Where gas is cheap and winters are cold, a gas furnace heats for less. At $1.00 per therm and 15¢ per kWh, a 95% furnace delivers a therm of heat for about $1.05 while a heat pump running at a seasonal COP of 3 needs about $1.47. Flip the inputs, and the heat pump wins: against an 80% furnace, propane, oil, or resistance heat, it saves 30 to 60 percent on every heating bill.
So the honest answer is to check your rates, and the formula below takes one minute to run.
The Math That Decides It
Both machines deliver heat, just from different sources at different efficiencies. A furnace burns gas at 80 to 97% efficiency. A heat pump moves existing heat, so it delivers 2 to 3.5 units of warmth per unit of electricity depending on outdoor temperature (that ratio is the COP).
| Fuel and equipment | Cost to deliver 1 therm (100,000 BTU) | Notes |
|---|---|---|
| Gas furnace, 95% AFUE, $1.00/therm | ~$1.05 | Typical Midwest rate |
| Gas furnace, 95% AFUE, $1.60/therm | ~$1.68 | Northeast and California rates |
| Gas furnace, 80% AFUE, $1.00/therm | ~$1.25 | Older equipment |
| Heat pump, COP 3, $0.15/kWh | ~$1.47 | Mild weather, modern unit |
| Heat pump, COP 3.5, $0.10/kWh | ~$0.84 | Mild climate, cheap power |
| Heat pump, COP 2, $0.15/kWh | ~$2.20 | Near 0°F, cold snap |
| Propane, 95% furnace, $2.50/gal | ~$2.88 | Rural reality |
| Resistance heat (COP 1), $0.15/kWh | ~$4.40 | Electric baseboards, strips |
Here’s the formula. Heat pumps beat your furnace when:
electricity price per kWh < (gas price per therm ÷ furnace efficiency) × COP ÷ 29.3
With $1.00 gas, a 95% furnace, and COP 3, the break-even electricity price is about 10.8¢ per kWh. Below that, the heat pump heats cheaper. Above it, the furnace does. A COP of 3 is a fair seasonal average for a modern unit in a climate with real winters; mild-climate units average closer to 3.5.
Notice what this formula does to the propane and oil rows. Propane at $2.50 a gallon puts the break-even near 29¢ per kWh, which no US utility charges. Same story for heating oil. If you’re off the gas grid, the heat pump isn’t a debate.
When Each Side Wins
Heat pump wins: Texas. A 1990s house in Dallas with an 80% furnace, gas at $1.45 per therm, electricity at 14¢. Delivered gas heat costs $1.81 per therm; the heat pump at COP 3 costs $1.37. On a $900 winter gas bill, that’s roughly $200 back per season, plus the heat pump replaces the AC that was due anyway.
Heat pump wins: rural Pennsylvania. Propane at $2.60 per gallon costs about $3.00 per delivered therm. The heat pump at COP 3 and 13¢ electricity costs $1.27. Savings run 55 to 60 percent, which on a $2,400 propane winter is over $1,300 a year.
Gas furnace wins: Minnesota. Gas at $0.95 per therm, electricity at 15¢, design temperature near -10°F. The furnace’s $1.00 per therm beats even a strong seasonal COP of 3 ($1.47). Cold climate plus cheap gas is the furnace’s home turf.
Gas furnace wins: cheap gas, existing newer furnace. If your 96% furnace is six years old and healthy, no arithmetic saves you money by replacing it early. Efficiency gains only pay when equipment is due anyway.
One caution before you build a spreadsheet: federal incentives no longer tilt this decision. The 25C heat pump credit expired December 31, 2025, so ignore any comparison still subtracting $2,000 from the heat pump’s price. State and utility rebates persist; DSIRE shows what’s live near you.
Comfort: The Part Nobody Puts in a Quote
Furnace air comes out hot, around 120 to 140°F, in short loud bursts. Heat pump air leaves the vent at 95 to 110°F and runs longer, steadier cycles. Most people describe the heat pump house as more even and less drafty once they live with it for a season.
