Heat Pump Savings Calculator

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Walk-through

How to Use This Calculator

5 steps

1

Enter your current fuel and annual heating cost

Pick what you heat with today — natural gas, heating oil, propane, or electric resistance — and type in your annual heating cost (the heating portion of your bill, not cooking or water heating). The calculator uses national-average fuel prices and efficiencies to turn that dollar figure into the amount of heat your home actually needs, so you don't have to know therms or gallons.

2

Add the heat pump's HSPF2 and your electricity price

Enter the heat pump's HSPF2 rating (8–9 for a standard unit, 9–11 for a cold-climate model) — the calculator converts it to an average seasonal COP by dividing by 3.412. Then enter your electricity price in dollars per kWh; this is the single biggest driver of whether a heat pump beats your current fuel.

3

Choose your climate zone and system type

Select your climate zone so the tool derates the seasonal COP for colder weather (a heat pump loses efficiency as it gets colder). Choose Air-source for a standard heat pump or Geothermal (ground-source) for a system that draws from stable ground temperatures — geothermal keeps a higher, steadier COP and qualifies for a different federal credit.

4

Enter install cost and rebates

Add the installed cost of the heat pump and any rebates you expect from the DOE Home Energy Rebates (HEAR) program or your state/utility. The tool applies the correct 2026 federal credit automatically: $0 for air-source (the 25C credit expired at the end of 2025) and 30% for geothermal (the 25D credit runs through 2032).

5

Read savings, payback, and CO₂

The result card shows your annual savings (or, honestly, when the current fuel is cheaper to run), the payback period after incentives, and the CO₂ you'd avoid each year. Use the Fuel Comparison tab to see the heat pump next to every fuel and the dual-fuel crossover temperature, and the Incentives & CO₂ tab for the full incentive and emissions breakdown.

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Reference

Formula & Methodology

5 formulas

Heat delivered from your bill

Heat delivered = (Annual cost ÷ fuel price) × energy content × efficiency

Your bill divided by the fuel's price gives the units burned (therms, gallons, or kWh); multiplying by energy content and system efficiency gives the useful heat delivered. Energy content is fixed per fuel — natural gas 100,000 BTU/therm, heating oil 138,500 BTU/gallon, propane 91,500 BTU/gallon, electricity 3,412 BTU/kWh. Efficiency uses typical existing-system values (gas 82%, oil 83%, propane 85%, electric resistance 100%).

Heat pump electricity at a climate-adjusted COP

Seasonal COP = (HSPF2 ÷ 3.412) × climate factor; HP kWh = Heat delivered ÷ (COP × 3,412); HP cost = HP kWh × electricity price

HSPF2 (BTU per watt-hour) divided by 3.412 is the rated COP; the climate factor derates it for colder zones (Warm ×1.10, Mixed ×1.00, Cold ×0.85, Very cold ×0.72). Geothermal instead uses a stable seasonal COP of at least 3.2 because ground temperature barely changes with the weather.

Savings and payback with 2026 incentives

Annual savings = Current cost − HP cost; Net install = Install − credit − rebates; Payback = Net install ÷ Annual savings

The federal credit is the 2026 reality: $0 for air-source heat pumps (the 25C credit expired 2025-12-31) and 30% of install cost for geothermal (the 25D credit through 2032). Add HEAR/state rebates on top. Payback is shown only when savings are positive; when your current fuel is cheaper to run, the tool says so plainly instead of inventing a payback.

Dual-fuel crossover temperature

COP(T) = rated COP × (1 − 0.012 × (47 − T)); crossover where HP $/heat = fuel $/heat

A heat pump's COP falls as the outdoor temperature drops. The crossover (or economic balance point) is the temperature below which your existing fuel becomes cheaper per unit of heat — the point where a dual-fuel (hybrid) system should switch from the heat pump to the furnace.

