Heat Pump ROI Calculator

Frequently Asked Questions

Do heat pumps work in cold climates?

Modern cold-climate heat pumps maintain rated capacity down to about -15F. For zone 5 and colder, a backup heat strip or dual-fuel furnace is still recommended for the coldest nights.

What is HSPF2?

Heating Seasonal Performance Factor 2 is the current US efficiency rating for heat pumps. Minimum federal standard is 7.5 HSPF2; high-efficiency units reach 10-13.

Does adding a heat pump significantly increase my electric bill?

Yes - electrifying heat roughly doubles a typical home's electricity load, which makes solar more attractive and should be factored into any solar sizing estimate.

Can the 25C credit and HEEHRA be stacked?

Yes. The 25C is a federal tax credit; HEEHRA is a separate income-based rebate. They can both apply to the same installation.

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Important Disclaimer: Estimates for informational purposes only.

This calculator provides estimates for informational purposes only. Results are based on assumptions and may not reflect actual outcomes. Consult qualified professionals in relevant fields before making important decisions based on these results.

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How It Works

This calculator estimates your new heating cost after switching to a heat pump, your annual savings, the federal 25C credit and any HEEHRA rebate, the net cost after incentives, payback period, and 15-year net savings.

Seasonal COP = HSPF2 ÷ 3.41, then de-rated by a climate factor (cold 0.75, moderate 0.90, hot 1.00). New cost = annual cost × (fuel efficiency ÷ seasonal COP) × fuel-to-electric price ratio. The fuel-to-electric ratio reflects national average relative fuel prices (gas 0.35, oil 0.75, propane 0.85, electric resistance 1.0). Payback = net installed cost ÷ annual savings.

Worked Example

Replacing a natural-gas furnace (AFUE 85%) costing $2,400/year in a moderate climate, with a $14,000 heat pump rated HSPF2 8.5, above 150% AMI: Seasonal COP = (8.5 ÷ 3.41) × 0.90 ≈ 2.24. Efficiency ratio = 0.85 ÷ 2.24 ≈ 0.379. New cost = $2,400 × 0.379 × 0.35 ≈ $318, so annual savings ≈ $2,082. The 25C credit = min(30% × $14,000, $2,000) = $2,000; net install = $12,000; payback ≈ 5.8 years.

IRA Incentives Explained

Section 25C Credit: A federal tax credit of 30% of the heat pump installed cost, capped at $2,000 per year. This is a non-refundable credit that reduces your tax owed - not a rebate.

HEEHRA Rebate: The High-Efficiency Electric Home Rebate Act provides point-of-sale rebates up to $8,000 for air-source heat pumps. The full $8,000 is available to households below 80% of Area Median Income (AMI); households at 80-150% AMI receive up to $4,000; above 150% AMI receive no rebate. State rollout varies and is ongoing through 2026.

FAQ

Do heat pumps work in cold climates?

Modern cold-climate heat pumps (NEEP-listed) maintain rated capacity down to about -15°F. For zone 5 and colder, a backup heat strip or dual-fuel furnace is still recommended for the coldest nights.

What is HSPF2?

Heating Seasonal Performance Factor 2 is the current US efficiency rating for heat pumps, measured under the updated AHRI 210/240-2023 test procedure. Minimum federal standard is 7.5 HSPF2; high-efficiency units reach 10-13.

Does adding a heat pump significantly increase my electric bill?

Yes - electrifying heat roughly doubles a typical home's electricity load. This makes solar more attractive and should be factored into any solar sizing estimate.

Can the 25C credit and HEEHRA be stacked?

Yes. The 25C is a federal tax credit; HEEHRA is a separate income-based rebate. They can both apply to the same installation.

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