Heat Pump Savings Calculator
See how much you could save annually by switching to a heat pump. Uses real EIA electricity rates for your state.
- Annual savings estimate based on your state's actual energy rates
- Heat pump vs. current system cost comparison
- Federal rebate eligibility under the Inflation Reduction Act (the 25C tax credit ended after December 31, 2025)
How the Calculator Works
- Enter your ZIP code - we load your state's EIA residential electricity rate.
- Select your current heating system - gas, oil, propane, or electric resistance, each with fuel cost and efficiency (AFUE) assumptions.
- Choose your home size - we estimate annual heating BTU demand based on your climate zone's heating degree days.
- See your savings - we compare your current annual fuel cost to heat pump electricity cost using a climate-appropriate COP (Coefficient of Performance).
What Is a Heat Pump?
A heat pump is a year-round HVAC system that moves heat between indoors and outdoors. In winter it extracts heat from outdoor air (even at very cold temperatures) and pumps it inside. In summer it works in reverse as an air conditioner.
Modern cold-climate heat pumps operate efficiently down to -13°F, making them viable in all US climate zones. The key efficiency metric is COP (Coefficient of Performance) - a COP of 3.0 means 3 units of heat energy delivered for every 1 unit of electricity consumed.
IRA Incentives That Reduce Your Costs
The Inflation Reduction Act created two incentives for heat pump installations; the 25C tax credit has ended:
- 25C Tax Credit (ended): 30% of equipment and installation cost, up to $2,000 per year, for heat pumps placed in service through December 31, 2025. Public Law 119-21 ended the credit for property placed in service after that date.
- HEEHRA Rebate: Point-of-sale rebate up to $8,000 for households below 80% area median income (AMI), or up to $4,000 for 80–150% AMI. Availability depends on your state's program rollout - check energysaver.gov.
Rebates can reduce your payback period. The calculator does not subtract a federal tax credit when computing payback, because the 25C credit ended for property placed in service after December 31, 2025.
Efficiency Assumptions Used
| System | Efficiency | Typical Fuel Cost |
|---|---|---|
| Gas Furnace | 80–95% AFUE (avg 87%) | $1.35/therm (EIA 2025) |
| Oil Furnace | 80–87% AFUE (avg 83%) | $3.85/gallon (EIA 2025) |
| Propane Furnace | 80–93% AFUE (avg 87%) | $2.68/gallon (EIA 2025) |
| Electric Resistance | 100% (COP 1.0) | Your state EIA rate |
| Heat Pump (Zone 1–2) | COP 3.5–4.0 | Your state EIA rate |
| Heat Pump (Zone 3–4) | COP 2.7–3.1 | Your state EIA rate |
| Heat Pump (Zone 5–6) | COP 2.1–2.5 | Your state EIA rate |
| Heat Pump (Zone 7) | COP 1.7 | Your state EIA rate |
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Federal Rebates & Tax Credits
The Inflation Reduction Act (IRA) created two major incentive paths for heat pump installations. Under Section 25C, homeowners could claim a federal tax credit of 30% of total project cost (equipment plus installation labor), up to $2,000 per year, for qualifying air-source heat pumps that meet CEE highest efficiency tier specifications. The credit applied only to property placed in service through December 31, 2025; Public Law 119-21 ended it for property placed in service after that date.
Separately, the High-Efficiency Electric Home Rebate Act (HEEHRA) offers point-of-sale rebates up to $8,000 for heat pump installations in low- and moderate-income households (below 150% of area median income). Households earning 80–150% of AMI receive 50% of costs; those below 80% AMI receive 100%. Additional rebates from state energy offices and local utilities vary by location - the DOE's DSIRE database tracks available programs by ZIP code.
| Program | Max Amount | Income Limit | How to Claim |
|---|---|---|---|
| IRA Section 25C Tax Credit (ended for equipment placed in service after 2025) (ended after Dec 31, 2025) | $2,000/year | None - all income levels | IRS Form 5695 at tax filing |
| HEEHRA Rebate (<80% AMI) | $8,000 | Below 80% area median income | Point-of-sale discount via contractor |
| HEEHRA Rebate (80–150% AMI) | $4,000 (50% of cost) | 80–150% area median income | Point-of-sale discount via contractor |
| State & Utility Rebates | Varies ($500–$3,000+) | Varies by program | Check DSIRE or your utility |
Source: U.S. Department of Energy, IRS. HEEHRA availability depends on state program rollout - check energy.gov/save for your state's status.
Frequently Asked Questions
How much can I save by switching to a heat pump?
According to the DOE, households switching from electric resistance heating to a heat pump can save an average of $1,000 per year on energy bills. Savings vary based on your climate zone, current heating fuel, electricity rates, and home insulation. Homes replacing oil or propane furnaces tend to see the largest reductions.
Do heat pumps work in cold climates?
Modern cold-climate heat pumps operate efficiently at temperatures as low as -15°F (-26°C). Units with variable-speed compressors maintain over 70% of their rated capacity even at 5°F. The DOE now recommends heat pumps for all U.S. climate zones, including the Northeast and upper Midwest.
What is the federal tax credit for heat pumps?
Under the Inflation Reduction Act, homeowners could claim a federal tax credit (Section 25C) of 30% of the cost of a qualifying heat pump, including installation labor, up to $2,000 per year. The credit applied only to heat pumps placed in service through December 31, 2025; Public Law 119-21 ended it for property placed in service after that date.
How long does a heat pump last?
A well-maintained heat pump typically lasts 15 to 20 years, comparable to a central air conditioner. Ground-source (geothermal) systems can last 25 years or more for the indoor components, with underground loops warranting 50+ years. Annual maintenance including filter changes and coil cleaning helps maximize lifespan.
What size heat pump do I need for my home?
Heat pump sizing is based on your home's heating and cooling load, measured in BTUs or tons. A rough guideline is 1 ton (12,000 BTU) per 500 to 600 square feet, but climate, insulation, window area, and ceiling height all affect the calculation. A Manual J load calculation by an HVAC contractor is the most accurate way to determine the right size.
Data Sources & Methodology
Data Sources
- EIA Residential Energy Rates — State-level residential electricity and natural gas prices updated monthly
- DOE Heat Pump Performance Data — HSPF/SEER ratings, cold-climate performance specifications, and efficiency benchmarks
- IRA Tax Credits (Section 25C) — 30% federal tax credit up to $2,000/year for qualifying heat pumps placed in service through December 31, 2025 (ended by Public Law 119-21)
- HEEHRA Rebate Program — Point-of-sale rebates up to $8,000 for low/moderate-income households
- IECC Climate Zone Map — Climate zone classification affecting heating/cooling load calculations
Methodology
Savings are calculated by comparing current heating fuel costs (using EIA state-level rates for gas, oil, propane, or electric resistance) against projected heat pump operating costs at DOE-rated efficiency levels. Climate zone adjusts heating degree days and heat pump COP assumptions. Federal incentives are calculated from current IRA provisions based on income eligibility.