CO₂ avoided

CO₂ avoided = (fuel units × fuel CO₂ factor) − (HP kWh × grid factor)

Combustion factors are fixed by chemistry — gas 11.7 lb CO₂/therm, oil 22.4 lb/gallon, propane 12.7 lb/gallon — while grid electricity is 0.82 lb CO₂/kWh (EPA eGRID U.S. average, 2026). Because a heat pump moves far more heat than the electricity it uses, it almost always emits less, and the gap widens each year as the grid gets cleaner.

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Glossary

Key Terms Explained

9 terms

HSPF2 Heating Seasonal Performance Factor 2 — the 2023-standard seasonal heating-efficiency rating printed on a heat pump's label, in BTU of heat per watt-hour of electricity. Divide by 3.412 to get an average seasonal COP. Standard units rate about 7.5–8.5; cold-climate models reach 9–11.

COP (Coefficient of Performance) The ratio of heat delivered to electricity consumed. A COP of 3 means 3 kWh of heat from 1 kWh of power. It's what makes a heat pump cheaper than combustion despite electricity often costing more per unit of energy; electric resistance heat has a COP of exactly 1.0.

Balance point The outdoor temperature at which a heat pump's heating capacity just matches the home's heat loss. Below it the unit needs supplemental heat. The economic balance point (this tool's crossover) is a related idea: the temperature below which the existing fuel becomes cheaper to run.

Dual-fuel (hybrid) system A heat pump paired with a gas, oil, or propane furnace as backup. Controls run the heat pump in mild weather and switch to the furnace below a set crossover temperature, capturing the heat pump's efficiency most of the year while keeping the furnace for the coldest days.

25C credit The federal Energy Efficient Home Improvement Credit that used to give 30% (up to $2,000) toward an air-source heat pump. It expired on December 31, 2025, so air-source installs in 2026 get $0 from 25C and rely on HEAR/state/utility rebates instead.

25D credit The federal Residential Clean Energy Credit — 30% of the installed cost of a geothermal (ground-source) heat pump, with no dollar cap, available through 2032. Unlike 25C for air-source units, 25D survives into 2026 and beyond, which is a major reason to consider geothermal.

HEAR rebate The Home Electrification and Appliance Rebates program (part of the Inflation Reduction Act), administered by each state. Income-qualified households can get point-of-sale rebates of up to $8,000 toward a heat pump. Availability and amounts vary by state and launch date.

Heating degree days (HDD) A measure of how cold a location is over a season — the sum of degrees each day's average temperature falls below 65°F. More HDD means more heating load, which is why the same equipment saves different amounts in different climates.

Grid carbon intensity The pounds of CO₂ emitted per kWh of grid electricity, about 0.82 lb/kWh as a U.S. average in 2026. It's falling every year as renewables grow and varies by region, so a heat pump on a cleaner grid avoids even more CO₂ than the national-average figure suggests.

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Scenarios

Real-World Examples

3 worked examples

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Gas furnace, average rates

Natural gas, $1,400/yr heating cost, an HSPF2 8.5 air-source heat pump at $0.17/kWh in a mixed climate, $12,000 installed with no rebate yet.

Current fuel Natural gas · $1,400/yr Heat pump HSPF2 8.5 · air-source Electricity $0.17/kWh

This is the honest gas case: at $0.17/kWh the heat pump runs about $1,640/yr versus $1,400 for gas, so gas is roughly $240/yr cheaper to run and there's no operating-cost payback. The tool says so instead of faking savings. The heat pump still avoids about 3,800 lb (1.9 tons) of CO₂ a year and bundles in summer cooling — and it flips to a win if your electricity is below about $0.12/kWh or gas prices spike.

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Oil heat with a HEAR rebate

Heating oil, $2,200/yr at $3.80/gallon, an HSPF2 9.5 cold-climate heat pump at $0.17/kWh in a cold zone, $14,000 installed less an $8,000 HEAR rebate (net $6,000).

Current fuel Heating oil · $2,200/yr Heat pump HSPF2 9.5 · air-source Net install $6,000 after HEAR

Expensive oil is where a heat pump shines. The same heat costs about $1,400/yr to pump versus $2,200 to burn — roughly $800/yr saved, with payback near 7.5 years after an $8,000 HEAR rebate, and about 6,200 lb (3.1 tons) of CO₂ avoided a year. In this cold zone the dual-fuel crossover lands near 9°F, so a hybrid setup that keeps the oil furnace for the coldest nights is a smart hedge.

