Heat Pump Payback Calculator (2026 Rules)
Enter what you heat with now, the installed price and any rebates you've been offered, and get an estimate of the yearly savings, the simple payback and the 15-year result. *(Show this note above the inputs on this page, not only at the bottom.)*
Heat pump payback
B05Scenario A
Sets the electricity rate. Pick US average if you're not sure.
From EIA for US average. Use the rate on your bill if you know it.
Rate used: 18.4¢/kWh · US average · EIA reference 2025–26 · gas $1.55/therm · propane $2.60/gal · heating oil $3.70/gal · 4,500 heating degree-days · climate zone 4 (data as of 2026-09-26) ·
Use 1.0 for electric resistance.
Simple payback
Switching from a natural gas furnace saves an estimated $8.71 a year at US average prices.
- Estimated savings per year
- $8.71
- Net cost (no federal 25C credit, after rebates)
- $14,000.00
- Simple payback
- More than 30 years
- Net savings over 15 years (rates +3%/yr)
- −$13,837.96
Estimate. Formula and sources are under “How it works”. Change any input; the result updates as you type.
2026 note: The federal 25C and 25D tax credits ended for installations after Dec 31, 2025. Our numbers use 2026 rules. State rebates, HEAR/HOMES programs and utility programs may still apply.
Formula
How it works
Every number here is an estimate. The inputs above the line are yours to change.
- Annual heating load (MMBtu) = square feet × insulation factor × heating degree-days × 24 ÷ 1,000,000
- Current system, $ per MMBtu — gas: $/therm ÷ 0.1 ÷ AFUE · propane: $/gal ÷ 0.0915 ÷ AFUE · oil: $/gal ÷ 0.1385 ÷ AFUE · resistance: $/kWh × 293.07
- Heat pump, $ per MMBtu = $/kWh × 293.07 ÷ seasonal COP of your climate zone (3.6 in zone 1 down to 1.8 in zone 8)
- Savings per year = annual load × (current $ per MMBtu − heat pump $ per MMBtu)
- Net cost = installed cost − state/HEAR rebate − utility rebate. No federal credit: 25C ended for installations after Dec 31, 2025.
- Simple payback = net cost ÷ savings per year
- 15-year result = the sum of 15 years of savings, each year 3% larger than the one before, minus the net cost
What decides the answer is what you heat with today. Replacing electric resistance heat usually pays back fastest. Replacing propane or oil depends on your electricity rate and climate. Replacing cheap natural gas often doesn't pay back on running cost at all; people who do it anyway are usually replacing a failed furnace and AC at the same time, or want the cooling.
Sources: EIA Electric Power Monthly table 5.6.A; EIA Natural Gas Prices; EIA Heating Oil and Propane Update; NOAA CPC heating degree-day normals 1991–2020; ACCA Manual J (simplified envelope factors); NEEP cold-climate heat pump data; One Big Beautiful Bill Act (July 2025) for the end of 25C/25D; HEAR and HOMES program rules; DSIRE for state programs.
Worked example
A worked example
An 1,800 sq ft Maine house with average insulation heats with an 82% oil boiler. A heat pump installed for $12,000, less a $4,000 state rebate, has a net cost of $8,000.00. At Maine's reference prices (26.0¢/kWh, oil $3.70 a gallon) and a zone 6 seasonal COP of 2.3, the heat pump would cost slightly more to run than the oil: estimated savings of −$61.78 a year. So it doesn't pay back on operating cost, and the 15-year estimate is a net loss of $9,148.96. With a lower electricity rate, a higher oil price or a heat pump that averages a better COP, the answer changes. Edit those numbers to see yours.
Reference
By state, at the default inputs
Simple payback, with this page's default inputs and each state's reference prices (EIA reference 2025–26, data as of 2026-09-26).
