Thinking About a Heat Pump? Here’s What a Sustainable Heating System Will Cost You

With global warming becoming an urgent issue, heating our homes efficiently — and sustainably — has taken center stage. As winters become more unpredictable, finding effective heating solutions that reduce reliance on fossil fuels is essential. Though traditional HVAC systems still dominate, heat pumps offer an appealing alternative, delivering winter warmth and optional summer cooling with a smaller carbon footprint.

Heat pump adoption is on the rise, especially as more people recognize its benefits for both energy savings and environmental impact. In 2023, Americans purchased 21% more heat pumps than other heating systems, according to the Air Conditioning, Heating, and Refrigeration Institute.

If you’re considering a heat pump for your home, cost is likely a top concern. Many people assume heat pumps are expensive to buy and operate, but the reality may surprise you. With potential tax credits, rebates and long-term savings, a heat pump could be a wise investment that not only heats your home efficiently but also lowers your energy bills over time.

CNET’s comprehensive guide breaks down what you can expect in upfront costs, operational expenses and potential savings, helping you make an informed decision about heating your home in a more sustainable way.

How much does a heat pump cost?

Like any major home appliance, the cost of a heat pump is going to vary depending on a number of factors. Typically, purchasing the system itself is going to be the largest cost that you will face. But you can quickly rack up expenses the more elaborate the system is. 

“The top three drivers of price are system performance and efficiency, the quality of the installation labor, and the complexity of the install,” said DR Richardson, co-founder of Elephant Energy, an electrification company that installs heat pump, heat pump water heaters, EV chargers and other appliances.

A common heat pump option is a ductless mini-split heat pump. These are popular for their flexibility and efficiency, and can serve most standard homes. According to HomeAdvisor, these types of heat pumps will typically cost between $1,300 to $8,000 for equipment and installation. Costs are kept low because there is minimal duct work that has to be done. 

Ducted air-source heat pumps are another common option. The price for these systems generally falls between $4,500 and $8,000, including installation. Air-source heat pumps work by transferring heat between your home and the outside air, making them a versatile choice that can function in most homes. 

On the higher end of the spectrum are geothermal heat pumps, which are the gold standard for energy efficiency. The initial investment is significant, typically ranging from $6,000 to $20,000, but these systems offer the promise of the most savings over time. One thing worth noting, though: These systems require the installation of underground loops and may need to be located near a water source like a pond or lake.

How much does it cost to have a heat pump installed?

Once you have picked a heat pump system that makes the most sense for your home, you’ll have to consider the actual installation process. You’ll want a professional to handle this, and the cost will depend on a variety of factors such as the size and layout of your home, the condition of existing ductwork, and labor costs.

Ductless mini-split systems are generally less invasive to install since they do not require ductwork, making them a cost-effective option for homes without existing ducts. Air source pumps are common and can work with existing ductwork. They involve installing an outdoor unit and connecting it to an indoor air handler via refrigerant lines.

Geothermal heat pumps are the most expensive and the most elaborate to install. The high expense is due to the installation of the underground loop system, which requires significant excavation and specialized equipment. Some systems may need to be located near a water source like a pond or lake to operate at peak efficiency. These systems use the stable temperatures of the ground to provide highly efficient heating and cooling, leading to long-term energy savings despite the higher initial investment. 

Richardson said that while higher-quality installations cost more, “HVAC systems are quite complex with sophisticated knowledge required to install them according to manufacturer and local code specifications. In HVAC, you often get what you pay for.” 

What tax credits and rebates are available for heat pumps?

Tax credits and rebates for heat pumps can significantly offset the initial installation costs, making these energy-efficient systems more accessible. For air-source heat pumps, federal tax credits can cover up to 30% of the installation cost, up to $2,000, thanks to the energy efficient home improvement credit. This credit applies to qualified equipment installed in your primary residence and includes costs for both equipment and installation.

Geothermal heat pumps often qualify for even more substantial incentives. A different federal tax credit, the residential clean energy credit, covers geothermal systems, offering a 30% tax credit without a cap. This can be particularly beneficial given the higher upfront costs of geothermal installations. These credits apply to both new and existing homes and cover the costs of installation and labor.

Some states and municipalities may have other incentives available to homeowners to further offset the cost of heat pumps. It is worth looking into the potential rebates and credits available in your specific region that may make a heat pump even more cost effective.

“More efficient systems typically cost more upfront, but often qualify for better financial incentives reducing the total cost,” Richardson says. He explains that through federal and state incentives, “homeowners often can save $7,000 to $12,000 on this cost.”

Bottom line: Is buying a heat pump worth it?

While every home is different, there are many cases in which buying a heat pump can be a financially and environmentally beneficial decision over time.
While the upfront costs can be significant depending on the system that you choose, the long-term savings on energy bills can be substantial. The lifespan of a heat pump typically ranges from 15 to 20 years, providing reliable and efficient service over time that will allow those savings to stack. 

Beyond the economic benefits, heat pumps also offer significant environmental advantages by reducing greenhouse gas emissions and reliance on fossil fuels. Investing in a heat pump can be a smart choice for many homeowners looking to enhance their home’s efficiency and sustainability.