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Geothermal vs air-source incentive

Propane, $2,600/yr, an HSPF2 8.5 geothermal (ground-source) system at $0.17/kWh in a cold zone, $28,000 installed with the 30% federal 25D credit.

Current fuel Propane · $2,600/yr System Geothermal · COP 3.2 25D credit 30% = $8,400

Geothermal holds a steady COP around 3.2 even in the cold, delivering the heat for about $1,090/yr versus $2,600 of propane — roughly $1,500/yr saved. Its 30% federal 25D credit is worth about $8,400, cutting a $28,000 install to $19,600 net for a payback near 13 years. An identical air-source system would get $0 in federal credit in 2026, which is the whole reason geothermal is worth a look despite the higher upfront cost.

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Deep Dive

Heat Pump Savings in 2026: The Credit Changed, So Did the Math

3 chapters · 6 min read

The heat-pump pitch shifted at the start of 2026. The federal 25C tax credit that used to knock up to $2,000 off an air-source heat pump expired on December 31, 2025, so a 2026 air-source install now leans on HEAR and state/utility rebates instead — while geothermal keeps its 30% federal credit through 2032. This calculator prices the comparison honestly from your own bill and electricity rate, and shows payback, the cold-climate dual-fuel crossover, and CO₂ side by side.

Why a heat pump usually wins — and sometimes doesn't

A furnace turns fuel into heat at best 1-to-1; an 82% furnace delivers 0.82 units of heat per unit of fuel energy. A heat pump doesn't make heat, it moves it from outdoor air (or the ground) into your home, delivering 2.5–3.5 units of heat per unit of electricity. That multiplier is the COP, and it's why a heat pump beats oil and propane comfortably and usually beats gas.

The exception is cheap natural gas paired with pricey electricity. At around $0.17/kWh and average gas prices, a heat pump can cost a little more to run than a gas furnace. A neutral tool should tell you that rather than assume savings — which is exactly why the default gas case here shows gas slightly ahead, while oil, propane, and electric resistance show clear wins.

Which incentives survive into 2026

Air-source (25C): gone. The Energy Efficient Home Improvement Credit's 30%/$2,000 for air-source heat pumps expired at the end of 2025. Budget $0 in federal credit for an air-source install in 2026.

Geothermal (25D): 30% through 2032. Ground-source heat pumps still qualify for the Residential Clean Energy Credit — 30% of installed cost, no dollar cap. On a $28,000 geothermal system that's $8,400 back, which is often what makes geothermal's higher upfront cost pencil out.

HEAR and state/utility rebates. The Inflation Reduction Act's Home Electrification and Appliance Rebates give income-qualified households up to $8,000 toward a heat pump, administered state by state. Many utilities add their own rebates. These are now the main lever on air-source payback, so enter what you actually qualify for.

Cold climates and when dual-fuel makes sense

A heat pump's COP falls as the outdoor temperature drops, so in cold zones the seasonal average is lower and running cost is higher. This tool derates the COP by climate zone and reports a dual-fuel crossover temperature — the point below which your existing fuel becomes cheaper per unit of heat.

When that crossover sits well above the coldest weather (often the case switching from cheap gas), a dual-fuel (hybrid) system that runs the heat pump in mild weather and the furnace on the coldest nights is usually the lowest-cost, most-reliable setup. Geothermal sidesteps the problem: ground temperature barely changes, so its COP stays near 3.2 all winter with no crossover to worry about. This is a planning estimate, not a Manual J load calculation — get a contractor's load calc and a firm quote, and confirm current incentive rules, before deciding.

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Questions

Frequently Asked Questions

8 questions

Does a heat pump actually save money?+

It depends on your current fuel price and your electricity rate. A heat pump beats oil, propane, and electric resistance easily, and often beats gas — but where natural gas is cheap and electricity is expensive (around $0.17/kWh), it can cost slightly more to run than a gas furnace. This calculator shows the honest dollar comparison for your own rates instead of assuming savings.

