tax credit for heat pumps?

Not for equipment placed in service in 2026. The Energy Efficient Home Improvement Credit (25C) terminated for property placed in service after 31 December 2025. State and utility rebates may still apply and are now the incentives worth chasing.

Run the numbers yourself