Heat Pump vs. Central AC in 2026: Which Costs Less to Run, and When the Heat Pump Pays Off
Replacing your central air? A heat pump does the same cooling and also heats. Here's when the extra cost pays back, with this winter's fuel prices.
By Mark Curant·Updated
Quick answer
A heat pump costs about $2,000–$4,500 more than a central AC of the same size and cools for exactly the same running cost. The extra cost is repaid only by cheaper heating. If you heat with oil or electric resistance, it usually pays back in 2–8 years. With propane it's marginal and needs a cold-climate model. With natural gas at U.S. average prices, a heat pump costs more to heat with than a 95% gas furnace unless your electricity is below about 12.29¢ a kWh.
My stores are in the Caribbean, where nobody needs heating, so the AC-or-heat-pump question never comes up. In most of the U.S. and Canada it's the biggest decision you make when the air conditioner dies, and contractors often pitch the heat pump as the obvious upgrade. Sometimes it is. Sometimes it costs you money every winter. The difference comes down to two prices on your bills, and this article shows where the line falls.
What a heat pump is, and what it isn't
In summer it's an air conditioner. Same outdoor unit, same refrigerant cycle, rated with the same SEER2. A 16 SEER2 heat pump and a 16 SEER2 AC cost the same to cool your house.
In winter it runs in reverse. It moves heat from the outdoor air into the house, delivering 2–3 units of heat for every unit of electricity over a season. Its heating efficiency is rated in HSPF2.
That's why the comparison isn't really "heat pump vs. AC". It's "heat pump vs. whatever heats your house now". Against electric baseboards or an electric furnace, which turn one kWh into one kWh of heat, a heat pump is two to three times as efficient. Against gas, it depends on the price of a kWh compared with the price of gas.
Heating costs: heat pump vs. your current system
What this table shows
- The house: a typical 2,000 sq ft home. How much heat it needs depends on the winters: we use 15, 30, 45, 60 million Btu a year from mild to very cold (our estimate).
- Prices: U.S. averages: natural gas $13.44 per thousand cubic feet, propane $2.52 and heating oil $5.26 a gallon (EIA's forecast for winter 2026–27), electricity 18.31¢/kWh (July 2026).
- Each cell: what switching to a heat pump saves (or costs) a year in heating, and the verdict on a $3,000 heat pump premium. Furnaces at 95% efficiency (gas, propane), oil at 85%.
| You heat with | Mild wintersGulf Coast, Southern California, Arizona | Moderate wintersMid-Atlantic, Tennessee, Pacific Northwest | Cold wintersMidwest, New York, southern New England | Very cold wintersMinnesota, Wisconsin, northern New England |
|---|---|---|---|---|
| Natural gas furnace | Costs $61 morea yearNot worth it for savings | Costs $201 morea yearNot worth it for savings | Costs $403 morea yearNot worth it for savings | Costs $706 morea yearNot worth it for savings |
| Propane furnace | Saves $170a year, pays back in 17.7 yearsNot worth it for savings | Saves $259a year, pays back in 11.6 yearsMarginal | Saves $287a year, pays back in 10.4 yearsMarginal | Saves $214a year, pays back in 14.0 yearsNot worth it for savings |
| Heating oil furnace or boiler | Saves $405a year, pays back in 7.4 yearsMarginal | Saves $730a year, pays back in 4.1 yearsGood deal | Saves $993a year, pays back in 3.0 yearsGood deal | Saves $1,155a year, pays back in 2.6 yearsGood deal |
| Electric furnace or baseboard | Saves $540a year, pays back in 5.6 yearsGood deal | Saves $1,000a year, pays back in 3.0 yearsGood deal | Saves $1,398a year, pays back in 2.1 yearsGood deal | Saves $1,694a year, pays back in 1.8 yearsGood deal |
Heat pump seasonal efficiency: HSPF2 ÷ 3.412, raised 15% for mild winters and lowered 10–20% for cold and very cold winters, when it relies more on backup heat (our estimate). Cold-climate models hold their output better in deep cold, so the real gap in very cold climates can be bigger than shown.
How we judge an upgrade
Central air typically lasts about 15 years; in my own stores, 15 years isn't unreasonable. But "it pays back before the system dies" is too low a bar. Money spent today is worth more than savings that trickle back over a decade, and many people sell before the system is worn out. So we use three verdicts:
- Good dealpays back within 7 years
- Marginal7–12 years: only if you'll keep the system well past that
- Not worth it for savingsover 12 years
Our rule of thumb, on electricity savings alone. Comfort, noise, rebates and warranties can still tip the decision.
The gas question: when does a heat pump beat a gas furnace?
