Heat Pump vs Gas Furnace: Which Is Cheaper to Run in 2026?
Short answer: at mid-2026 prices, a modern heat pump beats a gas furnace on running costs in most US states, because it delivers 2 to 3 units of heat per unit of energy while even the best furnace delivers less than one. The exceptions are states that combine cheap natural gas with expensive electricity. Run your own state's numbers in about 20 seconds.
Key takeaways
- Heat pumps outsold gas furnaces in the US for the fourth straight year in 2025, without federal subsidies (DOE Energy Saver).
- The 25C federal tax credit (up to $2,000 for heat pumps) ended December 31, 2025. Pages still promising it are out of date.
- The decision is now a pure price comparison: your state's cents per kWh against its dollars per therm.
- Some states still pay meaningful rebates. Check before you buy, and check again before you sign, because funds run out fast.
- If your air conditioner is due for replacement anyway, the heat pump premium shrinks to nearly nothing: it replaces both systems.
The only equation that matters
A gas furnace turns fuel into heat at its AFUE efficiency: a 92% furnace delivers 92,000 BTU from every therm you buy. A heat pump moves heat instead of making it, delivering its HSPF2 rating in BTU for every watt-hour it draws. A standard new unit rates around 8, meaning it delivers roughly 2.3 times more heat per unit of input energy than a gas furnace can.
That multiplier is why the comparison usually favors the heat pump even though electricity costs more per unit of energy than gas. Whether it favors it in your house depends entirely on local prices, which is why national-average answers are close to useless. Residential electricity currently ranges from about 11 cents per kWh in North Dakota to over 35 in California and over 40 in Hawaii, according to EIA monthly data. The DOE Energy Saver methodology is the standard reference for converting equipment ratings into running cost.
Worked example at current prices
Take a home that burned 600 therms last winter through a 92% furnace, a typical figure for a mid-size house in a cold-ish climate. That is 55.2 million BTU of delivered heat.
- Furnace: 600 therms at $1.50 per therm is about $900 a season.
- Heat pump (HSPF2 8.1): the same delivered heat needs about 6,800 kWh. At 17 cents per kWh that is roughly $1,160. At 12 cents it is $820. At 30 cents it is $2,040.
Same house, same warmth, and the answer flips entirely on the rate. This is the whole argument for doing the math with your own state's prices, which is what our calculator does using the EIA's current figures for both fuels.
What changed in 2026
Two things. First, the One Big Beautiful Bill Act ended the 25C credit for heat pumps and the 25D credit for solar and geothermal for anything placed in service after December 31, 2025, per IRS guidance and the Congressional Research Service summary. A large share of the advice you will find on this topic was written before that date and silently assumes $2,000 off. Second, electricity prices rose 6.9% in 2025, roughly twice inflation, tracked in the BLS Consumer Price Index, and utilities have signalled further rises through 2027. Rising rates hurt the heat pump case at the margin, but they hurt resistance heating and inefficient cooling far more.
State money survived. Massachusetts, Maine, Colorado, New York and a dozen other states run live rebate programs worth up to five figures for whole-home conversions, catalogued in the DSIRE incentive database. We track the current status of every state's programs on the rebate tracker.
When the furnace still wins
- Cheap gas plus dear electricity. If your state's rate is above roughly 25 cents per kWh while gas is under $1.20 per therm, a standard heat pump struggles to compete on running cost alone.
- A young furnace. Scrapping a working 5-year-old furnace rarely pays back. The economic moment is when the furnace or the AC dies.
- Undersized electrical service. If the install requires a panel upgrade, add $1,500 to $4,000 to the quote and redo the payback math.
Frequently asked questions
Do heat pumps work in cold climates?
Modern cold-climate models maintain full output well below freezing and useful output to around -13°F. Maine, the coldest state in the lower 48, has one of the highest adoption rates in the country.
Is the federal heat pump tax credit still available in 2026?
No. The 25C credit ended for equipment placed in service after December 31, 2025. State and utility rebates are the remaining money, and they vary month to month.
What is HSPF2?
The federal heating-season efficiency rating adopted in 2023: BTU of heat delivered per watt-hour consumed, measured under more realistic conditions than the old HSPF. New units must rate at least 7.5; good ones exceed 9. ENERGY STAR lists qualifying models.
Should I wait for prices to come down?
Equipment prices are stable, but electricity rates are rising and rebate funds are finite. If your current system is over 12 years old, pricing the replacement now costs nothing and protects you from making the decision in an emergency.