Heat Pump vs Gas Furnace: Which Costs Less Over 10 Years?
A heat pump can be extremely efficient.
A gas furnace can be less expensive to install.
Neither fact tells you which system will cost less over the next 10 years.
The answer depends on your heating load, electricity rate, natural gas price, equipment efficiency, installation cost and the systems already in your home.
There is also an important difference between the two technologies:
A gas furnace provides heat. An air-source heat pump can provide both heating and cooling.
That means a homeowner replacing only a failed furnace faces a different financial decision from a homeowner whose furnace and central air conditioner both need replacement.
Do not compare a heat pump and gas furnace using installation price alone.
Compare: Installed Cost + Heating Energy Cost + Maintenance + Required Companion Equipment
over the period you expect to own the system.
Heat Pump vs. Gas Furnace 10-Year Cost Calculator
This calculator compares the heating-side economics of an air-source heat pump and a gas furnace.
Use your own contractor quotes and utility rates whenever possible.
Heat Pump vs. Gas Furnace Cost Calculator
All default installation, maintenance and performance assumptions are illustrative unless otherwise noted.
Heat Pump
Gas Furnace
Planning estimate only. The default 40 million BTU heating load, COP 2.7, installation prices and $1.60/therm gas price are illustrative inputs. The default electricity rate of $0.1834/kWh reflects the June 2026 U.S. residential average reported by EIA.
What Is the Real Difference Between a Heat Pump and Gas Furnace?
A gas furnace creates heat by burning fuel.
A heat pump works differently. It uses electricity to move heat from outdoors into the house.
This allows a heat pump to deliver more heat energy than the electrical energy it consumes.
The same heat-pump system can also reverse operation and provide air conditioning.
That creates two very different homeowner scenarios.
Scenario 1: Only the Furnace Needs Replacement
If the existing central air conditioner still has substantial useful life remaining, a furnace-only replacement may have a much lower upfront cost.
Scenario 2: Both Furnace and AC Need Replacement
If both systems need replacement, comparing only the furnace price with the heat-pump price is incomplete.
The more appropriate comparison becomes:
Furnace + Central AC vs. Heat Pump
The calculator therefore includes an optional field for an additional AC replacement cost on the furnace side.
How Heat Pump Heating Cost Is Calculated
The simplified calculation used here is:
Heating Load in BTU ÷ 3,412
Heat Pump Electricity
Useful Heat kWh ÷ Seasonal COP
Heat Pump Heating Cost
Electricity Used × Electricity Rate
Suppose a home requires an illustrative 40 million BTU of useful heat over the heating season.
That equals approximately:
40,000,000 ÷ 3,412 ≈ 11,723 kWh of useful heat.
At an illustrative seasonal COP of 2.7:
11,723 ÷ 2.7 ≈ 4,342 kWh.
Using the June 2026 U.S. residential average electricity price of 18.34¢/kWh:
4,342 × $0.1834 ≈ $796 per year.
How Gas Furnace Heating Cost Is Calculated
Furnace efficiency is commonly expressed as AFUE, or Annual Fuel Utilization Efficiency.
ENERGY STAR describes AFUE generally as the percentage of incoming fuel energy converted into space heat rather than lost.
A 95% AFUE furnace therefore converts approximately 95% of the fuel energy represented by the AFUE test calculation into space heat.
Using the same illustrative 40 million BTU heating load:
40,000,000 ÷ 0.95 ≈ 42.1 million BTU of fuel input.
One therm represents approximately 100,000 BTU.
So:
42.1 million ÷ 100,000 ≈ 421 therms.
At an illustrative $1.60 per therm:
421 × $1.60 ≈ $674 per year.
The $1.60 gas rate is an example only. Enter the effective rate from your own utility bill.
Important: AFUE Does Not Capture Every Furnace Energy Cost
AFUE is useful, but it is not the entire household-energy picture.
DOE notes that AFUE does not include the electricity consumed by furnace fans and controls.
The simplified calculator therefore estimates the gas heating component rather than attempting to model every electrical accessory load.
This limitation is disclosed rather than hidden inside an assumed national number.
Why Electricity and Natural Gas Prices Can Reverse the Winner
Heat-pump operating cost is highly sensitive to electricity price.
Gas-furnace operating cost is highly sensitive to natural gas price.
Using the illustrative assumptions above:
| Variable | Makes Heat Pump More Attractive | Makes Gas More Attractive |
|---|---|---|
| Electricity Price | Lower | Higher |
| Natural Gas Price | Higher | Lower |
| Heat Pump Seasonal COP | Higher | Lower |
| Furnace AFUE | Lower | Higher |
This is why national statements such as “heat pumps always cost less” or “gas is always cheaper” are not useful financial rules.
