Heat Pumps: How They Work, What They Cost and Are They Worth It?

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A heat pump is an electric system that heats and cools your home by moving heat instead of burning fuel: it pulls warmth from the outdoor air (or the ground) into the house in winter and carries it out in summer. It suits most homes, especially those heating with electricity, propane or oil, or replacing an old air conditioner.

Picture a cold January morning. The furnace in the basement used to kick on with a thump and a whoosh; now a quiet unit outside hums along, and warm air keeps coming through the same vents. In July, that same box cools the house. No oil delivery, no propane tank to watch, one machine for both seasons. ENERGY STAR says an air source heat pump can deliver up to three times more heat energy than the electricity it uses. Whether it lowers your bills depends mostly on what you heat with now and your local prices.

Prices change often: the ones below are what we saw at the maker or a major retailer in October 2026, or installed-cost averages from the named source and year.

Heat pumps at a glance

• What it is: one electric system that heats and cools by moving heat between indoors and outdoors.
• Efficiency: up to three units of heat for each unit of electricity, per ENERGY STAR. DOE says modern air-source heat pumps can cut electricity use for heating by about 50% compared with electric furnaces and baseboard heaters.
• Main types: ducted (central), ductless mini split, cold-climate models, window units, and geothermal (ground-source). Heat pump water heaters and dryers use the same idea.
• Popularity: in 2025, U.S. makers shipped 3.64 million air-source heat pumps and 3.25 million gas furnaces (AHRI shipment data, released February 2026).
• Cold weather: ENERGY STAR’s cold-climate label requires real heating performance at 5°F.
• Cost: EnergySage puts the average whole-home installation at about $15,400 before incentives in 2026; DIY mini splits for one room start around $860 to $2,200 for the equipment.
• No federal tax credit in 2026: the 25C credit (up to $2,000 for a heat pump) ended for property placed in service after December 31, 2025. State and utility rebates remain in some places.

How does a heat pump work?

A heat pump works like your refrigerator, which pulls heat out of the food compartment and releases it into your kitchen, but at house scale and in either direction. Inside, a fluid called refrigerant circulates in a closed loop between an indoor coil and an outdoor coil. The cycle has four steps:

1. Absorb: cold, low-pressure refrigerant passes through one coil and soaks up heat from the air around it, even cold air, because the refrigerant is colder still. It boils into a gas.
2. Compress: the electric compressor squeezes that gas, which makes it much hotter.
3. Release: the hot gas flows through the other coil, where a fan blows air across it. The refrigerant gives up its heat and turns back into a liquid.
4. Expand: the liquid passes through an expansion valve, drops in pressure and temperature, and the loop starts again.

In summer, the indoor coil soaks up heat (and moisture) from your rooms and the outdoor unit releases it: that’s air conditioning. In winter, a reversing valve flips the flow, so the outdoor coil collects heat from outside and the indoor coil releases it into your home. As EnergySage puts it, that valve is the one part that separates a heat pump from a plain air conditioner.

Why so efficient? The electricity runs the compressor and fans; it doesn’t make the heat, which already exists outdoors. A baseboard heater turns 1 kWh of electricity into 1 kWh of heat; a heat pump can deliver two to three or more kWh for the same 1 kWh, depending on the outdoor temperature. For the physics, see thermal energy.

COP, SEER2 and HSPF2 in plain English

• COP (coefficient of performance): heat out divided by electricity in, at one moment and one temperature. A COP of 3 means three times the heat of a resistance heater for the same power. Cold-climate specs quote COP at 5°F.
• SEER2: cooling efficiency over a whole season. Higher is better. Since January 1, 2023, the federal minimum for a split heat pump is 14.3 SEER2; ENERGY STAR asks for at least 15.2.
• HSPF2: heating efficiency over a whole season. Higher is better. The federal minimum for a split heat pump is 7.5 HSPF2; ENERGY STAR asks for at least 7.8. Some makers list two values, Region IV (moderate climate) and Region V (cold, so the number is lower).
• EER2: cooling efficiency on a hot day; it matters most in the Southwest.

