Is a Heat Pump Worth It in Your State? Electricity vs. Gas Cost Calculator
A heat pump can be an efficient way to heat a home.
But that does not automatically mean it will cost less to operate than your gas furnace.
A homeowner in Massachusetts, a homeowner in Texas and a homeowner in Colorado can face very different electricity prices, natural gas prices and winter conditions.
That changes the math.
The useful question is not:
“Are heat pumps cheaper than gas?”
It is:
“At my electricity rate, my gas rate and my equipment efficiency, which one costs less to produce the heat my house needs?”
Use the calculator below to compare them.
Heat Pump vs. Gas Heating Cost Calculator
For the best result, use the actual electricity and natural gas prices from your bills.
Default values are illustrative examples only. They are not U.S. averages, state averages, utility rates or predictions of your home's heating demand. Use your actual utility prices and realistic equipment assumptions whenever possible.
Why Your State Can Change the Answer
Energy prices vary substantially across the United States.
The U.S. Energy Information Administration publishes residential electricity prices by state as well as residential natural gas prices by state.
Those differences matter because a heat pump purchases its heating energy through electricity while a gas furnace purchases natural gas.
A heat pump can be highly efficient and still face difficult economics in a location where electricity is expensive relative to natural gas.
The reverse can also be true.
That is why a national statement such as “heat pumps are always cheaper” or “gas is always cheaper” is not useful enough for an individual homeowner.
Start With Your Utility Bills, Not a National Average
The calculator above allows you to enter an electricity price and a natural gas price.
Whenever possible, use your own bills.
EIA state averages are useful for regional context, but they are not the same thing as the exact rate charged by your utility.
Your bill may include:
- energy charges,
- delivery charges,
- fixed monthly charges,
- taxes and fees,
- seasonal pricing,
- tiered rates, or
- time-of-use pricing.
For a decision involving thousands of dollars of HVAC equipment, your actual marginal energy costs are more useful than a generic national number.
Why Heat Pump Efficiency Looks Different From Furnace Efficiency
Gas furnaces and heat pumps use different efficiency metrics.
A gas furnace's AFUE describes the share of fuel energy converted into useful heat over a typical heating season.
For example, a 90% AFUE assumption means the simplified calculator treats 90% of the fuel's energy as useful delivered heat.
A heat pump works differently.
Rather than creating all of its heat through electric resistance, it moves heat from outside to inside.
That is why heat pump performance can be represented by a coefficient of performance, or COP, greater than 1.
A COP of 3 means that, under the modeled condition, each unit of electrical energy moves approximately three units of heat into the home.
But COP is not a constant for every hour of the winter.
Outdoor Temperature Changes Heat Pump Performance
This is one of the biggest limitations of a simple annual calculator.
Heat pump efficiency and heating capacity can change as outdoor temperature changes.
The equipment model, climate, system design and controls all matter.
A mild-climate home and a cold-climate home should not automatically use the same performance assumption.
Cold-climate heat pumps are specifically designed and tested for operation at lower outdoor temperatures, but actual performance still depends on the specific equipment and installation.
For a serious replacement decision, use manufacturer performance data and a contractor's load calculation rather than relying only on one generic COP assumption.
The Most Useful Number May Be the Break-Even Electricity Price
The calculator does more than tell you which fuel is cheaper under one assumption.
It also estimates a break-even electricity price.
That number answers:
“How expensive could my electricity become before the modeled heat pump heating cost equals the modeled gas heating cost?”
For example, if your break-even point is 20¢/kWh and you currently pay 15¢/kWh, the heat pump has more operating-cost room under the assumptions you entered.
If you currently pay 28¢/kWh under the same assumptions, the result may favor gas.
Change the gas price, furnace AFUE or heat pump COP and the break-even point changes too.
Do Not Use the State Average as Your Personal Rate
EIA publishes average retail electricity prices by state.
These figures are extremely useful for understanding geographic differences.
But EIA explains that its average retail electricity prices are calculated from utility revenue divided by retail electricity sales.
They are not necessarily the same as the tariff or rate structure applied to your individual account.
Use state data as a benchmark.
Use your own bill for the final decision whenever possible.
Natural Gas Pricing Needs the Same Caution
Natural gas costs also vary by state, utility and season.
The EIA publishes residential natural gas prices by state.
But a homeowner should still check the actual gas bill.
Fixed monthly gas charges deserve special attention.
If you switch most heating to electricity but continue using natural gas for cooking, water heating or another appliance, you may still pay the fixed gas service charge.
If eliminating the furnace also allows you to eliminate gas service entirely, the economics can look different.
Your Existing Furnace Efficiency Matters
Replacing an older, lower-efficiency furnace creates a different comparison from replacing a newer high-efficiency furnace.
Suppose two homes use the same amount of useful heat.
