Heat Pump vs Furnace: Which Is Right for You?

A heat pump costs less per unit of heat than a gas furnace when its seasonal COP is above 29.3 × electricity price ($/kWh) × furnace AFUE ÷ gas price ($/therm). At $0.18/kWh, $1.50/therm and a 95% furnace that break-even is a COP of 3.34, a seasonal average that gets harder to reach the colder your winters run; at $0.12/kWh it drops to 2.23 and the heat pump wins easily. So the choice is mostly your two utility rates, how cold your design day is, and whether you need cooling anyway.

The break-even in one formula

One kWh delivers 3,412 BTU as resistance heat and one therm of gas holds 100,000 BTU. Per million BTU of heat into the house, a heat pump costs electricity price × 293.07 ÷ COP, and a gas furnace costs gas price × 10 ÷ AFUE. Setting the two equal and solving for COP gives the break-even.

The matrix shows why the same heat pump can be a money-saver in one state and a money-loser in another. Expensive gas and cheap power (top right) put the threshold near 1.7, which even a heat pump leaning on resistance backup can beat. Cheap gas and expensive power (bottom left) puts it near 7, which no air-source unit reaches.

Backup heat drags the blended COP down

A house needing 20 million BTU of heat in a season, with 18 million supplied by a heat pump at COP 3 and 2 million by resistance strips at COP 1, uses 1,758.5 + 586.2 = 2,344.7 kWh. That is a blended COP of 20,000,000 ÷ 3,412 ÷ 2,344.7 = 2.50. Here is the same house at the two electricity prices, with gas at $1.50/therm and a 95% furnace (20,000,000 ÷ 100,000 ÷ 0.95 × $1.50 = $315.79).

Break-even COP at $0.18 is 3.34, so a blended 2.50 loses to gas, as does a flat COP of 3.00. At $0.12 the break-even is 2.23, so a blended 2.50 wins. If your utility has time-of-use or demand charges, use the rate that applies on cold evenings rather than the annual average.

Cold weather is a capacity question first

Cost does not matter if the equipment cannot hold the house at 20°F. Ask for the heat pump's output and electrical input at your heating design temperature, then compare with the heating load. Suppose the load is 36,000 BTU/h and the unit delivers 28,000 BTU/h at that outdoor temperature. The gap is 8,000 BTU/h. If the strips run alongside the compressor, they need 8,000 ÷ 3,412 = 2.3 kW; if the controls lock out the compressor and run strips alone, they carry the full 36,000 BTU/h, about 10.6 kW. Ask which one the installer is designing for, because the electrical service and the winter bill differ by a factor of four.

A furnace output depends far less on outdoor temperature, but it still has to be sized from the load and its AFUE; the furnace sizing guide shows the output-versus-input conversion. For the heat pump side use the heat pump sizing guide, and run the winter check with the heat pump calculator before accepting a nominal tonnage. A heat pump chosen for winter output also has to pass a summer sensible and latent check.

Match the choice to the house

Compare bids for the same rooms and scope. A furnace-plus-AC bid and a heat pump bid are different amounts of work (venting, gas piping, drains, line sets, electrical), so line them up the way the quote verification guide does before comparing totals.

What changed for incentives

The federal Energy Efficient Home Improvement Credit (25C) is not allowed for property placed in service after December 31, 2025, so do not subtract it from a 2026 install. State, utility and local rebates still exist in many places; count one only after the administrator confirms in writing that your model and applicant qualify and funds are reserved. SEER2, EER2 and HSPF2 have been the rating basis since January 1, 2023 (the SEER2 guide covers how to read them).

Sources: U.S. DOE heat pumps overview; IRS: 25C not allowed after Dec. 31, 2025; ACCA Manual S. The break-even formula is arithmetic from 3,412 BTU/kWh and 100,000 BTU/therm.