The short answer
A heat pump moves heat instead of burning fuel to make it, so it can deliver 2-4 times more heating energy than the electricity it uses — an efficiency no furnace can match. Whether that becomes a lower bill comes down to two things: the price of electricity versus gas where you live, and how cold your winters get. In mild and moderate climates with typical energy prices, the heat pump usually wins on running cost. Where natural gas is very cheap and electricity is expensive — and winters are severe — a gas furnace can still come out ahead in the coldest months.
| Factor | Heat pump | Gas furnace |
|---|---|---|
| Upfront installed cost | Typically $1,500-$3,000 more than a comparable furnace | $3,500-$7,500 with existing ductwork |
| Operating cost (mild/moderate climate) | Usually cheaper | Usually more expensive |
| Cooling included | Yes | No — separate AC needed |
| Efficiency | COP ~3.5 mild, ~2.2 at 5°F | 90-98% (max 1.0) |
| Crossover temperature | Cheaper above ~15-25°F | Often cheaper below |
| Typical lifespan | ~12-15 years | ~15-20 years |
| 2026 federal tax credit | None (25C expired Dec 31, 2025) | Not applicable |
Upfront cost: the gas furnace usually wins
On sticker price, gas furnaces win. A furnace typically runs about $3,500-$7,500 installed with existing ductwork, often $1,500-$3,000 less than a comparable heat pump. But there's a catch that changes the math: a furnace only heats; a heat pump heats and cools. If you'd otherwise buy a furnace and a separate air conditioner, the honest comparison is furnace + AC versus one heat pump — and that gap narrows or disappears. (See our installation cost guide for full price ranges.)
Operating cost: it comes down to your energy prices
This is where the real decision lives, and there's no national answer — only yours. The key number is the ratio of your electricity price (per kWh) to your gas price (per therm). A useful rule of thumb from cost analyses: if your electricity-to-gas price ratio is below about 3.5 to 1, a heat pump almost always costs less to run; above roughly 5 to 1, a furnace may be cheaper in the coldest months. Pull your latest utility bills, find your rate per kWh and per therm, and you'll learn more than any average can tell you.
Efficiency is the other half. A heat pump's COP — units of heat per unit of electricity — sits around 3.5 in mild weather but falls as it gets colder, to roughly 2.2 at 5°F. A modern gas furnace, by contrast, is 90-98% efficient but can never exceed 1 unit of heat per unit of fuel. The heat pump's 2-4x advantage is exactly why it tends to win until temperatures get low enough to erode its COP.
What about cold climates?
As the temperature drops, every heat pump eventually reaches a “crossover temperature” — the point where gas becomes the cheaper way to make heat. Depending on local rates and equipment, that often lands around 15-25°F. Above it, the heat pump is cheaper; below it, gas. Cold-climate heat pumps hold a higher COP at low temperatures, pushing that crossover lower, but it still exists. (For why heat pumps work at all in the cold, see our cold-climate guide.)
This is why dual-fuel (hybrid) systems exist: pair a heat pump with a gas furnace, and the system runs the heat pump when it's efficient and switches to gas below the crossover temperature. You get the heat pump's efficiency most of the year plus gas's muscle on the coldest days.
Don't forget cooling — and the gas bill you stop paying
Two things tilt the lifetime math toward the heat pump that people often miss:
- One system, both seasons.A heat pump replaces your furnace and your AC. If you need cooling anyway, that's one piece of equipment to buy and maintain instead of two.
- Dropping the gas connection. Go all-electric and you stop paying the fixed monthly gas customer charge (often $10-$20) whether you burned any gas or not — a small but permanent saving on top of fuel.
Lifespan and maintenance
Furnaces tend to last a bit longer — roughly 15-20 years versus about 12-15 for a heat pump — partly because a furnace only runs in winter while a heat pump works year-round. Factor replacement timing into any long-run comparison.
What about tax credits in 2026?
Worth being precise, because it recently changed. The federal tax credits for heat pumps ended December 31, 2025. The One Big Beautiful Bill Act (signed July 2025) terminated both the Section 25C credit for air-source heat pumps and the Section 25D credit for residential geothermal, for systems placed in service after that date. If you switched by the end of 2025, you can still claim it; for a 2026 switch, there's no federal credit. State and utility rebates may still help and vary widely by location. (General information, not tax advice.)
So which should you choose?
A rough decision framework:
- Lean heat pump if you need cooling too, your climate is mild to moderately cold, and your electricity-to-gas price ratio is favorable (below ~3.5:1).
- Lean gas furnace (or dual-fuel)if natural gas is very cheap where you live, winters are severe, and you already have a working AC you're not replacing.
- Consider dual-fuel if you want heat pump efficiency most of the year with gas as a cold-snap backup.
Run your own numbers
The only comparison that matters is yours:
- The Heat Pump vs. Gas Furnace Calculator compares upfront, operating, and long-run costs for your home and energy prices.
- The Heat Pump Running Cost Calculator estimates what a heat pump would cost to run in your climate.
- The Heat Pump Installation Cost Calculator sizes up the upfront side.
- Not sure what capacity you need? Try the Heat Pump Sizing Calculator.
The bottom line
For most homes in mild-to-moderate climates, a heat pump is cheaper to run than a gas furnace and replaces your AC into the bargain — though the furnace usually wins on upfront price. Where gas is cheap, electricity is dear, and winters are brutal, gas or dual-fuel can still make sense. With federal credits gone in 2026, it's a straight economics-and-comfort call, so check your local energy prices and run the numbers for your own home.