Quick answer: A heat pump is an electric system that heats and cools your home by moving heat instead of burning fuel. In winter it pulls heat from the outdoor air (even cold air) and brings it inside; in summer it runs in reverse like an air conditioner. A whole-home system costs about $15,000 installed on average in the U.S., though prices range from roughly $8,000 to over $30,000 depending on where you live and what your home needs. It makes the most sense if you heat with electric baseboards, propane, or oil, or if you need to replace your AC and furnace anyway.
Heat pumps have gone from niche to mainstream. In 2025, U.S. manufacturers shipped 3.64 million heat pumps versus 3.25 million gas furnaces, the fourth year in a row that heat pumps came out ahead. But the rules changed this year: the federal tax credit that knocked up to $2,000 off the price is gone. So is a heat pump still worth it? This guide walks you through how the technology works, what you’ll really pay, how it handles cold winters, and a simple checklist to decide whether it’s right for your home.
Key takeaways
| Question | Short answer |
|---|---|
| What does it do? | Heats and cools with one system, using electricity |
| Average installed cost | About $15,400 before incentives (ducted systems about $14,500) |
| Does it work in the cold? | Yes. Cold-climate models are tested down to 5°F, and some keep heating at -13°F |
| How much energy does it save? | Up to about 65% less electricity for heating than baseboard or electric furnaces |
| Federal tax credit in 2026? | No. It ended for systems installed after December 31, 2025 |
| Typical lifespan | 10–15 years, longer with good maintenance |
What is a heat pump?
A heat pump is a heating and cooling system that moves heat from one place to another instead of creating it. A furnace burns gas, propane, or oil to make heat. An electric baseboard turns electricity directly into heat, one unit of electricity for one unit of heat. A heat pump uses electricity to run a compressor and fans that carry heat that already exists outside into your home.
Because it moves heat rather than making it, a heat pump can deliver up to three times more heat energy than the electrical energy it uses, according to ENERGY STAR. That’s the whole trick, and it’s why heat pumps are so much cheaper to run than electric resistance heat.
If you already have central air conditioning, you’ve lived with half a heat pump. An AC moves heat from inside to outside. A heat pump does the same thing in summer, then flips a valve in winter and moves heat from outside to inside.
How does a heat pump work?
Even at 20°F, outdoor air still contains heat energy. A heat pump captures it using a refrigerant, a fluid that boils at very low temperatures. Here’s the cycle in heating mode:
- Absorb: Cold liquid refrigerant flows through the outdoor coil. It’s colder than the outside air, so it absorbs heat and turns into a gas.
- Compress: The compressor squeezes that gas. Compressing a gas raises its temperature, so it leaves the compressor hot.
- Release: The hot gas flows to the indoor coil. A fan blows your home’s air across the coil, the air warms up, and the refrigerant cools back into a liquid.
- Expand and repeat: The liquid passes through an expansion valve, drops in pressure and temperature, and heads back outside to absorb more heat.
In cooling mode, a reversing valve sends the refrigerant the other way. The indoor coil absorbs heat from your home and the outdoor unit dumps it outside, just like a standard air conditioner. A heat pump also removes humidity in summer, the same way an AC does.
What is a defrost cycle?
In cold, damp weather, frost can build up on the outdoor coil. Every so often the heat pump briefly switches into cooling mode to melt it. You may see steam rising from the outdoor unit and hear a whoosh. That’s normal. If the unit is covered in thick ice that won’t clear, that’s a problem and worth a service call.
Types of heat pumps
Most homeowners choose between four options. The right one depends mainly on whether your home already has ductwork.
| Type | How it works | Best for | Average installed cost* |
|---|---|---|---|
| Ducted air-source | Outdoor unit plus indoor air handler connected to your existing ducts | Homes with ducts, replacing a central AC and furnace | About $14,500 |
| Ductless mini-split | Outdoor unit connected to wall, ceiling, or floor units in each room or zone | Homes without ducts, additions, garages, room-by-room control | About $26,000 for whole-home systems; far less for one or two rooms |
| Dual fuel (hybrid) | Heat pump paired with a gas or propane furnace that takes over in extreme cold | Cold climates with an existing furnace in good shape | About $14,400 |
| Geothermal (ground-source) | Loops buried in the ground exchange heat with the earth, which stays at a steady temperature | Homeowners planning to stay long-term with space for loops | Much higher; drilling or trenching adds a large cost |
*National averages before incentives from EnergySage’s 2026 marketplace data. Your quotes will vary by region, home size, and brand.
Ductless systems cost more per ton of capacity because every zone needs its own indoor unit. But if you only need to heat and cool a finished basement or a bonus room, a single-zone mini-split is one of the cheapest ways to add comfort to part of a home. See our ductless mini-split guide.
Do heat pumps work in cold weather?
Yes, modern ones do, but not all heat pumps are built for cold climates. This is the most common heat pump myth, and it comes from older units that lost most of their output once temperatures dropped into the 20s.
Today’s cold-climate heat pumps use variable-speed (inverter) compressors and improved refrigerants. Some examples of what that means in practice:
- ENERGY STAR’s cold-climate certification verifies heating performance down to 5°F.