Efficiency matters: NREL’s 2024 national study found minimum-efficiency heat pumps could raise bills in 39% of households, versus 5% with higher-efficiency equipment. The step up in SEER2 and HSPF2 usually earns its keep.

Defrost and backup heat

In cold, damp weather frost builds up on the outdoor coil, so the system briefly runs in reverse to melt it; steam from the outdoor unit is normal. Many ducted systems also include electric resistance strips (“aux” or “emergency” heat) that kick in when the heat pump can’t keep up or during defrost. Those strips work like a giant toaster and cost much more to run, so a well-sized system should need them rarely.

Types of heat pumps

Most homes use an air source heat pump, which trades heat with the outdoor air. It comes in several forms; ground-source (geothermal) systems trade heat with the earth instead.

Type	Best for	Typical efficiency	Relative cost	Notes
Ducted air-source (central)	Homes with ductwork replacing central AC, a furnace or both	Federal minimum 14.3 SEER2 / 7.5 HSPF2; ENERGY STAR ≥15.2 / ≥7.8	Medium: about $14,500 installed on average (EnergySage, 2026)	Uses your existing ducts; leaky ducts waste the gains
Ductless mini split (single or multi-zone)	Homes without ducts, additions, garages, rooms that are always too hot or cold	Often 20+ SEER2 (the units on this page: 20 to 23.5 SEER2)	Low for one room ($860 to $2,200 equipment, Oct 2026); high for whole home (about $26,000, EnergySage 2026)	One outdoor unit can feed several indoor heads (multi-zone); ENERGY STAR says certified mini splits use up to 60% less energy than standard electric radiators
Cold-climate air-source	Places with long winters below freezing	ENERGY STAR cold climate: COP ≥1.75 at 5°F, HSPF2 ≥8.1 ducted / ≥8.5 ductless	Medium to high	Variable-speed compressor; see our cold-climate picks
Ground-source (geothermal)	New homes, big renovations, owners staying long term	300% to 600% (COP 3 to 6) on the coldest nights, per DOE	Highest: $15,000 to $40,000+ (EnergySage, 2026)	DOE: 25 to 50% less energy than air-source; loops last 25 to 50 years
Heat pump water heater	Anyone replacing an electric tank water heater	UEF about 3.0 to 3.9 vs at most 1.0 for a standard electric tank	Low: about $1,550 to $2,600 equipment (Oct 2026)	ENERGY STAR: about $550 a year saved for a family of four (2023)
Window and portable	Renters, apartments, single rooms	Rated like room ACs; heating drops off in the cold unless built for it	Lowest; plugs in, no contractor	The Midea below stops heat-pumping near 41°F; Gradient rates its unit to -13°F

A dual-fuel (hybrid) setup pairs an air source heat pump with a gas or propane furnace that takes over in deep cold; it makes sense with cheap gas or a newer furnace you want to keep. A heat pump water heater pulls heat from the air around the tank, and a heat pump dryer recycles warm air instead of venting it. Our geothermal energy explainer covers how ground loops work.

Do heat pumps work in cold climates?

Yes, with the right equipment. DOE wrote in 2023 that air-source heat pumps, once rare where temperatures stay below freezing, are now a legitimate option for colder regions. The physics hasn’t changed, though: the colder it gets, the harder the heat pump works. A Pacific Northwest National Laboratory (PNNL) guide explains that a standard unit’s capacity starts dropping below the mid-40s outdoors, and by the teens it delivers only a fraction of its rating.