Only one number matters: your electricity price compared with your gas price. At this winter's average gas price of $13.44 per thousand cubic feet, a heat pump heats for the same cost as a 95% gas furnace when electricity costs about 10.24¢/kWh (standard heat pump) or 12.29¢/kWh (cold-climate model). No state's average residential price is that low; the cheapest, Louisiana, is 12.72¢. So at average gas prices a heat pump heats for more than gas almost everywhere. Where gas is expensive, the line moves up, as the table shows.
| Your gas price ($ per thousand cubic feet) | Heat pump wins below this electricity pricestandard, HSPF2 7.5 | Heat pump wins below this electricity pricecold-climate, HSPF2 9 |
|---|---|---|
| $10.00 | 7.62¢/kWh | 9.14¢/kWh |
| $13.44 (U.S. average) | 10.24¢/kWh | 12.29¢/kWh |
| $16.00 | 12.19¢/kWh | 14.63¢/kWh |
| $20.00 | 15.24¢/kWh | 18.29¢/kWh |
| $25.00 | 19.05¢/kWh | 22.86¢/kWh |
Your gas bill shows the price per therm or per hundred cubic feet: $1 per therm is about $10.36 per thousand cubic feet. Use the price of each extra unit (supply and delivery per therm), not the fixed monthly charge, which you'd keep paying as long as the gas is connected.
That doesn't make a heat pump wrong for every gas home. A dual-fuel system keeps the furnace and lets the heat pump do the mild days, when it's most efficient, switching to gas in deep cold. It costs about the same as an AC plus furnace, gives you a backup heat source, and it's the safer choice if gas prices rise. Just don't expect it to lower your bills much at today's prices.
Estimate your own payback
For someone replacing a central AC anyway: is the heat pump's extra cost repaid by cheaper heating? Cooling costs are the same for both at the same SEER, so only heating counts.
Heating per year now
$1,340
Heating per year with the heat pump
$610
Saved per year
$730
Payback
4.1 years
Good deal
Net over 15 years
+$7,952
Pays back within 7 years; savings after that are profit for as long as you keep the system.
Heat needed: 30 million Btu a year (8,792 kWh), our estimate for a typical 2,000 sq ft home. Your furnace at 85% efficiency; heat pump seasonal efficiency 2.64 (heat delivered per unit of electricity) in this climate.
Rebates and credits in 2026
- Federal tax credit: gone. The 25C credit ended for equipment installed after December 31, 2025.
- HEEHRA (state-run, income-based): still available in some states for lower- and moderate-income households, but DOE guidance from May 2026 bars rebates for replacing gas or other fossil-fuel equipment. Electric-to-electric upgrades, like baseboards or an old electric furnace to a heat pump, still qualify.
- Utilities and states: many still pay rebates for heat pumps, often more for cold-climate models. Check before you sign, because some require a pre-approval.
Details: HVAC tax credits and rebates in 2026. In Canada, federal and provincial heat pump programs are much larger; see heat pumps in Canada: costs by province and 2026 rebates.
Beyond the running cost
- Size it for heating. A heat pump sized only for cooling can come up short in winter. In cold climates, ask for a Manual J load calculation and a model with good capacity at 5°F.
- Backup heat. Most heat pumps have electric heat strips or a furnace for the coldest days. Strips cost two to three times as much to run as the heat pump, so they should only come on when needed.
- Air feels different. Heat pump air is warm, not hot like a gas furnace's. Some people notice; most get used to it.
- Winter maintenance. Keep snow off the outdoor unit and expect short defrost cycles with steam. See defrost mode explained.
- Lifespan. A heat pump runs all year, so it may wear out a little sooner than an AC that only runs in summer. Our payback verdicts don't account for that.
Frequently asked questions
Is a heat pump cheaper to run than central air conditioning?
For cooling, they cost the same: a heat pump in summer is an air conditioner, and at the same SEER2 rating it uses the same electricity. The difference is in winter, when the heat pump also heats your home. Whether that saves money depends on what it replaces.
Does a heat pump save money over a gas furnace?
Usually not at U.S. average prices. With gas at $13.44 per thousand cubic feet (EIA's winter 2026–27 forecast), a heat pump only matches a 95% gas furnace when electricity costs about 10.24¢–12.29¢ a kWh or less, depending on the model. The U.S. average is 18.31¢. Where power is cheap or gas is expensive, the numbers change; use the calculator with your own prices.
Is a heat pump worth it if I heat with oil or electric baseboards?
Usually, yes. In a moderate climate, a cold-climate heat pump cuts heating costs by about $730 a year against oil and $1,000 against electric resistance heat at U.S. average prices, so a $3,000 premium pays back in a few years.
Is there still a federal tax credit for heat pumps?
No. The federal 25C credit for heat pumps ended for equipment installed after December 31, 2025. Some states and utilities still offer rebates, and the income-based HEEHRA rebates run by states can help with electric-to-electric upgrades, but DOE guidance from May 2026 rules out HEEHRA rebates for replacing gas or other fossil-fuel equipment.
Sources and method
- Fuel prices: EIA Winter Fuels Outlook (October 6, 2026), U.S. average residential prices forecast for winter 2026–27.
- Electricity: EIA Electric Power Monthly, Table 5.6.A, July 2026.
- Heat pump premium: PickHVAC (central AC $4,500–$9,000 installed vs. heat pump $6,500–$13,500); we use $3,000.
- Heat content: 1.036 million Btu per thousand cubic feet of gas, 91,500 Btu per gallon of propane, 138,500 per gallon of heating oil, 3,412 Btu per kWh.
- Heat needed per climate and the climate adjustment to heat pump efficiency are our estimates; your bills will tell you more. To find your own heat use, add up a winter's fuel bills.