Heat Pump vs Gas Furnace: Which Is Cheaper to Run in 2026?

Sample article written by CiteMonthly to show quality, not a real client. "Northside Heating & Air (sample)" is a fictional placeholder business. All prices are U.S. national averages from the public sources listed at the end.

Short answer: At U.S. average winter 2026 energy prices, a 95% efficient gas furnace delivers heat for about $14.70 per million Btu. A typical ENERGY STAR heat pump costs roughly $20–$23 for the same heat, so the furnace is usually cheaper to run on heating alone. The heat pump comes out ahead when your electricity is cheap compared with your gas, when it replaces an older 80% furnace, propane, oil or electric baseboard heat, or when it keeps a high average efficiency in a mild climate. It also does the job of your air conditioner. Your own rates decide the answer, and the three-step check below takes about ten minutes.

What does each system cost to run at 2026 prices?

To compare the two systems fairly, we priced the same amount of delivered heat: one million British thermal units (Btu). We used the U.S. Energy Information Administration's (EIA) average residential prices for the coldest months of 2026:

• Electricity: 17.45¢/kWh in January and 17.65¢/kWh in February, which averages 17.55¢/kWh [1].
• Natural gas: $13.96 per thousand cubic feet in January and $14.95 in February, which averages $14.46 [2]. At 1,036 Btu per cubic foot, that works out to about $13.95 per million Btu, or $1.40 per therm [3].

How we calculated it: For gas, we divided the price per million Btu by the furnace's AFUE. For a heat pump, we multiplied the price per kWh by 293 kWh (one million Btu ÷ 3,412 Btu per kWh [3]) and divided by the COP. HSPF2 is a ratio of Btu of heat to watt-hours of electricity [4], so dividing it by 3.412 gives an average COP.

What does that mean over a full year?

The U.S. Department of Energy's federal buying guide uses an example furnace with 70,000 Btu/h of output in a northern state. It estimates that furnace uses 523 therms a year at 95% AFUE and 621 therms at 80% AFUE [6]. That is about 50 million Btu of heat delivered to the home. At the winter 2026 prices above, heating that home would cost about:

• 95% gas furnace: about $730
• 80% gas furnace: about $867
• Heat pump averaging COP 3.0: about 4,850 kWh, or $852
• Heat pump averaging COP 2.5: about 5,830 kWh, or $1,022
• Heat pump averaging COP 2.29: about 6,360 kWh, or $1,116

These figures cover heating only. Fixed monthly customer charges and tiered or time-of-use rates will move them, so the next section uses your own bills.

How do I check this for my own home?

Step 1: Get your real prices. Take a winter electricity bill and divide the energy charges by the kWh you used. Do the same for gas to get a price per therm. If your gas bill is in Ccf (hundreds of cubic feet), one Ccf is about 1.036 therms [3].

Step 2: Find your break-even electricity price. A heat pump is cheaper to run when:

your electricity price ($/kWh) < gas price per therm × heat pump COP ÷ (29.3 × furnace AFUE)

The 29.3 comes from 100,000 Btu per therm ÷ 3,412 Btu per kWh [3]. For example, take gas at $1.40/therm, a 95% furnace and a heat pump averaging COP 2.5: $1.40 × 2.5 ÷ (29.3 × 0.95) = about 12.6¢/kWh. Compared with an older 80% furnace, the break-even rises to about 14.9¢/kWh. The 2026 winter average of 17.55¢ is above both, which is why gas wins at national average prices.

Step 3: Use a realistic COP for your climate. Ask the installer for the model's HSPF2 rating. HSPF2 is measured for one standard climate region [4], so treat it as a guide rather than a guarantee. If you live somewhere cold, also ask for the COP at 5°F. ENERGY STAR cold-climate models must reach at least 1.75 at 5°F and keep at least 70% of their 47°F heating capacity [4].

Location matters a lot. In July 2026, average residential electricity ranged from 12.72¢/kWh in Louisiana to 48.00¢/kWh in Hawaii [8]. A national average can point you the wrong way.

When does a heat pump win on running costs?

• When you're replacing propane, heating oil or electric resistance heat. ENERGY STAR lists lower energy bills as a benefit of switching from these fuels to a heat pump [5]. The table shows why: resistance heat costs about $51 per million Btu, compared with roughly $20–$23 for a heat pump.
• When you'd otherwise keep an 80% furnace. At average prices, a heat pump only needs to average a COP of about 2.95 to match an 80% furnace. To match a 95% furnace it needs about 3.5.
• When electricity is cheap and gas is expensive where you live. Run Step 2 with your own numbers.
• When you also need cooling. A heat pump heats in winter and cools in summer, and ENERGY STAR notes that in most zones it can go in as a drop-in replacement when either your central AC or your furnace needs replacing [5].