Cold-climate heat pumps use variable-speed (inverter) compressors to hold their output. To earn ENERGY STAR’s cold-climate designation (Version 6.2 spec, revised February 2026), a heat pump must keep at least 70% of its rated heating capacity at 5°F and run at a COP of at least 1.75 at 5°F, verified by a third party. ENERGY STAR adds that these units keep working below 5°F, but pairing them with a backup heat source is the most efficient way to heat when it gets even colder. The Northeast Energy Efficiency Partnerships (NEEP) keeps a free list of cold-climate models with low-temperature data that contractors use.

Makers rate how low their units heat: per their makers or sellers, the Senville AURA goes to -22°F, the Cooper & Hunter Olivia to -13°F and the Pioneer Diamante Pro to -4°F, while the Senville LETO (not a cold-climate unit) stops at 5°F. For a full list, see the best heat pumps for cold climates.

“Heats down to -22°F” doesn’t mean “heats your whole house at -22°F.” Output falls as it gets colder, so in a snowy climate plan backup heat for the coldest days: electric strips in the air handler, a dual-fuel furnace, or an existing boiler or wood stove kept for emergencies.

Sizing: why a load calculation beats a rule of thumb

Sizing by square footage alone ignores your insulation, windows, air leaks and climate. PNNL’s Building America guide says that while “numerous rules of thumb” exist, the industry’s ACCA Manual J load calculation should be used for reliable results, and that rules of thumb typically lead to an oversized unit. An oversized heat pump short-cycles: it turns on and off often, wears faster and controls humidity poorly in summer. An undersized one leans on expensive backup heat. Sealing air leaks and adding insulation first can shrink the system you need.

Questions to ask any contractor:

• Will you do a room-by-room Manual J calculation and show me the design heating load for my area’s coldest days?
• What is this model’s heating output and COP at 5°F (or its NEEP listing), and its SEER2 and HSPF2?
• What backup heat do you plan, and at what outdoor temperature will it turn on?
• Will you test and seal my ducts? Does my electrical panel need an upgrade?
• Are you licensed, will you pull the permit, and who registers the warranty?

Compare written bids from two or three contractors with the same questions, so you’re comparing like with like.

How much does a heat pump cost in 2026?

Installed prices vary more than almost any home upgrade, because your home’s size, ducts, electrical panel and climate all matter. EnergySage, which collects real installer quotes, reported these 2026 averages before incentives (updated March 2026):

System	Average installed cost (EnergySage, 2026)	Per ton
Ducted air-source heat pump	$14,529	$3,790
Ductless mini split (whole home)	$25,957	$9,163
Hybrid (heat pump plus furnace)	$14,353	$6,407
All whole-home heat pump jobs	$15,393	–

EnergySage also notes a typical whole-home system runs about $8,000 in New Mexico and $33,000 in New York. A single-room mini split costs far less (see the units below). The full breakdown is in our heat pump cost guide.

Heat pump incentives in 2026

Federal tax credit: gone for 2026 installs. The IRS’s 2025 Form 5695 instructions say you can’t claim the energy efficient home improvement credit (25C) “for expenditures or property placed in service after December 31, 2025” (the One Big Beautiful Bill Act, July 2025). The credit paid 30% up to $2,000 a year for a qualifying heat pump; if yours was installed in 2025, you claim it on your 2025 return. More in our guide to the heat pump tax credit in 2026.

State and utility rebates: still out there, and they change. The federally funded Home Energy Rebates (the heat pump one is called HEAR) are separate from tax credits and run by state energy offices; DOE says they’re “available in select states.” Three examples, as of the dates shown:

• North Carolina: since February 10, 2026, Energy Saver North Carolina is open in all 100 counties, with up to $8,000 for a heat pump for households under 80% of area median income and partial rebates from 80% to 150% (NC DEQ).
• Maine: Efficiency Maine’s example for a two-indoor-unit system shows rebates of $2,000 at any income, $4,000 for moderate income and $6,000 for low income (page read October 2026).
• California: the state says its single-family HEEHRA heat pump rebates were fully reserved statewide as of February 24, 2026, a reminder that funding runs out.

