Heat pump cost

A ducted air-source heat pump costs $5,000 to $13,000 installed, with a typical 3 ton system landing near $8,000. That is roughly $1,000 to $2,000 more than a comparable air conditioner, and for that premium the same machine also heats the house.

The important thing to know before you budget in 2026 is that the federal tax credit most heat pump guides still describe is, according to the IRS, no longer available.

The federal credit has changed

The Energy Efficient Home Improvement Credit under Section 25C paid 30% of a qualifying heat pump project up to $2,000 a year. The One Big Beautiful Bill Act, signed in July 2025, moved its end date, and the IRS position is that the credit applies only to property placed in service on or before 31 December 2025.

There is a documented disagreement about whether the legislation actually changed that date, and it has not been settled. What that means practically is simple: do not build the credit into your budget, and if you believe you may still qualify, ask a tax professional rather than a contractor. A contractor telling you the credit is still available is not the person who will deal with the consequence if it is not.

What has not gone away is everything else. The federal HEAR rebate program, which is income-qualified and can reach $8,000 towards a heat pump, is administered state by state. Massachusetts, New York, Colorado, Maine and California run substantial programs of their own, and many utilities pay several hundred to a few thousand dollars for a qualifying installation.

Check your state energy office and your own utility before you sign. These programs have budgets that run out, and several require pre-approval before the work starts, which cannot be fixed afterwards.

What a heat pump costs

Cold-climate models, which hold useful capacity down to around 5°F, sit in the upper half of the ducted range. Ground-source systems are a different product entirely, typically $18,000 to $40,000, because most of the cost is drilling or trenching rather than equipment.

How a heat pump differs from what you have

A heat pump is an air conditioner that can run backwards. In summer it moves heat out of the house. In winter it moves heat from the outdoor air into the house. Because it moves heat rather than making it, it delivers two to four units of heat per unit of electricity, where an electric resistance heater delivers one.

That is the entire economic case, and it is a strong one against electric resistance heat or oil or propane. Against cheap natural gas it is closer, and depends on your local electricity and gas prices.

Where the extra cost goes

The electrical. A heat pump draws more current than a straight air conditioner, and it draws it in winter as well as summer. Older houses on 100 amp service sometimes need an upgrade, which is a separate job at $1,800 to $5,500. This is the most common reason a heat pump quote comes in far above expectation.

Backup heat. Most ducted installations include electric resistance strips that take over when it is too cold, or keep the existing furnace as a dual-fuel setup. Strips add $300 to $900. Dual fuel adds a control board and costs less if the furnace stays.

Ductwork. Heat pumps deliver air cooler than a furnace does, so they move more of it for the same heating effect. Ducts sized for a furnace are sometimes too small, and undersized ducts make a heat pump noisy and underperforming. Modifying them runs $10 to $35 per linear foot.

Does it make sense where you live

Yes, clearly: anywhere you currently heat with electric resistance, oil or propane. The running cost difference is large and immediate.

Yes, usually: the south and the moderate parts of the country, where a heat pump replaces both the air conditioner and the furnace with one machine and the heating season is short.

It depends: cold northern climates on cheap natural gas. A cold-climate heat pump works, but the running cost against gas is close, and the case usually rests on a dual-fuel setup that switches to gas below a chosen outdoor temperature.

Check carefully: anywhere electricity is unusually expensive relative to gas. Divide your electricity price per kilowatt hour by your gas price per therm and ask a contractor to run the comparison at your actual rates.

Frequently asked questions

Do heat pumps work in cold weather?

Modern cold-climate models hold most of their rated capacity to around 5°F and keep working below that, which is a genuine change from the equipment of twenty years ago. Capacity does fall as it gets colder, which is why backup heat exists. The old reputation comes from older machines and from installations sized for cooling alone.

Will my electricity bill go up?

Yes, and your gas or oil bill should fall by more if the system is a good fit. The right comparison is total energy spending across the year, not one bill.

How long does a heat pump last?

Twelve to eighteen years, slightly less than an air conditioner because it runs in both seasons rather than one. Annual maintenance matters more than with a cooling-only system.

Is a mini split a heat pump?

Almost always, yes. Ductless mini splits are heat pumps that skip the ductwork and deliver heating and cooling directly into a room through a wall-mounted head.

Can I keep my furnace?

Yes, and it is often the best answer in a cold climate. A dual-fuel system runs the heat pump when it is efficient to do so and switches to the furnace below a temperature you choose. You keep the furnace you already own and gain cheap shoulder-season heating.