| US average | More than 30 years | 18.4¢/kWh |
|---|---|---|
| Alabama | 27.6 years | 15.5¢/kWh |
| Alaska | Doesn't pay back on running cost | 25.0¢/kWh |
| Arizona | More than 30 years | 15.0¢/kWh |
| Arkansas | More than 30 years | 13.0¢/kWh |
| California | Doesn't pay back on running cost | 32.0¢/kWh |
| Colorado | Doesn't pay back on running cost | 16.0¢/kWh |
| Connecticut | Doesn't pay back on running cost | 30.0¢/kWh |
| Delaware | More than 30 years | 17.0¢/kWh |
| District of Columbia | More than 30 years | 19.0¢/kWh |
| Florida | More than 30 years | 15.0¢/kWh |
| Georgia | More than 30 years | 14.5¢/kWh |
| Hawaii | Doesn't pay back on running cost | 42.0¢/kWh |
| Idaho | Doesn't pay back on running cost | 12.0¢/kWh |
| Illinois | Doesn't pay back on running cost | 17.0¢/kWh |
| Indiana | Doesn't pay back on running cost | 15.5¢/kWh |
| Iowa | Doesn't pay back on running cost | 13.5¢/kWh |
| Kansas | More than 30 years | 14.5¢/kWh |
| Kentucky | More than 30 years | 13.0¢/kWh |
| Louisiana | More than 30 years | 12.5¢/kWh |
| Maine | Doesn't pay back on running cost | 26.0¢/kWh |
| Maryland | More than 30 years | 19.0¢/kWh |
| Massachusetts | Doesn't pay back on running cost | 29.0¢/kWh |
| Michigan | Doesn't pay back on running cost | 19.5¢/kWh |
| Minnesota | Doesn't pay back on running cost | 15.5¢/kWh |
| Mississippi | More than 30 years | 13.5¢/kWh |
| Missouri | More than 30 years | 13.0¢/kWh |
| Montana | Doesn't pay back on running cost | 13.0¢/kWh |
| Nebraska | Doesn't pay back on running cost | 12.0¢/kWh |
| Nevada | More than 30 years | 15.0¢/kWh |
| New Hampshire | Doesn't pay back on running cost | 27.0¢/kWh |
| New Jersey | Doesn't pay back on running cost | 22.0¢/kWh |
| New Mexico | More than 30 years | 15.0¢/kWh |
| New York | Doesn't pay back on running cost | 25.0¢/kWh |
| North Carolina | 27.9 years | 14.5¢/kWh |
| North Dakota | Doesn't pay back on running cost | 11.5¢/kWh |
| Ohio | Doesn't pay back on running cost | 16.5¢/kWh |
| Oklahoma | More than 30 years | 13.0¢/kWh |
| Oregon | More than 30 years | 14.5¢/kWh |
| Pennsylvania | Doesn't pay back on running cost | 18.5¢/kWh |
| Rhode Island | Doesn't pay back on running cost | 29.0¢/kWh |
| South Carolina | More than 30 years | 15.0¢/kWh |
| South Dakota | Doesn't pay back on running cost | 13.0¢/kWh |
| Tennessee | More than 30 years | 13.5¢/kWh |
| Texas | More than 30 years | 15.5¢/kWh |
| Utah | Doesn't pay back on running cost | 12.0¢/kWh |
| Vermont | Doesn't pay back on running cost | 22.0¢/kWh |
| Virginia | More than 30 years | 15.5¢/kWh |
| Washington | More than 30 years | 12.0¢/kWh |
| West Virginia | Doesn't pay back on running cost | 15.5¢/kWh |
| Wisconsin | Doesn't pay back on running cost | 17.5¢/kWh |
| Wyoming | Doesn't pay back on running cost | 12.5¢/kWh |
Questions
FAQ
Is the federal heat pump tax credit still available in 2026?
No. The 25C Energy Efficient Home Improvement Credit ended for installations after Dec 31, 2025. The calculator uses no federal credit. What's left are state programs (including HEAR and HOMES rebates where your state runs them) and utility rebates.
What rebates exist in my state?
It changes by state and utility. HEAR rebates for heat pumps go up to $8,000 for qualifying incomes; HOMES pays based on measured energy savings. Look up your state on DSIRE and your utility's rebate page, then enter the amounts you've confirmed.
How long does a heat pump take to pay back?
It depends on the fuel it replaces. For a 2,000 sq ft house with average insulation at US-average reference prices, $14,000 installed and no rebates: replacing electric resistance pays back in an estimated 5.3 years, propane in 13.1 years, oil in 13.9 years. Replacing an 80% gas furnace saves about $8.71 a year, which never pays back on running cost.
Why does my payback say it never pays back?
Because in your state and climate, heat from the heat pump costs about the same or more per MMBtu than your current fuel. In the Illinois example (gas at $1.20/therm, zone 5), the heat pump costs $513.47 a year more than an 80% furnace.
Does a heat pump increase home value?
We don't have a source that puts a number on it, so we don't estimate it. The calculator counts energy savings and rebates only.
What does the 3% a year mean?
The 15-year result assumes energy prices rise 3% a year, so each year's savings (or losses) grow by 3%. It is an assumption, not a forecast.
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