When does a gas furnace still make more sense?

A furnace usually wins on running costs if gas is cheap, electricity is expensive and your winters are long and cold. It also makes sense to keep a furnace that is only a few years old if just your AC needs replacing. In that case, consider pairing the furnace with a heat pump (see the next section) rather than replacing both.

What is a dual-fuel system, and is it a good compromise?

A dual-fuel system pairs a heat pump with a gas (or oil) furnace. ENERGY STAR describes it as a modest extra cost over a standard AC, and it lets you heat with whichever system is cheaper at the time [5]. In practice, your installer sets a switch-over outdoor temperature. Above it, the heat pump runs. Below it, where the heat pump's COP falls under your break-even point from Step 2, the furnace takes over. ENERGY STAR notes that cold-climate heat pumps keep working below 5°F, but that pairing one with a backup heat source is the most efficient way to heat when temperatures fall even lower [5].

Is there a federal tax credit for heat pumps in 2026?

No. The federal Energy Efficient Home Improvement Credit (25C) was worth 30% of the cost, up to $2,000 a year for qualifying heat pumps, but it only applied to improvements made through December 31, 2025 [7]. You may still see older web pages quoting a credit that runs to 2032. Go by the IRS page. For a 2026 installation, check state and utility rebates with the ENERGY STAR Rebate Finder [5].

How can I keep heat pump running costs down?

Start with correct sizing. ENERGY STAR advises having your contractor size the system with a "Manual J" load calculation [5]. After installation, ENERGY STAR recommends [5]:

1. Keep a steady temperature. Unlike a furnace, a heat pump doesn't save energy from deep setbacks overnight or while you're away.
2. Set the thermostat to "Heat" or "Cool," not "Auto," so the system doesn't switch modes on mild days.
3. Use the "auto" fan setting, or the lowest fan speed that still spreads warm air well.
4. Clean or replace filters when they look dirty or the filter light comes on.

Frequently asked questions

Is a heat pump cheaper to run than a gas furnace?

Not at U.S. average 2026 winter prices, unless the heat pump is very efficient. To beat a 95% furnace it needs to average a COP of about 3.5, and about 2.95 to beat an 80% furnace. Where electricity is cheap relative to gas, the result can flip.

Do heat pumps work when it's below freezing?

Yes. ENERGY STAR tests cold-climate models at 5°F, where they must reach a COP of at least 1.75 and keep at least 70% of their rated capacity [4]. They keep working below 5°F, but ENERGY STAR says a backup heat source is the most efficient way to heat at even lower temperatures [5].

What's the difference between HSPF2 and AFUE?

HSPF2 rates a heat pump's seasonal heat output per watt-hour of electricity [4]. AFUE is the share of a furnace's fuel energy that becomes useful heat over a season [6]. Divide HSPF2 by 3.412 to compare a heat pump with a furnace on the same scale.

How much electricity does a heat pump use for heating in a year?

For the Department of Energy's example northern home (about 50 million Btu of heat a year), a heat pump would use roughly 4,850–6,360 kWh, depending on whether it averages a COP of 3.0 or 2.29 [6] [3].

Can I still get the federal heat pump tax credit?

Not for systems installed in 2026. The 25C credit covered improvements made through December 31, 2025 [7]. Check for state and utility rebates instead [5].

Want a figure for your own house? Northside Heating & Air (sample) can run Step 2 with your last winter's bills and a Manual J sizing before quoting. (Sample call to action; fictional business.)

Sources

1. U.S. Energy Information Administration, Electric Power Monthly, Table 5.3: Average Price of Electricity to Ultimate Customers (residential, January–July 2026). https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_5_3
2. U.S. Energy Information Administration, U.S. Price of Natural Gas Delivered to Residential Consumers (monthly, released 9/30/2026). https://www.eia.gov/dnav/ng/hist/n3010us3m.htm
3. U.S. Energy Information Administration, Units and calculators explained (Btu conversion factors). https://www.eia.gov/energyexplained/units-and-calculators/
4. ENERGY STAR, Heat Pump Equipment Key Product Criteria. https://www.energystar.gov/products/air_source_heat_pumps/key-product-criteria
5. ENERGY STAR, Air-Source Heat Pumps. https://www.energystar.gov/products/air_source_heat_pumps
6. U.S. Department of Energy, Federal Energy Management Program, Purchasing Energy-Efficient Residential Furnaces. https://www.energy.gov/cmei/femp/purchasing-energy-efficient-residential-furnaces
7. Internal Revenue Service, Energy Efficient Home Improvement Credit. https://www.irs.gov/credits-deductions/energy-efficient-home-improvement-credit
8. U.S. Energy Information Administration, Electric Power Monthly, Table 5.6.A: Average Price of Electricity by State, July 2026. https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_5_6_a