Cold-Climate Heat Pump Performance Matters
Modern cold-climate heat pumps can provide meaningful heating at low outdoor temperatures.
But performance varies by model.
Current ENERGY STAR cold-climate criteria require qualifying residential air-source heat pumps to demonstrate:
- COP of at least 1.75 at 5°F
- At least 70% of the system's 47°F heating capacity at 5°F
- Verification that the low-temperature performance can be achieved by the system's native controls
These are certification requirements, not a promise that every heat pump has the same seasonal efficiency in every home.
For a cold-climate installation, compare the exact model's:
- Heating capacity at 5°F
- COP at 5°F
- Heating capacity at 17°F
- HSPF2
- Backup-heat strategy
- Design-temperature sizing
Seasonal COP Is an Assumption, Not a Nameplate Rating
The calculator uses seasonal COP because it provides a simple way to translate useful annual heating demand into estimated annual electricity use.
But actual seasonal performance depends on:
- Outdoor temperatures
- Equipment sizing
- System controls
- Duct performance
- Defrost operation
- Backup heat
- Thermostat settings
- Building envelope
The default 2.7 COP is therefore an illustrative planning assumption, not a national average or ENERGY STAR rating.
95% AFUE Is Also an Input, Not a Universal Furnace
Gas-furnace efficiency varies by product.
ENERGY STAR's current residential furnace criteria vary by region.
For gas furnaces, current certification criteria are at least:
- 95% AFUE in the U.S. South
- 97% AFUE in the U.S. North
That does not mean every furnace installed in those regions has those efficiencies.
Enter the AFUE of the furnace you are actually considering.
Does a Heat Pump Replace Central Air Conditioning?
Yes. An air-source heat pump can provide both heating and cooling.
This matters financially when an existing central AC system also needs replacement.
Suppose:
- Furnace replacement = $6,500
- AC replacement = $6,000
- Heat pump replacement = $12,000
A comparison of:
$6,500 furnace vs. $12,000 heat pump
would make the heat pump appear $5,500 more expensive.
But if the AC also needs replacement, the relevant furnace-side system cost becomes:
$6,500 + $6,000 = $12,500.
That can materially change the decision.
These prices are illustrative examples only.
Do Not Add AC Replacement If Your AC Is Still Good
The reverse is equally important.
If the existing air conditioner is relatively new and expected to remain in service, assigning a full new-AC cost to the furnace option would unfairly favor the heat pump.
That is why the calculator's AC replacement field defaults to $0.
Only enter an AC replacement amount if it is genuinely part of the decision you are facing.
What About Backup Electric Resistance Heat?
Backup heat can materially affect a heat pump's winter electricity use.
This calculator does not separately model resistance backup heat.
If the seasonal COP estimate you enter already reflects the actual whole-season performance of the system, adding another generic backup-heat estimate would risk double counting.
For an actual project, ask the contractor how supplemental heat is designed to operate at your local winter design conditions.
What About Maintenance?
Maintenance costs vary too much by contractor, service agreement, equipment type and location to justify pretending one national amount applies to every home.
For that reason, both maintenance fields default to $0.
If you want maintenance included in the 10-year comparison, enter the annual amount you expect to pay for each system.
What Happened to the Federal Heat Pump Tax Credit?
This is one area where older heat-pump articles can now be misleading.
The IRS states that the Section 25C Energy Efficient Home Improvement Credit is not allowed for property placed in service after December 31, 2025.
Therefore, a heat pump placed in service in 2026 should not be modeled using the former 25C federal credit.
State, local and utility programs are separate and may still exist.
Any incentive should be verified for:
- Your location
- Your utility
- The exact equipment
- Income or program eligibility
- Installation date
- Current program funding and rules
What About Fixed Gas Utility Charges?
A gas bill can contain charges that are not proportional to therm consumption.
This matters if replacing a gas furnace could allow the household to discontinue natural gas service entirely.
If other gas appliances remain — such as a water heater, dryer, range or fireplace — the fixed gas service charge may remain anyway.
The calculator does not automatically include or eliminate fixed gas charges because the correct treatment depends on the household.
