Heat Pump vs Furnace in 2026: Upfront Cost, Running Cost and the Real Winner

Most heat pump versus furnace articles end with "it depends." This one shows you what it depends on, with 2026 prices and arithmetic you can redo with your own utility bill.

The short version: the two choices win in different places. A heat pump usually saves money at installation. A gas furnace often saves money every winter. Which effect is bigger depends on your climate, your energy prices and how long you will live in the house.

The scorecard

The installed prices come from 2026 national cost data for a 2,000-square-foot reference home. The running costs come from the calculation in the next section.

The running-cost math, step by step

Heating cost comes down to one question: how much do you pay for each unit of heat that actually reaches your rooms? The standard unit is a million BTU (MMBtu).

Gas furnace. One therm of natural gas contains 100,000 BTU, so a million BTU is 10 therms. A 95%-efficient furnace delivers 95% of that as heat.

• National average residential gas ran about $13.90 per thousand cubic feet in January 2026, roughly $1.35 per therm.
• Cost per MMBtu delivered: 10 therms x $1.35 / 0.95 = about $14.20
• At 80% efficiency, typical of older furnaces: about $16.90

Heat pump. A million BTU equals 293 kilowatt-hours. A heat pump delivers more heat than the electricity it uses, measured as its coefficient of performance (COP). Over a season, the federal minimum HSPF2 rating of 7.5 works out to a COP of about 2.2. Better models reach about 2.8 to 3.5, depending on climate.

• The national average residential electricity price was about 18.4 cents per kWh in May 2026.
• At COP 2.2: 293 / 2.2 x $0.184 = about $24.50 per MMBtu
• At COP 2.8: about $19.30
• At COP 3.5: about $15.40

Electric resistance (baseboard or an electric furnace) has a COP of 1: about $53.90 per MMBtu.

So at national average prices, a high-efficiency gas furnace delivers heat more cheaply than most heat pumps, and any heat pump beats electric resistance by a wide margin.

Your break-even electricity price

Here is the number that settles it for your house. A heat pump with a seasonal COP of 2.8 matches a 95% gas furnace at $1.35 per therm when electricity costs about 13.6 cents per kWh.

Find both prices on your utility bills: the total bill divided by kWh used, and the total gas bill divided by therms. If your gas is expensive or your electricity is cheap, the heat pump pulls ahead. Many utilities also offer lower winter or heat pump rates, which can change the answer.

Propane or heating oil?

Use the same method. Propane contains about 91,500 BTU per gallon and heating oil about 138,500. For propane, the cost per MMBtu is your price per gallon x 10.93 divided by the furnace efficiency. For oil, multiply by 7.22 instead. Homes on propane, oil or electric resistance are where heat pumps most often win outright, which is why we cover the switch in oil to heat pump conversion cost.

What that means over a year

Take a home that needs 40 million BTU of heat a winter, a moderate climate figure used here as an example:

• 95% gas furnace at $1.35/therm: about $570
• Heat pump at COP 2.8 and 18.4 cents: about $770
• Electric resistance: about $2,160

In that example the heat pump costs about $200 more per winter than gas. But it can cost thousands less to install, because it replaces both the furnace and the AC. At the middle of the 2026 ranges, the heat pump saves roughly $3,400 up front, enough to cover that heating gap for well over a decade. Cooling costs are about the same either way, since a heat pump cools like an air conditioner of similar efficiency.

Plug in your own heating load and prices to see which way your numbers fall.

Where each one wins

Choose a heat pump when:

• You live where winters are mild to moderate
• You heat with electric resistance, propane or oil today
• Your AC and furnace both need replacing at the same time
• Your electricity is cheap relative to gas, or your utility has a heat pump rate
• You do not have gas service, or want to drop the gas connection fee

Choose a gas furnace when:

• Winters are long and very cold, and gas is inexpensive
• Your AC is fairly new and only the furnace failed
• Your electricity rates are high
• You want the simplest, most familiar repair network in your area

Consider dual fuel when: you want both. A dual-fuel system pairs a heat pump with a gas furnace. The heat pump handles mild days, and the furnace takes over below a set outdoor temperature, when the heat pump's efficiency drops and gas becomes cheaper. It costs more up front than either alone, but it can be the lowest-cost system to run in cold regions with moderate electricity prices.

Cold climates

Modern cold-climate heat pumps keep producing useful heat well below freezing, but their efficiency falls as it gets colder, and the lowest COP arrives exactly when you need the most heat. In the coldest regions, compare cold-climate models by their rated capacity at 5°F, and ask whether backup heat is electric resistance (expensive to run) or gas. See cold-climate heat pump cost for the models and prices.

Lifespan and the true cost per year

A furnace often outlasts a heat pump by five years or so. But a furnace does not work alone: its AC partner lasts about as long as a heat pump. In practice, a furnace owner replaces the AC once during the furnace's life, so the lifespan advantage is smaller than it looks. Our guide to how long HVAC lasts covers what shortens and extends each.

What changed in 2026

• No federal credit. The 30% federal credit of up to $2,000 for heat pumps ended for systems installed after December 31, 2025. Check state programs and utility rebates, which still exist in many areas.
• New refrigerants. New heat pumps and ACs now use R-454B or R-32 instead of R-410A, with equipment prices estimated 8% to 15% higher. An EPA rule this year lets leftover pre-2025 R-410A units still be installed in most states, which can mean a discount.

The decision in three questions

1. Do you need cooling as well as heat? If yes and both systems are old, a heat pump starts ahead on installed price.
2. What is your break-even electricity price, using your own bills? That tells you who wins each winter.
3. How long will you stay? The longer you stay, the more the winter running cost matters.

For the rest of the system decision, including sizing and what a complete quote lists, read our heating and cooling costs guide and what size HVAC system you need.