How much does a heat pump cost?

As the planet warms, we’ll need to adapt to a new normal, which means finding more efficient ways to regulate the temperature in our homes. One option is the heat pump, which can replace more traditional HVAC options without using fossil fuels.

According to the Institute for Air Conditioning, Heating and RefrigerationAmericans purchased 21% more heat pumps than other heating and cooling options in 2023.

If you’re wondering whether a heat pump is right for your home, there are a few factors you’ll probably want to consider, starting with the price tag. Because heat pumps aren’t the standard option most people consider for heating and cooling, you might think they’re more expensive to buy and run. But you might be surprised.

We are happy to explain to you what a heat pump costs, from the purchase price to the operating costs. This way you can see exactly what the device will cost you in the long term and what you can possibly save.

How much does a heat pump cost?

As with any major household appliance, the cost of a heat pump will vary depending on a number of factors. Typically, the purchase of the system itself will be the largest expense you will face. However, the more extensive the system, the higher the cost can be.

“The three most important factors that determine price are system performance and efficiency, installation quality and installation complexity,” said DR Richardson, co-founder of Elephant energyan electrification company that installs heat pumps, heat pump boilers, EV chargers and other equipment.

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 HomeAdvisorThese types of heat pumps typically cost between $1,300 and $8,000 for equipment and installation. Costs remain low because minimal ductwork needs to be done.

Air source heat pumps are another common option. The price for these systems generally ranges 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 work in most homes.

At 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 long-term savings. One thing worth noting: These systems require the installation of underground loops and may need to be located near a water source, such as a pond or lake.

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

Once you’ve chosen a heat pump system that makes the most sense for your home, you’ll need to think about the actual installation process. You’ll want a professional to do this, and the cost will depend on a variety of factors, including the size and layout of your home, the condition of your existing plumbing, and labor costs.

Ductless mini-split systems are generally less invasive to install because they do not require ducts, making them a cost-effective option for homes without existing ducts. Air source pumps are common and can work with existing ducts. 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 involved to install. The high cost 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 such as a pond or lake to function optimally. These systems use the stable temperatures of the ground to provide highly efficient heating and cooling, resulting in long-term energy savings despite the higher initial investment.

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

What tax benefits and discounts are there for heat pumps?

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

Geothermal heat pumps often qualify for even more substantial incentives. Another federal tax credit, the residential clean energy creditcovers geothermal systems and offers an unlimited 30% tax credit. This can be especially beneficial given the higher initial cost of geothermal installations. These credits apply to both new and existing homes and cover the cost of installation and labor.

Some states and municipalities may have other incentives available to homeowners to further offset the cost of heat pumps. It’s worth looking into possible rebates and credits available in your specific area, which can make a heat pump even more cost-effective.

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

In short: is it worth buying a heat pump?

Although every home is different, there are many cases where purchasing a heat pump can be a financially and ecologically beneficial decision in the long term.
While the initial cost can be significant, depending on the system you choose, the savings on your energy bills can be substantial in the long run. The lifespan of a heat pump typically ranges from 15 to 20 years, providing reliable and efficient service over time, allowing those savings to add up.

In addition to the economic benefits, heat pumps also offer significant environmental benefits by reducing greenhouse gas emissions and dependence on fossil fuels. Investing in a heat pump can be a smart choice for many homeowners looking to improve the efficiency and sustainability of their home.