Is there a 2026 heat pump tax credit?+

For air-source heat pumps, no — the federal 25C credit (30% up to $2,000) expired on December 31, 2025, so 2026 air-source installs get $0 from it. Geothermal (ground-source) heat pumps still qualify for the 30% federal 25D credit through 2032. On top of either, HEAR and state/utility rebates may apply. Always confirm current rules before you buy.

How is payback calculated?+

Payback = net install cost (after the federal credit and any rebates) ÷ annual savings. If a heat pump saves $800/year and costs $6,000 net after rebates, payback is about 7.5 years. When the heat pump costs more to run than your current fuel, there is no operating-cost payback and the tool says so plainly.

Do heat pumps work in cold climates?+

Yes — modern cold-climate heat pumps keep heating well below 0°F, but their COP drops as it gets colder because there's less heat in the outside air to move. This calculator derates the seasonal COP by climate zone. In the coldest zones a dual-fuel system that backs up the heat pump with a furnace below the crossover temperature is often the most economical choice.

How does it compare to oil or propane?+

Usually a big win. Oil and propane are expensive per BTU, so replacing them with a heat pump that delivers 2.5–3.5 units of heat per unit of electricity typically cuts annual heating cost by hundreds to over a thousand dollars, and avoids the most CO₂ of any fuel switch. Payback then depends mainly on install cost and the rebates you qualify for.

How much CO₂ does a heat pump avoid?+

It depends on your grid. We compare the CO₂ from burning your current fuel against the CO₂ from the grid electricity the heat pump uses (0.82 lb/kWh U.S.-average in 2026). Because a heat pump moves far more heat than the electricity it consumes, it almost always emits less — often 2–3 tons/year less — and the gap grows every year as the grid gets cleaner.

What is a HEAR rebate?+

HEAR is the Home Electrification and Appliance Rebates program from the Inflation Reduction Act, run by each state. Income-qualified households can get point-of-sale rebates of up to $8,000 toward a heat pump. With the air-source 25C tax credit gone in 2026, HEAR and state/utility rebates are the main way to shorten an air-source heat pump's payback — enter what you qualify for.

Is geothermal worth the extra cost?+

Often, if you plan to stay in the home. Geothermal costs more to install but runs at a higher, steadier COP (around 3.2 even in winter, with no cold-weather crossover) and still qualifies for the 30% federal 25D credit through 2032 — worth thousands that air-source no longer gets. Model both here to see whether the credit and efficiency close the upfront-cost gap for your situation.

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Your current heating

The heat pump

Install & incentives

Cumulative cost — switch to a heat pump vs keep your fuel

Same heat demand, every fuel

Annual savings

How to Use This Calculator

Enter your current fuel and annual heating cost

Add the heat pump's HSPF2 and your electricity price

Choose your climate zone and system type

Enter install cost and rebates

Read savings, payback, and CO₂

Formula & Methodology

Key Terms Explained

Real-World Examples

Gas furnace, average rates

Oil heat with a HEAR rebate

Geothermal vs air-source incentive

Heat Pump Savings in 2026: The Credit Changed, So Did the Math

Why a heat pump usually wins — and sometimes doesn't

Which incentives survive into 2026

Cold climates and when dual-fuel makes sense

Frequently Asked Questions

Get a branded PDF of your results

Heat Pump Savings Calculator

Your current heating

The heat pump

Install & incentives

Cumulative cost — switch to a heat pump vs keep your fuel

Same heat demand, every fuel

Annual savings

How to Use This Calculator

Enter your current fuel and annual heating cost

Add the heat pump's HSPF2 and your electricity price

Choose your climate zone and system type

Enter install cost and rebates

Read savings, payback, and CO₂

Formula & Methodology

Key Terms Explained

Real-World Examples

Heat Pump Savings in 2026: The Credit Changed, So Did the Math

Why a heat pump usually wins — and sometimes doesn't

Which incentives survive into 2026

Cold climates and when dual-fuel makes sense

Frequently Asked Questions

Get a branded PDF of your results

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