Many utilities pay rebates too, some reserved before installation. Start with your state on our locations pages, then check the ENERGY STAR Rebate Finder, DSIRE and your utility, and see our home energy rebates and incentives guide.

Are heat pumps worth it?

For many homes, yes, but it depends on what you heat with now. NREL’s 2024 study, which modeled 550,000 representative U.S. homes, found that 62% to 95% of households would see lower energy bills with a heat pump, depending on its efficiency. For homes that already have air conditioning and heat with electricity, fuel oil or propane, 92% to 100% would save, with median savings of $300 to $650 a year. NREL also cautioned that high installation costs can still make the switch hard to justify for some households.

Usually worth it when: you heat with electric baseboard, propane or oil; your air conditioner or furnace is due for replacement anyway (one system replaces two); you live in a mild or moderate climate; you want to go all-electric or pair with solar; or you pick a cold-climate model sized for your winters.

Maybe not (yet) when: gas is cheap and your furnace is newer; electricity is expensive; the house is drafty and poorly insulated (fix that first); or old, leaky ducts need replacing too. Dual fuel, or a mini split for the rooms you use most, is a good middle path.

Here is our estimate of heating costs at national-average winter prices (January to March 2026, EIA). The second column assumes a home that needs 50 million Btu of delivered heat in a winter, which is our round number for illustration, not a measured average; your home and local prices will differ, sometimes a lot.

Heating system (efficiency we assumed)	Per 10 million Btu of heat (our estimate)	A 50 million Btu winter (our estimate)
Electric baseboard or furnace (100%)	≈$524	≈$2,620
Propane furnace (95% AFUE)	≈$308	≈$1,540
Heat pump, seasonal COP 2 (cold winter)	≈$262	≈$1,310
Heat pump, seasonal COP 2.5	≈$210	≈$1,050
Older gas furnace (80% AFUE)	≈$181	≈$900
Heat pump, seasonal COP 3	≈$175	≈$870
High-efficiency gas furnace (95% AFUE)	≈$152	≈$760

Prices used: electricity 17.9¢/kWh, natural gas $15.02 per thousand cubic feet and propane $2.67 a gallon (EIA residential averages). By our math, a heat pump beats propane at any seasonal COP above about 1.7, but it needs a COP of about 2.9 to match an 80% gas furnace and about 3.4 to match a 95% one at these prices. That matches NREL: against electric resistance, propane or oil a heat pump almost always saves; against cheap gas, your local electricity rate decides it.

Pros and cons

• Pro: heating and cooling in one system; very efficient in mild and moderate weather.
• Pro: no combustion in the house, so no carbon monoxide from the heater and no fuel deliveries.
• Pro: variable-speed models run long and steady, which many owners find more even and quieter than a furnace’s on-off blasts.
• Pro: pairs well with rooftop solar panels, since it runs on electricity.
• Con: higher up-front cost than replacing a furnace or AC alone, and the federal credit is gone.
• Con: output drops in deep cold; standard units may lean on costly backup heat.
• Con: air from the vents feels cooler than furnace air (warm, not hot), which takes some getting used to.
• Con: it runs year-round, so it may not last as long as a furnace. Carrier lists 10 to 15 years for heat pumps and 15 to 20 for furnaces and air conditioners.
• Con: no heat in a power outage, the same as a gas furnace with an electric blower. Plan backup with our generators or home battery backup guides.

Weighing a heat pump against what you have now? Read heat pump vs furnace and heat pump vs air conditioner.

Installation: what a good job looks like

• Licensed pros, with a permit where required. Refrigerant lines must be handled by an EPA-certified HVAC technician (except quick-connect DIY kits made for homeowners), and the 240 V or dedicated circuit is a job for a licensed electrician.
• Panel and ducts. Electrifying heat can mean a larger breaker or, in older homes, a panel upgrade; leaky or undersized ducts waste what you paid for. Settle both before you sign.
• Register the warranty. Many makers require registration within 60 to 90 days, and some (Senville, Cooper & Hunter) require professional installation for the warranty to count.