- Mitsubishi’s Hyper-Heating models are rated to deliver up to 100% of their heating capacity at 5°F and to keep heating at temperatures as low as -13°F.
- Below their rated limits, systems rely on backup heat: electric resistance strips in the air handler, or a furnace in a dual-fuel setup.
What this means for you: if you live where winter lows regularly hit single digits or below zero, ask specifically for a cold-climate model and check its heating capacity at 5°F on the spec sheet, not just its rated capacity at 47°F. Also ask your installer how the backup heat is set up and when it kicks in. Backup resistance heat that runs too often is the number one reason people see high winter bills. Read our guide to the best cold-climate heat pumps.
How much does a heat pump cost in 2026?
According to EnergySage’s 2026 data, the national average for a whole-home heat pump is $15,393 before incentives. The spread is huge: roughly $8,000 in New Mexico and around $33,000 in New York, with Florida averaging about $10,300 and Texas about $11,900.
| System | Average cost before incentives | Cost per ton |
|---|---|---|
| Ducted air-source | $14,529 | $3,790 |
| Hybrid (dual fuel) | $14,353 | $6,407 |
| Ductless mini-split (whole home) | $25,957 | $9,163 |
Source: EnergySage, updated March 2026.
What drives the price up or down
- Home size and heat loss: a leaky 2,500 sq ft house in Minnesota needs a much bigger system than a tight 1,500 sq ft home in Georgia.
- Ductwork: good existing ducts keep costs down. Repairing, resizing, or adding ducts can add thousands.
- Electrical work: older homes may need a panel upgrade or a new circuit.
- Efficiency and features: variable-speed, cold-climate models cost more upfront but run cheaper and more quietly.
- Local labor rates and permits: this is the main reason the same system costs twice as much in the Northeast as in the Southwest.
Get at least three written quotes, and make sure each one is for the same size and efficiency level so you’re comparing like for like. See our full heat pump cost breakdown by home size.
Heat pump tax credits and rebates in 2026
This is where a lot of online advice is out of date.
- The federal tax credit (Section 25C) is gone for new installs. The IRS confirms it is not allowed for any property placed in service after December 31, 2025. If your system was installed and running by the end of 2025, you can still claim it (30% up to $2,000) on your 2025 return.
- State HEEHRA rebates still exist, but they are income-based and limited. These federally funded, state-run rebates can cover up to $8,000 for households below 80% of area median income and up to $4,000 for those between 80% and 150%. Availability depends entirely on your state, and money runs out: California’s single-family funds were fully reserved statewide on February 24, 2026.
- Utility rebates are often the easiest money. Many electric utilities offer several hundred to a few thousand dollars for qualifying heat pumps. Check your utility’s website and the DSIRE incentives database before you sign a contract, because many rebates require pre-approval or a participating contractor.
Find heat pump rebates by state.
How much can a heat pump save on energy bills?
It depends on what you heat with now and what you pay for energy. The U.S. Department of Energy says today’s heat pumps can cut the electricity used for heating by about 65% compared with electric resistance heat like baseboards or an electric furnace. Against natural gas, the answer is closer and depends on local prices.
Here’s an illustrative example for a home that needs 40 million BTU of heat per winter. The prices are assumptions for comparison only, so plug in your own rates from your utility bills.
| Heating system | Efficiency assumed | Price assumed | Approximate winter cost |
|---|---|---|---|
| Electric baseboard or furnace | 100% | $0.17 per kWh | $1,990 |
| Propane furnace | 90% | $2.80 per gallon | $1,360 |
| Heating oil furnace | 85% | $3.80 per gallon | $1,290 |
| Heat pump | Seasonal average COP 2.5 | $0.17 per kWh | $800 |
| Natural gas furnace | 95% | $1.50 per therm | $630 |
The pattern is clear. Switching from electric resistance, propane, or oil usually saves a lot. Switching from cheap natural gas may save little on heating or even cost a bit more, although you also get high-efficiency air conditioning from the same system. In very cold climates the seasonal COP will be lower than 2.5, so a dual-fuel system can be the best of both worlds.
SEER2 and HSPF2: the efficiency ratings that matter
Every heat pump carries two efficiency ratings. Since January 1, 2023, they’re measured under a newer, tougher test, which is why you’ll see a “2” at the end.
- SEER2 measures cooling efficiency over a season. The federal minimum for split-system heat pumps is 14.3 SEER2.
- HSPF2 measures heating efficiency over a season. The federal minimum is 7.5 HSPF2.
Higher numbers mean lower bills. In a cold climate, pay closer attention to HSPF2 and the capacity at 5°F. In a hot climate, SEER2 matters more. What SEER2 rating do you actually need?
