Choosing how to heat your home is one of the biggest energy decisions you will make, because heating is the single largest energy expense in most households. The debate increasingly comes down to two options: a modern electric heat pump or a traditional furnace (gas or electric). The right choice depends on your climate, your local energy prices, and your existing equipment. This guide compares heat pumps and furnaces head to head so you can see which is cheaper to run in 2026.
The short answer: a heat pump is almost always cheaper to run than an electric resistance furnace, often cutting heating electricity use by 50–65%. Compared with a gas furnace, the winner depends on the price of electricity versus gas in your area, but modern heat pumps are increasingly competitive even against cheap natural gas.
How Each System Makes Heat
The fundamental difference is that furnaces create heat while heat pumps move it, and that distinction is everything.
Furnaces
A furnace generates heat by burning fuel (natural gas, propane, or oil) or by running electricity through resistance elements. A gas furnace is measured by AFUE (Annual Fuel Utilization Efficiency); a high-efficiency model is 95–98% efficient, meaning almost all the fuel becomes heat. An electric resistance furnace is 100% efficient but uses expensive electricity to make heat directly.
Heat Pumps
A heat pump does not create heat; it moves existing heat from the outdoor air (even cold air contains heat energy) into your home using a refrigerant cycle, essentially an air conditioner running in reverse. Because it moves heat rather than making it, a heat pump can deliver 2–4 units of heat for every unit of electricity it consumes. This is measured as its COP (Coefficient of Performance) or seasonal HSPF rating. A COP of 3 means 300% efficiency, something no furnace can match.
The Efficiency Difference
Electric resistance furnace: 100% efficient (COP 1.0)
High-efficiency gas furnace: 95–98% efficient
Modern heat pump: 200–400% efficient (COP 2.0–4.0)
Compare heating scenarios with the Seasonal Electric Cost Calculator.
Running Cost Comparison
Let us compare the cost to deliver the same amount of heat, one million BTU, which is roughly what a typical home needs on a cold day or two. We will use the national average electricity rate of 18.56¢/kWh and an average natural gas price of about $1.40 per therm.
| Heating System | Efficiency | Cost per 1M BTU |
|---|---|---|
| Electric resistance furnace | 100% | $54.40 |
| Heat pump (COP 2.5) | 250% | $21.76 |
| Heat pump (COP 3.5) | 350% | $15.54 |
| High-efficiency gas furnace (96%) | 96% | $14.58 |
Two things stand out. First, a heat pump is dramatically cheaper than an electric resistance furnace, less than half the cost, which is why switching from baseboard or electric-furnace heat to a heat pump delivers massive savings. Second, a high-efficiency gas furnace and an efficient heat pump are surprisingly close in cost at average energy prices; which one wins in your home depends on your local electricity and gas rates.
What About Cold Climates?
The old knock against heat pumps was that they lost efficiency in very cold weather and needed expensive backup resistance heat below freezing. That was true a decade ago, but modern "cold-climate" heat pumps have changed the equation. Today's models maintain strong efficiency down to 5°F or lower and can operate even in sub-zero conditions, and they are now widely used across the northern United States and Canada.
In extreme cold, a heat pump's efficiency does drop, and many systems include backup heat for the coldest days. In the harshest climates, a "dual-fuel" or hybrid system pairs a heat pump with a gas furnace, using the efficient heat pump most of the time and switching to gas only during extreme cold. This gives you the best of both worlds.
Heat Pumps Also Provide Cooling
A crucial advantage often overlooked in cost comparisons: a heat pump is also an air conditioner. It heats in winter and cools in summer with a single system. If you need both heating and air conditioning, a heat pump replaces two systems, which changes the economics of installation and maintenance in its favor. A furnace, by contrast, only heats; you still need a separate AC.
Upfront Cost and Payback
Heat pumps generally cost more to install than a basic furnace, though prices have come down and generous federal tax credits and utility rebates can offset a large share of the cost in 2026. When you factor in that a heat pump replaces both a furnace and an air conditioner, and that it slashes running costs versus electric resistance heat, the total lifetime cost often favors the heat pump, especially for homes currently using expensive electric or oil heat.
The payback is fastest when you are:
- Replacing electric resistance heat (baseboard or electric furnace), where savings are largest.
- Replacing an aging furnace and AC at the same time.
- Living in a moderate climate where the heat pump runs efficiently most of the year.
- Paying high electricity rates, which makes the efficiency gain more valuable, or using expensive heating oil or propane.
Which Should You Choose?
Here is a practical decision guide:
- Currently heat with electric resistance? A heat pump is almost certainly a big money-saver. This is the clearest case.
- Currently heat with cheap natural gas in a very cold climate? A high-efficiency gas furnace or a dual-fuel hybrid may still be most economical.
- Need both heating and cooling? A heat pump's dual function makes it very attractive.
- Live in a mild or moderate climate? A heat pump is usually the smart choice for year-round comfort and low bills.
Quick Takeaway
Heat pump beats electric furnace almost every time. Against gas, it depends on your local electricity vs gas prices, but modern heat pumps are increasingly the better long-term value, especially since they also cool your home.