Can you install one yourself? MRCOOL’s DIY line is built for it: pre-charged quick-connect line sets, and MRCOOL says homeowner installation doesn’t void its warranty. Most other mini splits need a certified technician, and even with a DIY kit a licensed electrician should make the panel connection. Our guide to the best DIY mini splits goes deeper.

The best heat pumps to look at in 2026

Whole-house ducted systems come through HVAC contractors. The units below are ones you can buy more directly: mini splits, window units and helpful extras. We researched and compared them from makers’ specs; we didn’t test them.

Unit	Type	Size and power	Lowest heating temp (maker or seller)	Install	About (Oct 2026)
MRCOOL DIY 5th Gen 12K	Mini split	12,000 BTU, 115V	Not stated	DIY allowed	$2,158 (retailer sale)
Senville AURA 24K	Mini split	24,000 BTU, 230V	-22°F	Pro required for warranty	$1,799.99 (maker)
Pioneer Diamante Pro 12K	Mini split	12,000 BTU, 230V	-4°F	HVAC pro	$858 (maker sale)
Midea window AC with heat	Window	12,000 BTU, 115V	About 41°F	DIY	Check price
Gradient All-Weather	Saddle window	9,300 BTU cooling, 120V	-13°F	DIY-friendly window mount	Contact Gradient

MRCOOL DIY 5th Gen E Star 12K is the one most homeowners can put in themselves: 115V, 23.5 SEER2 and 10.2 HSPF2 (Region IV), a 25 ft pre-charged line set, and a 7-year compressor, 5-year parts warranty that allows homeowner installation. You pay more than for pro-install units because the quick-connect lines replace a technician. MRCOOL doesn’t state how low it heats on the pages we read, so it’s best for moderate climates.

Check the MRCOOL DIY 5th Gen price on Amazon

Senville AURA 24K is a cold-climate mini split that Senville says heats down to -22°F, with 21 SEER2, 13.5 HSPF2 (Region IV), up to 29,000 BTU of heat and a 10-year compressor, 5-year parts warranty. Senville requires professional installation for the warranty, so budget for an HVAC contractor.

Check the Senville AURA 24K price on Amazon

Pioneer Diamante Pro 12K is the low-cost route if you’re paying a pro anyway: 20 SEER2, heats to -4°F, R-454B refrigerant and a 16 ft line kit. Plan on an HVAC technician, and register the 5-year parts warranty after installation.

Check the Pioneer Diamante Pro price on Amazon

For renters, the Midea window AC with heat cools a room and heat-pumps in spring and fall, but it stops heat-pumping below about 41°F outdoors, so treat it as shoulder-season heat. The Gradient All-Weather saddle unit is the real-winter option: Gradient rates it at 7,200 BTU of heat at 5°F and down to -13°F. It’s sold through Gradient, not Amazon. More in our best window heat pumps guide.

Check the Midea window AC with heat price on Amazon

See it at Gradient

Two extras round it out. A heat pump water heater like the Rheem ProTerra Hybrid uses the same trick for hot water; it’s sold at Home Depot and through plumbers, not Amazon. And a thermostat that understands heat pumps, such as the ecobee Smart Thermostat Premium, helps keep backup heat off when the heat pump can do the job. Check ecobee’s compatibility tool for your wiring first, and see our best smart thermostat for a heat pump.

See it at Rheem

Check the ecobee Smart Thermostat Premium price on Amazon

Which heat pump guide do you need?

