Heat Pump vs Furnace Calculator

A furnace makes heat by burning something. The best it can possibly do is turn all of the fuel’s chemical energy into heat inside the house, and in practice it does not manage that — some goes up the flue. A modern condensing furnace captures around 95% and an older non-condensing one around 80%. There is no way to exceed 100%, because you cannot get more heat out of a fuel than the fuel contains.

A heat pump does not make heat. It moves heat that already exists in the outdoor air into the house, using electricity to run a compressor rather than to produce warmth directly. Because moving heat costs far less energy than creating it, the ratio of heat delivered to electricity consumed sits somewhere between two and four for a typical unit over a season. On the efficiency scale a furnace is measured on, that is 200% to 400%.

And yet the running cost can still come out higher. The reason is that efficiency is only half the equation — the other half is what a unit of energy costs. In much of the United States a therm of natural gas delivers 100,000 BTU for around $1.50, which is roughly $15 per million BTU of fuel bought, or about $19 per million BTU delivered once an 80% furnace has taken its cut. Electricity at 18.44 cents per kilowatt-hour delivers 3,412 BTU per kWh, which is about $54 per million BTU bought. A heat pump running at a seasonal COP of 2.6 divides that down to roughly $21 per million BTU delivered. Three times the efficiency, spread against three and a half times the energy price, lands almost exactly level.

Heating and cooling equipment carries at least four different efficiency numbers, measured on different scales, and the mismatch between them is where most comparison mistakes start.

Through 2025, Section 25C of the tax code — the Energy Efficient Home Improvement Credit, as expanded by the Inflation Reduction Act — offered a federal credit of 30% of the cost of a qualifying heat pump, capped at $2,000 a year. The One Big Beautiful Bill Act, enacted on 4 July 2025, terminated that credit for property placed in service after 31 December 2025. A heat pump installed in 2026 receives no federal credit at all, regardless of when it was ordered or paid for.

The practical effect on a payback calculation is large and easy to miss, because most heat pump calculators published before mid-2025 still apply the 30% silently. On a $14,000 installation the credit was worth the full $2,000 cap, and removing it lengthens a payback that was seven years to something closer to nine.

State, utility and municipal incentives were not touched by the change, and several states run rebate programmes worth more than the federal credit ever was. Those are paid at or near the point of sale rather than at tax time, so the right figure to enter above is what the installation actually costs you after every rebate you can claim.

A cost-per-year comparison answers a narrower question than most people are actually asking. Three factors sit outside it and can each be larger than the running-cost difference.

Everything here depends on knowing how much fuel goes into heating specifically, and most bills mix that with cooking, hot water and — for an all-electric house — everything else in the building. The standard way to separate them is the base-load subtraction: find your consumption in a shoulder month when neither heating nor cooling runs, usually May or October, and treat twelve times that figure as the non-heating base load for the year. Subtract it from your annual total and what remains is heating.

It is approximate — hot water use rises in winter because the incoming mains water is colder — but it is far more accurate than any estimate from floor area, because it already contains everything an estimate has to guess at: your insulation, your windows, your thermostat habits, how many rooms you actually heat, and your real weather rather than a zone average.