The home with the less efficient furnace must purchase more natural gas to deliver that heat.
That can improve the relative operating economics of the heat pump.
This is why the calculator asks for furnace AFUE rather than assuming every gas furnace is identical.
Your Heating Demand Matters Even More Than House Size
Two 2,000-square-foot homes can have very different heating requirements.
Climate, insulation, air leakage, windows, orientation and thermostat settings all affect heating demand.
That is why CostCandid does not use square footage alone to estimate annual heating cost.
For an actual HVAC replacement, a professional heating and cooling load calculation is more useful than a simple square-foot rule.
What About Backup Heat?
Some heat pump systems may use supplemental or backup heating under certain conditions.
That backup source could be electric resistance heat, a furnace or another system depending on the design.
If significant backup heat is expected, a simple constant-COP calculator can understate actual operating cost.
This is especially important in cold climates.
Ask the contractor:
- what happens at the home's design heating temperature,
- how much heating capacity the heat pump retains in cold weather,
- when backup heat is expected to operate, and
- what energy source provides that backup heat.
Installation Cost Can Reverse the Decision
Lower annual operating cost does not automatically mean lower total ownership cost.
Imagine a heat pump saves $300 per year in heating costs but costs $6,000 more to install than the alternative.
Ignoring financing, maintenance and future energy-price changes, the simple operating-cost payback would be about 20 years.
If the incremental installation cost is only $1,500 with the same $300 annual savings, the simple payback would be about five years.
That is why operating cost and installation cost should eventually be evaluated together.
Cooling Changes the Comparison Too
A heat pump provides both heating and cooling.
That matters when comparing project costs.
If your house already needs a new furnace and a new central air conditioner, comparing a complete heat pump project only with the price of a furnace is not an apples-to-apples comparison.
The more useful project comparison may be:
furnace + central AC
versus:
heat pump
or:
heat pump + furnace in a dual-fuel configuration.
Do Not Automatically Subtract the Old Federal Heat Pump Tax Credit in 2026
This deserves special attention because many older heat pump articles still describe the federal Energy Efficient Home Improvement Credit.
Under current IRS guidance, the Section 25C credit is not allowed for property placed in service after December 31, 2025.
For a heat pump installed in 2026, do not automatically reduce your project cost using the former federal 25C heat pump credit.
State, utility or other local programs may still exist.
Verify the current rules for your location and project before including any incentive in your financial decision.
So, Is a Heat Pump Worth It in Your State?
Your state is a useful starting point.
But your ZIP code alone cannot answer the question.
I would want at least these numbers:
-
Your electricity price
Preferably from your actual utility bill. -
Your natural gas price
Again, use your actual bill when possible. -
Your existing furnace efficiency
This affects how much gas is required to deliver the heat your house needs. -
Realistic heat pump performance
Especially at winter temperatures relevant to your climate. -
Your heating demand
Ideally informed by actual fuel use or a proper load analysis. -
The installation-cost difference
Operating savings should be considered alongside the amount you must spend upfront.
CostCandid's Take
I would not buy a heat pump because someone told me that heat pumps are always cheaper than gas.
And I would not reject one because my state has relatively expensive electricity.
I would calculate the relationship between the two fuels.
The number I particularly want to know is the break-even electricity price.
That tells me how much room the heat pump has before its modeled heating cost reaches the gas alternative.
Then I would stress-test the decision.
I would run:
- a lower heat pump COP,
- a higher electricity price,
- a higher gas price,
- a lower gas price, and
- different annual heating-demand assumptions.
If the heat pump still looks financially attractive across several reasonable scenarios, that is much more useful information than a single optimistic calculation.
If a small change in electricity or gas prices reverses the answer, then the operating-cost advantage is fragile and installation cost becomes even more important.
The Bottom Line
Whether a heat pump is financially attractive depends partly on where you live — but your state's name is not enough.
Electricity price, natural gas price, furnace efficiency, heat pump performance, climate and heating demand all affect the result.
Start with state energy data if you need a benchmark.
Then replace those averages with your actual utility prices.
Calculate the annual heating difference.
Calculate the break-even electricity price.
Then compare those operating costs with the actual installation quotes you receive.
That is a much better way to answer whether a heat pump is worth it for your home.
Sources & Methodology
CostCandid uses official government and ENERGY STAR sources where possible and separates sourced data from illustrative calculator assumptions.
- U.S. Energy Information Administration — Residential Electricity Prices by State
- U.S. Energy Information Administration — Natural Gas Data and Residential Prices
- ENERGY STAR — Clean Heating and Cooling
- Internal Revenue Service — Energy Efficient Home Improvement Credit
Calculator default values are illustrative scenarios only. They are not national or state averages, utility rates, predictions of heat pump performance, HVAC sizing calculations or guarantees of savings.
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