Pros and cons of heat pumps
| Pros | Cons |
|---|---|
| One system for heating and cooling | Higher upfront cost than a basic furnace or AC alone |
| Much cheaper to run than electric, propane, or oil heat | Savings versus cheap natural gas can be small |
| No combustion, so no carbon monoxide risk from the unit | Standard models struggle in extreme cold; you need a cold-climate model or backup |
| Steady, even heat with variable-speed models | Air from vents feels warm, not hot, which some people need time to get used to |
| Dehumidifies in summer | Installation quality matters a lot; a poorly sized system performs badly |
Should you get a heat pump? A quick checklist
A heat pump is probably a strong choice if:
- You heat with electric baseboards, an electric furnace, propane, or oil.
- Your central AC is 12 or more years old and needs replacing soon.
- You’re building an addition or finishing a space without ducts.
- You live in a mild or mixed climate, such as the South, the Mid-Atlantic, or the Pacific Northwest.
- You have or plan to add solar panels.
You may want to wait or consider dual fuel if:
- You have a newer, efficient gas furnace and cheap natural gas.
- You live somewhere with very long, very cold winters and don’t want to keep a backup.
- Your electrical panel is maxed out and an upgrade would blow your budget.
Heat pump vs. furnace vs. air conditioner
| Heat pump | Furnace + central AC | |
|---|---|---|
| Heating | Yes, electric | Yes, gas, propane, oil, or electric |
| Cooling | Yes | Yes, via the separate AC |
| Number of outdoor units | One | One (the AC) |
| Best climate | Mild to cold (with cold-climate models) | Any, especially very cold |
| Running cost | Low to moderate | Depends heavily on fuel price |
If you’re replacing your AC anyway, the price gap between a new AC and a heat pump of the same size is often much smaller than people expect. That’s why many contractors now suggest a heat pump even when the furnace stays as a backup. Compare heat pump vs. furnace costs in detail.
How to choose the right heat pump
- Insist on a load calculation. A good contractor sizes the system with a Manual J calculation based on your home’s insulation, windows, and layout, not by copying the size of your old unit.
- Match the model to your climate. In cold regions, choose a cold-climate model and compare heating capacity at 5°F.
- Prefer variable-speed. Inverter-driven units run longer at low speed, which means steadier temperatures, better humidity control, and lower bills.
- Ask about the backup heat setup. Know what the backup is, when it turns on, and what thermostat the installer recommends.
- Check the ducts. Leaky or undersized ducts can waste a big share of what you paid for.
- Compare warranties. Look at both the manufacturer’s parts warranty and the installer’s labor warranty, and register the equipment so you don’t lose coverage.
The installer matters as much as the brand. A premium unit installed badly will underperform a mid-range unit installed well. See the best heat pump brands by climate zone.
How long do heat pumps last?
Most air-source heat pumps last around 10 to 15 years, and well-maintained units can go longer. Because a heat pump runs year-round, it works more hours than an AC that only runs in summer, so maintenance matters:
- Change or clean the air filter every 1–3 months.
- Keep at least 2 feet of clear space around the outdoor unit and clear snow and leaves.
- Book a professional tune-up once a year, ideally before the heating season.
Get our seasonal HVAC maintenance checklist.
Frequently asked questions
Can a heat pump heat a whole house by itself?
Yes, if it’s sized correctly for your climate. In mild and mixed climates, a heat pump handles the whole winter on its own. In very cold climates, most homes keep a backup, either electric strips or a furnace, for the coldest days.
Is a heat pump cheaper to run than gas?
It depends on local electricity and gas prices. Against electric resistance, propane, or oil, a heat pump is usually much cheaper. Against low-cost natural gas, heating costs are often similar, and sometimes gas wins.
Do heat pumps work below freezing?
Yes. Standard models heat well into the 20s and 30s. Cold-climate models are tested down to 5°F, and some keep producing heat as low as -13°F.
Is there still a tax credit for heat pumps in 2026?
Not a federal one. The Section 25C credit ended for systems placed in service after December 31, 2025. Income-qualified state rebates and utility rebates are still available in many areas.
How much does a heat pump cost to install?
The U.S. average is about $15,400 before incentives for a whole-home system, with ducted systems averaging about $14,500. Single-room mini-splits cost much less, and high-cost regions like New York can exceed $30,000.
How long does installation take?
A straightforward replacement of an existing ducted system usually takes one to three days. Multi-zone ductless installs, ductwork changes, or electrical upgrades can take longer.
The bottom line
A heat pump is one of the best upgrades you can make if you heat with electricity, propane, or oil, or if your AC is due for replacement. The loss of the federal tax credit makes the upfront price harder to swallow, but running costs, comfort, and one system for both seasons still make the numbers work for millions of homes. Get a proper load calculation, choose a model rated for your climate, and compare at least three quotes.
Ready to see what it would cost for your home? Compare free quotes from up to 3 local HVAC pros.
Sources
- ENERGY STAR: Air-Source Heat Pumps
- U.S. Department of Energy: Home Upgrades
- EnergySage: How Much Does a Heat Pump Cost?
- IRS: FAQs on Sections 25C and 25D
- California Energy Commission: IRA Residential Energy Rebate Programs
- AHRI: Residential Heat Pumps (efficiency standards)
- Mitsubishi Electric: Heat Pumps
- ACHR News: Heat Pump, A/C Shipments in 2025
- EnergySage: How Long Do Heat Pumps Last?