Heat Pump Cost Guide: Installation and Running Costs by Type

Heat pump costs in 2025 typically range from $3,500 to $15,000 for air-source systems (installed), and $15,000 to $30,000+ for ground-source (geothermal) systems. Air-source heat pumps are the most common: they provide both heating and cooling, qualify for the 30% federal tax credit, and often pay back in 5–10 years when replacing electric resistance or older fossil-fuel heating. This guide covers installation and running costs by type so you can compare options.

Air-source heat pump costs

Ducted central systems (replacing or supplementing a central AC/furnace) usually cost $5,000 to $15,000 installed, depending on capacity, brand, and labor. Ductless mini-splits (one or more head units) run about $3,500 to $8,000 for a single zone and more for whole-house. Cold-climate models rated for sub-freezing temps tend to be at the higher end. The 30% federal tax credit applies to the installed cost (including labor), which can cut the net price by thousands. Many states and utilities offer additional rebates—see our gas furnace vs heat pump comparison for context.

Ground-source (geothermal) heat pump costs

Ground-source heat pumps use buried loops to exchange heat with the earth. They are very efficient but have high upfront cost: $15,000 to $30,000 or more installed, with large homes and difficult soil conditions at the top of the range. They qualify for the same 30% federal tax credit. Payback is longer than for air-source (often 10–20 years) but they can last 20–25 years for the indoor unit and decades for the loop. They are best suited to homeowners planning to stay put and who want maximum efficiency.

Running costs and savings

Heat pumps move heat instead of creating it, so they can deliver 2–4 units of heat per unit of electricity (COP 2–4). That makes them much cheaper to run than electric resistance heat and often competitive with or cheaper than gas in many areas. Annual running cost depends on your climate, insulation, and local electricity and gas rates. In moderate climates, a heat pump can cut heating bills by 30–50% compared to resistance heat; versus an old gas furnace, savings vary. Use the HearthIQ calculator to see regional rates and compare upgrades.

What affects total cost?

Size and capacity must match your home’s heating and cooling load; oversizing or undersizing hurts efficiency and comfort. Ductwork: if you have ducts, a central heat pump may slot in; if not, ductless or ducted systems with new ducts add cost. Brand and features (e.g. smart thermostats, zoning) also affect price. Get multiple quotes and ensure the contractor does a proper load calculation. For UK readers, our heat pump vs gas boiler guide covers BUS grant and running costs there.

In summary: expect $3,500–$15,000 for air-source heat pumps and $15,000–$30,000+ for ground-source in 2025. After the 30% federal credit and any state rebates, net cost is lower. Running costs are typically lower than electric resistance and often competitive with gas, with payback in many cases within 5–10 years for air-source systems.