When a Heat Pump Can Make More Financial Sense
A heat pump generally deserves closer consideration when:
- The furnace and central AC both need replacement
- Electricity pricing is favorable relative to natural gas
- The proposed heat pump has strong cold-weather performance
- The home does not require major electrical or ductwork upgrades
- The system is properly sized
- The household expects to keep the system for many years
When a Gas Furnace Can Make More Financial Sense
A furnace replacement can remain financially attractive when:
- The existing central AC still has substantial remaining life
- The home already has usable gas service and ductwork
- Natural gas is inexpensive relative to electricity
- The furnace replacement is straightforward
- A heat-pump conversion would require substantial additional electrical or ductwork expense
What This Calculator Includes
- Useful annual heating load
- Electricity rate
- Natural gas rate
- Heat-pump seasonal COP assumption
- Gas-furnace AFUE
- Installed cost
- User-entered maintenance
- Optional AC replacement cost on the furnace side
- Comparison period
What This Calculator Does Not Include
- Cooling electricity consumption
- Backup resistance heat as a separate line item
- Furnace blower and control electricity
- Duct losses
- Electrical panel upgrades unless included in your quote
- Ductwork modifications unless included in your quote
- Financing
- Future utility-price changes
- Equipment replacement during the comparison period
- Rebates or incentives
- Fixed utility charges
- Building-envelope improvements
The calculator is a financial screening tool, not a Manual J load calculation, energy audit or HVAC design tool.
Frequently Asked Questions
Is a heat pump cheaper to run than a gas furnace?
Sometimes. Heat-pump operating cost depends primarily on electricity price, heating demand and seasonal efficiency. Furnace cost depends on natural gas price, heating demand and AFUE.
What does COP mean?
Coefficient of performance compares heat delivered with electrical energy consumed. A COP of 2.7 represents approximately 2.7 units of heat delivered for each unit of electricity represented by that operating condition or seasonal assumption.
What does AFUE mean?
Annual Fuel Utilization Efficiency represents the share of incoming fuel energy converted to useful space heat under the applicable furnace test method. Higher AFUE means less fuel input is required for the same useful heat output.
Does a heat pump work in cold climates?
Cold-climate heat pumps are specifically evaluated for low-temperature performance. Current ENERGY STAR cold-climate requirements include COP of at least 1.75 at 5°F and at least 70% of 47°F heating capacity remaining at 5°F.
Does a heat pump replace an air conditioner?
Yes. An air-source heat pump can provide heating and cooling. Whether that adds financial value depends on whether the existing AC also needs replacement.
Should I automatically add a new AC cost to the furnace option?
No. Only include AC replacement if it is actually required as part of your current decision.
Is there a federal Section 25C heat pump credit in 2026?
No for property placed in service after December 31, 2025. Current IRS guidance states that the Section 25C credit is not allowed for property placed in service after that date.
What gas price should I use?
Use the effective rate from your own natural gas bill whenever possible. The $1.60/therm calculator default is illustrative and is not presented as a current national average.
What electricity price should I use?
Use your own utility rate. The calculator's 18.34¢/kWh default is the June 2026 U.S. residential average reported by EIA.
The Bottom Line
A heat pump can be more efficient and can replace both heating and cooling equipment.
A gas furnace can have a significantly lower initial replacement cost when the existing AC remains usable.
The correct decision therefore depends on more than fuel efficiency.
= Long-Term Ownership Cost
Start with your own contractor quotes.
Then enter your utility rates and the efficiency of the actual equipment being proposed.
The system with the lowest installation price is not necessarily the system with the lowest 10-year cost — and the most efficient system is not automatically the cheapest either.
CostCandid Methodology
This article answers one specific financial question:
What is the estimated long-term heating-side ownership cost of an air-source heat pump compared with a gas furnace?
Heating Load ÷ 3,412 ÷ Seasonal COP
Heat Pump Annual Cost
Heating Electricity × Electricity Rate
Gas Furnace Fuel Input
Heating Load ÷ AFUE
Gas Furnace Therms
Fuel Input BTU ÷ 100,000
Gas Furnace Annual Cost
Therms × Gas Rate
Ownership Cost
Installed Cost + Entered Companion Equipment + (Energy + Entered Maintenance) × Years
The default 40 million BTU annual heating load, COP 2.7, $12,000 heat-pump installation, $6,500 furnace installation and $1.60/therm natural gas price are illustrative assumptions only.
The default electricity rate of 18.34¢/kWh reflects the June 2026 U.S. residential average reported by the U.S. Energy Information Administration.
The calculator does not attempt to replace an HVAC load calculation, contractor proposal or site-specific energy model.
Data checked: September 2026.
Sources
- ENERGY STAR — Air-Source Heat Pumps
- ENERGY STAR — Heat Pump Equipment Key Product Criteria
- ENERGY STAR — Furnaces Key Product Criteria
- U.S. Energy Information Administration — Residential Electricity Prices
- Internal Revenue Service — Home Energy Credit Expirations
Comments
Post a Comment