Heat Pumps in 2025: The Economics Have Shifted
Heat pump efficiency is measured in COP (Coefficient of Performance) — the ratio of heat produced to electricity consumed. Modern air-source heat pumps achieve COP 2.5–4.0 in moderate temperatures. At COP 3.0, a heat pump delivers 3 units of heat per unit of electricity consumed. Compare this to a 95% AFUE gas furnace that delivers 0.95 units of heat per unit of gas. At national average prices (18¢/kWh electricity, $1.70/therm gas), a heat pump at COP 3.0 costs about $0.018/kBTU of delivered heat, and a 95% AFUE furnace costs about the same, $0.018/kBTU — effectively a tie. At a more conservative seasonal COP of 2.5, which is what the calculator above assumes, the heat pump runs about 18% more ($0.021/kBTU). A heat pump's efficiency advantage is real, but on national-average prices it is almost exactly cancelled by electricity costing more per BTU than gas. Which one wins in your home comes down to your local rates and how cold your winters get, since a heat pump's COP falls as the outdoor temperature drops. Against electric resistance heat, at about $0.053/kBTU, a COP 3.0 heat pump is three times cheaper.
Cold Climate Performance: The Old Limitation Is Largely Resolved
The historical knock on heat pumps — that they lose effectiveness below 32°F — applies to 2005-era equipment. Modern cold-climate heat pumps (Mitsubishi H2i, Bosch Climate 5000, LG Therma V) maintain COP greater than 1.5 at 0°F and some are rated to -13°F. This matters enormously in climate zones 5–7 (New England, Upper Midwest, Mountain states). The crossover point — where a heat pump's efficiency advantage over gas disappears — has shifted from roughly 20°F in older units to below -5°F in current cold-climate models. For most of the U.S. heating season, modern heat pumps maintain their efficiency advantage throughout. Keep in mind that an efficiency advantage is not the same thing as a cost advantage: as the section above shows, on national-average prices a heat pump and a high-efficiency gas furnace come out about even per unit of heat, so it is your local electricity and gas rates that decide which one produces the lower bill.
Boilers vs Forced Air: Distribution System Compatibility
Heat pumps work best with forced-air distribution systems (ductwork). Homes with hot-water baseboard or radiator systems (typical in Northeast cities and older construction) face a compatibility challenge. Hydronic (water-based) heat pumps exist but cost 30–50% more than air-to-air systems. Mini-split heat pumps bypass the ductwork issue entirely by delivering heat directly to zones — often the most practical heat pump solution for homes with boilers. Installing 3–4 mini-splits throughout a home ($15,000–$25,000) provides both heating and cooling without touching existing boiler or ductwork.
The IRA Tax Credit Changes the Calculus
The Inflation Reduction Act (2022) used to provide a 30% tax credit (up to $2,000) for qualifying heat pump installations, but that credit was terminated by the One Big Beautiful Bill Act for anything placed in service after December 31, 2025 — it doesn't apply in 2026. Low-to-moderate income households may still qualify for HEEHRA rebates up to $8,000, a separate program that survived. A heat pump installation that costs $12,000 now nets to roughly $4,000 after HEEHRA rebates alone for eligible households, or the full $12,000 for households that don't qualify. Payback periods are longer than they were with the federal credit — often 8–12 years versus 5–8 years when the credit was still available, particularly when replacing an aging gas system.