How we calculate cost estimates

Where our numbers come from

Every input in our calculators traces to a public source. Each source is linked below so you can verify a figure directly.

• Residential energy prices — US EIA. National and regional residential electricity, natural gas, propane, and No. 2 heating oil prices. Electricity is drawn from the EIA Short-Term Energy Outlook (Winter Fuels Outlook) for winter averages and EIA Electric Power Monthly Table 5.6.A for annual state-level rates. Natural gas, propane, and heating oil come from the corresponding EIA residential price series.
• Heat pump efficiency — ENERGY STAR key product criteria. Minimum HSPF2, SEER2, and cold-climate COP-at-5°F thresholds come from ENERGY STAR Air-Source Heat Pumps. Gas furnace and boiler AFUE thresholds come from the corresponding ENERGY STAR product pages. Seasonal COP for the operating-cost math is derived from HSPF2 (COP ≈ HSPF2 ÷ 3.412).
• Heating design temperatures — ASHRAE. The 99.6% winter heating design dry-bulb temperature by city comes from ASHRAE Std 169 / Handbook of Fundamentals, with county-level lookups matched via the ENERGY STAR / DOE design-temperature guide. This is the industry-standard input for sizing and cold-climate performance.
• Install cost ranges — published 2026 industry data. Indicative installed-cost ranges for ducted air-source, ductless mini-split, heat pump water heater, and geothermal systems are synthesized from public 2026 pricing reports at HomeGuide, This Old House, Angi, and Modernize. These are labeled as estimates, not quotes — actual bids vary by market, contractor, and site conditions.
• Federal tax credits — IRS FS-2025-05. The Section 25C (Energy Efficient Home Improvement) and Section 25D (Residential Clean Energy) credits were terminated for property placed in service after Dec 31, 2025 by the One Big Beautiful Bill Act (P.L. 119-21). See IRS Fact Sheet FS-2025-05. For 2026 installs, our calculators show $0 federal credit and direct readers to check state and utility programs.

How the calculators use these inputs

Operating cost = delivered heating/cooling load ÷ seasonal efficiency × the energy price for the fuel used. Delivered load scales with square footage, climate factor (calibrated against ASHRAE design temperatures), and insulation. Heat pump seasonal COP is derived from ENERGY STAR HSPF2 and adjusted by climate for air-source (cold-climate performance is materially lower than mild-climate performance). Ground-source COP is treated as flat because sub-frost-line ground temperature is stable year-round.

What our estimates include

• Equipment cost at typical 2026 contractor pricing.
• Standard installation labor.
• Refrigerant line set, control wiring, and basic electrical work.
• Basic municipal HVAC permits and startup commissioning.
• Disposal of removed equipment.

What our estimates don't include

• Electrical service panel upgrades when a heat pump load exceeds existing service capacity.
• Ductwork repair, replacement, or new ducted installs in homes without existing distribution (shown separately as a range where calculators support it).
• Backup heat (electric resistance strips, dual-fuel furnace retention) unless explicitly selected.
• Federal tax credits (there are no federal credits on 2026 installs — Sections 25C and 25D both expired Dec 31, 2025). State and utility rebates vary and are not modeled by default.
• Financing costs, interest, or any contractor financing markup.

How we update our data

Every calculator is reviewed at least quarterly against the latest EIA fuel price releases, ENERGY STAR criteria updates, ASHRAE design temperature revisions, and published install-cost surveys. If a headline input moves between scheduled reviews — a winter fuel-price update, an ENERGY STAR criteria change, a federal incentive change — we re-run that category out of cycle.

How to report a pricing error

If a number on this site looks wrong, please tell us. Email details, including the calculator, inputs you used, and the figure you expected, via our contact form. We fix verified errors within 7 days.