Heat Pump vs Gas Furnace: The 2026 Payback Math
By Sustainability Awakening • Dr. Ahmad Mahmood
The real question
Price ratio beats efficiency
A heat pump only saves money if its COP beats the gap between your electricity and gas prices.
How it works
It moves heat, not burns fuel
3 kWh
Heat delivered for every 1 kWh of electricity at a COP of 3.
Break-even COP
What a heat pump must beat
vs 80% gas furnace2.75
vs 95% gas furnace3.26
vs baseboard heat1.00
Source: at $0.17/kWh and $1.45/therm
Gas prices vary
Cheap gas raises the bar
Northeast$1.55/therm
Midwest$1.00/therm
South$1.36/therm
Source: EIA, winter 2026–27
Cold-climate units
Built for 5°F winters
ENERGY STAR COP at 5°F≥ 1.75
Capacity kept at 5°F≥ 70%
DOE Challenge units100%
Source: ENERGY STAR; US DOE
Dual-fuel
Keep gas for the coldest days
The furnace runs below about 26°F. In our default case, −$60 a year becomes +$76.
Source: our calculator
Federal tax credit
Section 25C has ended
$0
For 2026 installs. The 30% credit stopped on 31 Dec 2025.
Source: IRS
State rebates
HEAR: up to $8,000
Income-qualified. Since May 2026, gas homes qualify only if the furnace stays.
Source: DOE Program Notice 26-2
Where it pays
The cold-zone results
Replacing baseboard5.7-yr payback
12¢/kWh heat pump rate$324/yr saved
Working 80% furnace−$60/yr
Source: our calculator