Cold-Climate Heat Pumps Have Changed the Math
For years the standard objection to heat pumps was that they "stop working when it gets really cold." That was largely true of older units, whose efficiency fell sharply below freezing and which relied on expensive backup electric resistance heat on the coldest days. Modern cold-climate heat pumps have transformed this picture. Using variable-speed inverter compressors and improved refrigerants, today's best units maintain strong efficiency well below 0°F and are now installed successfully across the northern United States, Canada, and Scandinavia.
If you live in a genuinely cold region, the key is to choose a unit rated specifically for cold-climate performance and to have it sized correctly by a qualified installer. Many homeowners also opt for a dual-fuel or "hybrid" setup, pairing a heat pump with a gas furnace that only kicks in on the few extreme-cold days each winter – capturing the heat pump's efficiency most of the season while keeping a low-cost backup for the coldest snaps. This flexibility is a big reason heat pumps have moved from a mild-climate niche product to a mainstream heating option nationwide.
The Bottom Line
A heat pump moves heat instead of making it, delivering two to four times more warmth per unit of energy than a furnace and cutting heating costs in half or more compared with electric resistance heat. Against a high-efficiency gas furnace, the winner depends on your local energy prices, but heat pumps are increasingly competitive and offer the bonus of built-in cooling. If you heat with electricity today, upgrading to a heat pump is one of the most impactful ways to lower your bill. Model your heating scenarios with our Seasonal Electric Cost Calculator, and see how heating fits into your total in our guide on what uses the most electricity in your home and our winter savings guide.
Key Takeaways
- A heat pump moves heat rather than making it, achieving 200 to 400% efficiency versus 100% for resistance heat.
- A heat pump is almost always cheaper than an electric resistance furnace, often cutting heating cost by 50 to 65%.
- Against a high-efficiency gas furnace, the winner depends on local electricity versus gas prices.
- Modern cold-climate heat pumps work efficiently well below freezing; dual-fuel systems add gas backup for extreme cold.
- A heat pump also provides air conditioning, replacing two systems with one.
- The clearest savings case is replacing electric resistance, oil, or propane heat with a heat pump.
Frequently Asked Questions
Is a heat pump cheaper to run than a furnace?
A heat pump is almost always cheaper to run than an electric resistance furnace, often cutting heating electricity use by 50 to 65 percent, because it moves heat rather than creating it and can be 200 to 400 percent efficient. Compared with a high-efficiency gas furnace, the winner depends on local electricity versus gas prices; at average US prices the two are surprisingly close, but modern heat pumps are increasingly competitive.
Do heat pumps work in cold climates?
Yes. While older heat pumps struggled in freezing weather, modern 'cold-climate' models maintain strong efficiency down to about 5 degrees Fahrenheit or lower and can operate in sub-zero conditions, and they are now widely used across the northern US and Canada. In the harshest climates, a dual-fuel system pairs a heat pump with a gas furnace, using the efficient heat pump most of the time and switching to gas only during extreme cold.
How much can I save by switching from electric heat to a heat pump?
The savings are largest when replacing electric resistance heat such as baseboards or an electric furnace. Because a heat pump delivers two to four times more heat per kilowatt-hour, it can roughly halve or better your heating electricity cost. Delivering one million BTU of heat costs about $54 with electric resistance but only $16 to $22 with a heat pump at average rates, and the gap grows in high-rate areas.
Is a heat pump or gas furnace better?
It depends on your situation. A heat pump wins clearly if you currently heat with electric resistance, if you need both heating and cooling (a heat pump does both with one system), or if you live in a mild to moderate climate. A high-efficiency gas furnace or a dual-fuel hybrid may be most economical if you have access to cheap natural gas in a very cold climate. Local energy prices are the deciding factor.
Does a heat pump also provide air conditioning?
Yes. A heat pump heats in winter and cools in summer using a single system, essentially working as an air conditioner in reverse during cold months. This dual function is a major advantage over a furnace, which only heats and requires a separate air conditioner. When you factor in that a heat pump replaces two systems, its overall economics often improve significantly compared with a furnace-plus-AC setup.
How long do heat pumps last compared to furnaces?
A well-maintained heat pump typically lasts about 12 to 15 years, while a gas furnace often lasts 15 to 20 years or more. Heat pumps run year-round for both heating and cooling, which can shorten their lifespan relative to a furnace that only runs in winter. However, because a heat pump replaces both a furnace and an air conditioner, its combined lifecycle cost is often competitive. Regular maintenance extends the life of either system significantly.
Can a heat pump replace both my furnace and air conditioner?
Yes. A heat pump provides both heating and cooling from a single system, so it can replace a separate furnace and air conditioner entirely. This is one of its biggest advantages: you maintain one system instead of two, and you gain efficient heating alongside the cooling you already needed. In very cold climates, some homeowners keep a backup furnace in a dual-fuel setup, but in mild to moderate climates a heat pump alone handles year-round comfort.