Nov 1, 2026 · @alan
Replacing a gas furnace (and its central AC) with a heat pump typically costs $9,000–$16,000 for the equipment and installation in a 2,000 sq ft home, plus $300–$5,000 for electrical work, so most full conversions land between $10,000 and $20,000. If you keep your furnace as backup and add a heat pump in place of the AC (a dual-fuel setup), the cost drops to roughly $6,000–$9,000.
Cost by scenario
| Scenario (2,000 sq ft, existing ducts) | What’s installed | Typical total cost |
|---|---|---|
| Full electric conversion, standard heat pump | Heat pump + air handler with backup strips; furnace and AC removed | $10,000–$15,000 |
| Full electric conversion, cold-climate heat pump | Variable-speed cold-climate heat pump + air handler | $13,000–$20,000 |
| Full conversion with a panel upgrade | Either of the above + 200-amp panel | Add $1,500–$4,000+ |
| Dual-fuel (keep your furnace) | Heat pump replaces the AC; furnace stays as backup | $6,000–$9,000 |
| Dual-fuel (new furnace too) | Heat pump + new high-efficiency furnace | $12,000–$16,000 |
| Ductless instead of ducted | 4–5 mini split heads; furnace removed or kept as backup | $12,000–$20,000 |
These totals include removal of old equipment and standard permits. The biggest swing factors are your electrical panel, the condition of your ducts, and whether your gas water heater shares a chimney with the furnace.
Line-item breakdown
A good quote for a full furnace-to-heat-pump conversion should itemize most of these:
| Line item | Typical cost | Notes |
|---|---|---|
| Outdoor heat pump unit (3–3.5 tons) | $3,500–$8,000 | Higher for variable-speed and cold-climate models |
| Indoor air handler (replaces the furnace) | $1,500–$3,500 | Houses the blower and indoor coil; sits where the furnace was |
| Electric backup heat strips (5–15 kW) | $300–$1,500 | Often built into the air handler; size depends on climate |
| Installation labor | $2,500–$5,000 | 1–2 days for a standard swap |
| Refrigerant line set, pad, drain, materials | $300–$900 | New lines often required for new refrigerants |
| Removal of furnace and old AC | $200–$600 | Usually included |
| Capping the gas line to the furnace | $150–$400 | Done by the HVAC tech or a plumber |
| Thermostat compatible with heat pumps | $100–$400 | Must control auxiliary heat properly |
| Duct modifications (transitions, return upgrades) | $200–$2,500 | Heat pumps often need more airflow than old furnaces |
| Electrical work | $300–$5,000+ | See the next section |
| Permits and inspection | $100–$600 | Mechanical and usually electrical |
The hidden cost most people miss: an orphaned water heater
Many homes have a gas water heater that vents through the same chimney as the furnace. Remove the furnace, and the water heater is left alone in a chimney sized for both, which can cause poor drafting, condensation and, in the worst case, carbon monoxide problems. The fix is usually a chimney liner sized for the water heater ($500–$2,500), or replacing the water heater with a direct-vent, power-vent or heat pump water heater. Ask your installer to check this before you sign.
If you’re dropping gas completely
If the furnace was your only gas appliance, or you’re also replacing a gas water heater, stove and dryer, you can close your gas account and eliminate its monthly fixed charge, often $10–$30 a month. Utilities may charge a small fee to remove the meter or cap the service.
The electrical work: where costs swing most
A gas furnace uses a small 120V circuit for its blower. A heat pump system needs much more electrical capacity:
| Component | Typical circuit | Typical cost to add |
|---|---|---|
| Outdoor heat pump unit | 240V, often a 20–40 amp breaker | $300–$1,000 (may reuse the old AC circuit if adequately sized) |
| Air handler with electric backup strips (10 kW) | 240V, often a 50–60 amp breaker | $400–$1,200 |
| Larger backup strips (15 kW+) | One or more large 240V circuits | More, and more likely to trigger a panel upgrade |
Amp ratings vary by model; your electrician sizes circuits from the equipment’s nameplate.
Do you need a panel upgrade?
- 200-amp panel with open spaces: usually no upgrade needed.
- 150-amp panel: often fine, depending on other loads (electric range, dryer, EV charger).
- 100-amp panel: frequently too small for a heat pump with large backup strips, especially if you also have electric cooking or an EV.
A panel upgrade typically costs $1,500–$4,000, and more (sometimes much more) if the utility must upgrade the service line or meter. An electrician should do a load calculation before you assume you need one.
Ways to avoid or shrink a panel upgrade
- Smaller backup strips. A cold-climate heat pump may need only 5 kW of backup, or none.
- Dual-fuel. Keep the gas furnace as backup, and you need no strips at all.
- Load management. Smart panels, circuit-sharing devices or load controllers can keep total demand under your panel’s limit for roughly $500–$2,000.
- Right-size the heat pump. A load calculation often shows a smaller system is enough, especially after air sealing.
The state-run HEAR program’s panel ($4,000) and wiring ($2,500) rebates now apply only to electric-to-electric upgrades and new construction, so they generally won’t help with a gas-furnace conversion. See our full guide to whether you need a panel upgrade for a heat pump.
Full electric or dual-fuel?