The catch is the first week. Longer cycles and cooler-feeling vents read as “not working” to people used to furnace blasts. Contractors get callbacks over it every winter anyway.
Heat pumps also dehumidify better in summer because longer cooling cycles pull more moisture. In humid climates, that’s worth real comfort.
Replace Both at Once or Stagger Them
The pairing question costs people real money. If your furnace and AC are both 14 or older, replacing both with a single heat pump makes sense: you’re buying two machines either way, and one machine costs less to run and maintain than two.
If the furnace is 8 years old and the AC just died, replace the AC only. Pulling a healthy furnace early to chase a heat pump rarely pays back before the furnace would have died anyway. Matched-system caveats apply, so read the age thresholds in our central AC replacement cost guide before deciding.
Ways to Pay Less Either Way
Get three quotes, whichever direction you go. On furnace replacements, the gap between the low and median quote routinely hits $1,000 to $1,500. Our gas furnace replacement cost guide lists what a fair quote itemizes.
Book in the shoulder season. Furnace installs are cheapest in September and heat pump installs in April or May, when crews are between their busy seasons.
Size from a load calculation, not the old nameplate. Oversized equipment of either type costs more upfront, short-cycles, and dies younger. An honest contractor measures before quoting.
Check utility rebates. Gas utilities in several states pay $300 to $800 toward 95%+ furnaces, and electric utilities often pay more for heat pumps. Run your specific rates through our heat pump payback calculator before you let a salesperson run them for you.
Mistakes to Avoid
Comparing sticker price instead of cost per therm. A $14,000 heat pump can be the cheaper machine over ten years in Georgia and the more expensive one in Minnesota. The fuel math is the whole game, and it’s six numbers long.
Ignoring what dies first. Most people choose a heating system twice: once when the AC fails and once when the furnace does. Plan the endgame now and you’ll spend the transition budget once instead of twice.
Forgetting the strips in cold climates. If your heat pump’s bill spikes on the coldest week, that’s resistance backup running at COP 1. A thermostat set to “heat” instead of “emergency” and a properly sized unit keep strips as a rare backup rather than a January habit.
Assuming electrification is automatic savings. Heat pumps save money against resistance heat, propane, and oil almost everywhere. Against cheap natural gas in cold climates, they frequently don’t. Anyone telling you otherwise is selling something.
The Bottom Line
Run the formula with your own bills: electricity under roughly 11¢ per kWh beats $1 gas; anything over 20¢ needs propane, oil, or an ancient furnace on the other side to make sense. Cold climate plus cheap gas favors the furnace, everything else tilts toward the heat pump, and replacing both units together usually beats staggering them. Full installation pricing for the heat pump path is in our heat pump installation cost guide.
FAQ
What is COP in plain English?
It’s how many units of heat you get per unit of electricity. A COP of 3 means three units of heat moved for every one unit of electricity purchased, which is why heat pumps beat even 100% efficient resistance heaters by a wide margin. COP falls as outdoor temperature drops, which is why the seasonal average matters more than the brochure peak.
Do heat pumps work below freezing?
Modern cold-climate models keep working below 0°F and hold most rated capacity down to around 5°F. Output drops as temperature drops, so backup electric strips cover the coldest hours. That backup is why sizing matters more for heat pumps than for furnaces.
Is a heat pump cheaper than a gas furnace overall?
Heating alone: usually not where gas is under $1.20 per therm and winters are real. Total cost including cooling: often yes, because the heat pump replaces a separate AC purchase and cools at high efficiency. The payback calculator handles both sides with your rates.
Can I switch from gas to a heat pump without replacing everything?
Often yes. If your air handler and ducts are in good shape, a heat pump can use them, though the coil and thermostat usually change. Budget $9,000 to $22,000 for the full job; a standalone mini split is the cheaper route if you only want to electrify part of the house first.