If you want to…	Read
Decide whether to replace your furnace	Heat pump vs furnace
Replace an old central or window AC	Heat pump vs air conditioner
Heat a home through real winters	Best heat pumps for cold climates
Install a mini split yourself (MRCOOL and others)	Best DIY mini splits
Know what you’ll pay, installed	Heat pump cost
Check what happened to the tax credit	Heat pump tax credit 2026
Cut your water heating bill	Best heat pump water heaters
Heat and cool one room or an apartment	Best window heat pumps
Dry clothes for less (and without a vent)	Best heat pump dryers
Pick a thermostat that won’t waste backup heat	Best smart thermostat for a heat pump
Find rebates in 2026	Home energy rebates and incentives

Keep exploring: running your heat pump on sunshine starts with our solar guide; for the bigger picture see clean energy and electrical energy at home, or browse every article in our heat pumps category.

Heat pump questions

How does a heat pump work in simple terms?

It moves heat instead of making it. A refrigerant loop absorbs heat on one side and releases it on the other, driven by an electric compressor. In summer it carries heat out of your house, like an air conditioner. In winter a reversing valve flips the flow, and it gathers heat from the outdoor air and brings it inside, even when it feels cold out.

What is an air source heat pump?

It’s the most common kind of heat pump: one that trades heat with the outdoor air, using an outdoor unit and either your ducts (a central system) or wall-mounted heads (a ductless mini split). A ground-source or geothermal heat pump does the same job with pipes buried in the yard, which is more efficient but costs much more to install.

Are heat pumps worth it in 2026 without the tax credit?

Often, yes. The savings come from efficiency, not the credit. NREL found that most homes heating with electric resistance, propane or oil would save $300 to $650 a year (median, homes with AC). Against cheap natural gas the case is weaker. The 25C credit ended for property placed in service after 2025, so check state, utility and HEAR rebates before you buy.

Is there a federal tax credit for heat pumps in 2026?

No. Per the IRS, the energy efficient home improvement credit (25C) can’t be claimed for property placed in service after December 31, 2025. A heat pump installed in 2025 can still be claimed on your 2025 return, up to $2,000. For 2026 installs, look to state programs, utility rebates and income-qualified HEAR rebates where your state has launched them.

Is a heat pump cheaper to run than a gas furnace?

Sometimes. At early-2026 national average prices, our estimate is that a heat pump needs a seasonal COP of about 2.9 to beat an 80% gas furnace and about 3.4 to beat a 95% one. Efficient models in moderate climates can get there; in very cold places with cheap gas, a dual-fuel system often costs less to run. Your local rates decide it.

At what temperature does a heat pump stop working?

It depends on the model. Standard units lose much of their output below freezing, and window units like the Midea with heat stop at about 41°F. Cold-climate models keep heating far lower: Senville rates its AURA line to -22°F. ENERGY STAR cold-climate units must keep 70% of their capacity at 5°F. Below a unit’s limit, backup heat takes over.

What size heat pump do I need?

Only a load calculation can tell you. Contractors should use ACCA Manual J, which accounts for your insulation, windows, air leaks and local design temperature; PNNL notes that square-foot rules of thumb usually lead to an oversized unit. Oversized units short-cycle and handle humidity poorly; undersized ones lean on backup heat. Ask to see the numbers.

Is a mini split the same as a heat pump?

Most mini splits sold today are heat pumps: ductless air source systems that heat and cool. A few are cooling-only, so check that the model lists a heating capacity and an HSPF2 rating. Mini splits suit homes without ducts and single rooms; a ducted heat pump suits homes that already have good ductwork.

Do heat pumps work well with solar panels?

Yes. A heat pump runs on electricity, so rooftop solar can cover part of what it uses, especially for summer cooling when panels produce the most. Winter heating usually needs more power than winter sunshine provides, so size your expectations, and your solar system, with your installer. Our solar guide explains the basics.

How long do heat pumps last?

Carrier puts heat pumps at 10 to 15 years, a little less than furnaces and central air conditioners (15 to 20), because a heat pump works in both seasons. Yearly maintenance, clean filters and keeping snow and leaves away from the outdoor unit help.