You don’t have to rip out a working furnace to get most of a heat pump’s benefits.
| Full electric (furnace removed) | Dual-fuel (furnace kept as backup) | |
|---|---|---|
| Upfront cost | $10,000–$20,000 | $6,000–$9,000 if your furnace stays |
| Electrical work | More: backup strips, maybe a panel upgrade | Minimal: the old AC circuit can often be reused |
| Coldest days | Heat pump plus electric strips (or a cold-climate unit alone) | Gas furnace takes over below a set temperature |
| Running cost | Lowest where electricity is cheap or gas is expensive | Often the lowest overall where gas is cheap |
| Gas account | Can be closed if no other gas appliances | Stays open |
| Best for | Furnace near end of life; cheap electricity; rebates available; goal of going fully electric | Furnace under ~10 years old; cheap gas; cold climate; tight budget |
When your AC dies but your furnace is fine, dual-fuel is usually the best value: you replace the AC with a heat pump for a modest premium and let the furnace handle only the coldest hours. When the furnace eventually fails, you can replace it with an air handler and go fully electric.
For the full running-cost math, see our heat pump vs gas furnace 15-year comparison.
Rebates for furnace-to-heat-pump conversions
The federal 25C tax credit doesn’t apply to heat pumps installed in 2026. Remaining help:
- HEAR rebates (income-qualified): no longer available for replacing a gas furnace. Since September 1, 2026, DOE’s Program Notice 26-2 limits HEAR to electric-to-electric upgrades and new construction. Adding a heat pump while keeping your furnace (dual-fuel) may qualify in some states, so ask your state program.
- State programs, especially in the Northeast, which often pay more when you fully replace fossil-fuel heating than when you keep a furnace as backup.
- Utility rebates, sometimes with bonus amounts for switching from gas or propane.
State programs set their own rules: some pay more for fully replacing fossil-fuel heat, while federal HEAR no longer funds removing a gas furnace and may help only if the furnace stays, depending on your state. Read the rules before choosing between full electric and dual-fuel.
How your energy bills change
For a typical 2,000 sq ft home at 2026 US-average prices (18¢/kWh, $1.50/therm), heating with a 96% gas furnace costs about $780 a year, versus about $880 with a cold-climate heat pump and about $1,055 with a standard one. The heat pump usually wins back much of that gap through cheaper cooling, and wins outright where electricity is cheap or gas is expensive. Your result depends on your local rates; use the break-even rule in our heat pump vs gas furnace guide.
The conversion process, step by step
- Get a load calculation (Manual J) to size the heat pump, ideally after any planned insulation or air sealing.
- Have an electrician assess your panel and confirm circuit sizes for the outdoor unit and air handler.
- Check the water heater venting if it shares a chimney with the furnace.
- Confirm rebates and pre-approval before signing.
- Choose full electric or dual-fuel, and the backup heat size.
- Installation day(s): the crew removes the furnace and AC, caps the gas line, sets the air handler and outdoor unit, runs new refrigerant lines, and makes electrical connections.
- Inspection: a mechanical and electrical inspection, if required locally.
- Commissioning: the installer checks refrigerant charge, airflow, defrost operation and auxiliary heat settings on the thermostat.
Most conversions take one to two days of work, plus scheduling time for the electrician and inspections.
Frequently asked questions
How much does it cost to replace a gas furnace with a heat pump?
Most full conversions cost $10,000–$20,000 for a 2,000 sq ft home, including the heat pump, air handler, installation and typical electrical work. Keeping the furnace as backup (dual-fuel) costs about $6,000–$9,000.
Can I keep my gas furnace and add a heat pump?
Yes. The heat pump replaces your AC’s outdoor unit and uses the furnace’s blower and ducts. The thermostat switches to the furnace in very cold weather. This is often the cheapest way to start electrifying.
Will I need a new electrical panel?
Not always. Homes with 200-amp service rarely need one. Homes with 100-amp panels often do, unless they use smaller backup heat, dual-fuel, or a load-management device. An electrician’s load calculation will tell you.
Can I reuse my existing ductwork?
Usually, yes, if it’s in good condition and sized adequately. Heat pumps typically need more airflow than furnaces, so undersized returns may need upgrading.
Is replacing a working gas furnace with a heat pump worth it?
Financially, it depends on your gas and electricity prices and rebates. It’s most compelling when the furnace or AC is near the end of its life, when you qualify for rebates, or when going all-electric lets you drop your gas service.
How long does a furnace-to-heat-pump conversion take?
One to two days of installation, plus time to schedule an electrician, any panel upgrade and inspections.
Related guides
- Heat Pump vs Gas Furnace: Total Cost Over 15 Years
- Do You Need a Panel Upgrade for a Heat Pump? Costs and Alternatives
- Dual-Fuel Hybrid Heat Pump vs All-Electric: Which Saves More?
- Heat Pump Backup Heat: Electric Strips vs Furnace Backup
- How Much Does a Heat Pump Cost for a 2,000 Sq Ft House?
- Heat Pump Tax Credit 2026: What Happened to 25C and What Replaced It
Prices are 2026 national estimates for a typical 2,000 sq ft home and vary by region, home and installer. Have a licensed electrician assess your panel, and a qualified technician check combustion venting for any remaining gas appliances.