Heat Pump vs Furnace: Which Is Cheaper to Run Where You Live

A heat pump is cheaper to run than a gas furnace only when its efficiency beats a break-even number set by your local electricity and gas prices. At 2026 state-average prices, a 95% efficient gas furnace costs less to run in 13 of the 20 US cities we modeled. An efficient heat pump wins in Seattle, Portland, Atlanta, Dallas, Phoenix, Kansas City and Louisville. Against an electric furnace, a heat pump wins everywhere.

Below: the math, a city-by-city estimate from NOAA climate normals and EIA prices, and a lookup table for the rates on your own bill.

The short answer: two prices and one efficiency number

A gas furnace burns fuel; its efficiency (AFUE) tops out just under 100%. A heat pump moves heat from outdoor air, so it can deliver up to three times more heat than the electricity it uses, says ENERGY STAR.⁸ That ratio is the coefficient of performance (COP). But electricity usually costs more per unit of energy than gas, so efficiency alone does not settle it.

The efficiency rating alone does not determine operating cost.

What decides it is the break-even COP: the seasonal COP at which both systems cost the same for the same heat. With EIA’s conversions (1 kWh = 3,412 Btu; 1 therm = 100,000 Btu):⁵

Break-even COP = electricity price ($/kWh) × 29.31 × furnace AFUE ÷ gas price ($/therm)

If your heat pump’s seasonal COP is above that number, it is the cheaper heat.

Heat pump vs. gas furnace at a glance

Sources: ENERGY STAR,⁹ PNNL,⁷ Bryant,¹⁷ Trane²³ and EnergySage.¹⁸ Our glossary explains what HSPF2 measures.

Heating cost by city: our 20-city estimate

We priced the same example home in 20 cities. Its heat need scales with heating degree days (HDD): each degree the daily mean falls below 65°F adds one.⁴ HDD come from NOAA 1991–2020 normals for the station nearest each ZIP code, the same data behind our climate guides.¹ Prices are EIA residential state averages: electricity from Electric Power Monthly Table 5.6.B for January–July 2026,² gas for 2025.³

The example home needs 12 million Btu of heat per 1,000 HDD (a heat loss of 500 Btu per hour per °F), about 72 million Btu a year in Chicago. The heat pump range uses seasonal COP 2.4 (HSPF2 8.1, the ENERGY STAR cold-climate minimum for ducted systems)⁷ and 3.1 (HSPF2 10.5, Bryant’s rating for its Evolution Extreme 23).¹⁷ COP = HSPF2 ÷ 3.412.

Why the North still favors gas at today’s prices

Detroit (5.7), Madison (5.1) and Chicago (4.9) pair cheap gas, about $1.04–$1.09 a therm, with electricity at 19–22¢. No air-source heat pump averages a COP near 5 through a Midwest winter. Seattle (2.4) and Atlanta (2.2) are the reverse. Cold alone does not decide it: Omaha is colder than Nashville but has a lower break-even, 3.3 against 3.4, because Nebraska power costs 12.9¢.

Limits: state averages hide local rates, real homes need less heat on mild days than the 65°F base assumes, and cooling is left out. Treat the dollars as a comparison, not a bill forecast.

Find your own break-even COP

Read the per-kWh and per-therm charges off your bills (a CCF of gas is roughly one therm) and find the closest cell:

For an older 80% furnace, multiply by 0.84. Then compare the result with the seasonal COP of the heat pump you are quoted (HSPF2 ÷ 3.412).

Better still, use your own history: last winter’s heating therms × your furnace’s AFUE ÷ 10 is your home’s heat need in millions of Btu. Multiply by 293 and divide by a heat pump’s COP for the kilowatt-hours it would use.

What seasonal COP to expect

NEEP’s cold-climate specification requires ducted heat pumps to reach HSPF2 7.7 (about COP 2.3) and a COP of at least 1.75 at 5°F.⁶ ENERGY STAR’s cold-climate label asks for HSPF2 8.1 ducted, 8.5 ductless, and 70% of rated capacity at 5°F.⁷ COP is highest in mild weather and lowest in deep cold, which is why NEEP’s cold-climate heat pump list reports it at 47°F, 17°F and 5°F. HSPF2 is calculated for a standard climate region, so in much colder places expect a lower seasonal COP than the label implies.

The real money leak in cold weather is backup heat. Heat pumps have traditionally been installed with electric resistance backup, PNNL notes, and resistance heat has a COP of 1.

This electric resistance backup is an inefficient and typically expensive form of heat

The same math settles heat pump vs. electric furnace: a COP 2.4 heat pump cuts the bill by about 58%, a COP 3.1 unit by about 68%. How much heat a heat pump still delivers below freezing is covered in our guide to heat pumps in cold weather.

Heat pump vs. furnace and AC

A heat pump is one system doing both jobs; a furnace needs a separate AC.¹⁷ If your air conditioner is due at the same time as your furnace, replacing two machines with one can narrow the upfront gap even where gas heat is cheaper. Our running costs cover heating only.

Dual fuel: a heat pump and a furnace together

A dual-fuel (hybrid) system pairs a heat pump with a gas furnace. Carrier describes it using the heat pump on mild days and the furnace on freezing nights.¹⁶ On price alone, the switchover belongs where the heat pump’s COP falls below your break-even. With a break-even of 2.7, a Kansas City heat pump can carry much of the season; at 4.9, Chicago’s average rates hand most of the winter back to gas.

Ductwork: what both systems share

Central heat pumps and furnaces use the same ducts, so leaks cost you either way. ENERGY STAR says a typical house loses about 20 to 30% of the air moving through its ducts to leaks, holes and poor connections.¹⁰ Homes without ducts can use ductless (mini-split) heat pumps.⁸

Size is a separate decision from type. A contractor should run an ACCA Manual J load calculation before quoting either system;¹⁴ see our glossary entry on Manual J.

Upfront cost and incentives in 2026

Published installed-cost ranges disagree widely, so get several quotes. The American Gas Association (January 2024) puts heat pumps at $2,500–$10,000 and gas furnaces at $700–$3,300, plus $2–$4 per square foot if a gas home needs more electrical capacity.¹⁹ EnergySage (July 2026) lists $10,500–$24,000 for heat pumps after state and local incentives, and $2,000–$15,000 for furnaces.¹⁸

The federal credit many guides still mention, section 25C (up to $2,000 a year for heat pumps), has ended for new installations:

You can claim the credit for improvements made through December 31, 2025.

The section 25D credit for geothermal heat pumps also ended for property placed in service after December 31, 2025.¹² The Department of Energy says its Home Energy Rebates are available in select states through state energy offices,¹³ and ENERGY STAR’s rebate finder lists rebates its partners sponsor on certified products.⁸ Confirm on the IRS credit page before counting on any credit.

Maintenance, safety and lifespan

Because a heat pump also cools, EnergySage suggests professional service twice a year, against once per heating season for a furnace.¹⁸ For fuel-burning systems, the EPA advises a yearly professional inspection, cleaning and tune-up of the furnace, flue and chimney to limit carbon monoxide risk.¹⁵ Both stop in a power outage, since a furnace’s blower runs on electricity; size a backup unit with our generator size calculator, which adjusts for your elevation.

Next step

Find your break-even COP in Table 3 from your own bills, then ask each installer for the HSPF2 and 5°F COP of the heat pump they quote. More in our heating and cooling guides and the home energy section; our methodology page explains how we use NOAA station data.