Should You Replace Your Furnace with a Heat Pump?

By Lyle Weischwill | Aug. 08, 2023 9:20 am PST

This may sound like a weird question unless you’re aware of the HVAC “electrification” provisions in the 2022 Inflation Reduction Act (IRA).

Beginning in 2023, the IRA will provide generous rebates to low- and moderate-income households for converting a gas home furnace to an electric heat pump. The act will also provide financial help to convert your home’s wiring and electrical system to accommodate the new heat pump.

Low-income households can get a 100 percent rebate (up to $8,000) to install a new heat pump to replace a gas furnace.

Moderate-income households can receive a 50 percent rebate (also up to $8000) for a new heat pump to replace a gas furnace.

So, if your gas furnace is more than 10 years old and you plan on replacing it soon, consider taking advantage of rebates and tax credits by replacing your gas furnace with an energy-efficient heat pump if you qualify.

If you decide to make that HVAC system switch, you can also get rebates for replacing your other gas appliances (dryer, water heater and stove) with energy-efficient electric versions. Consider going all-electric, all at once and you could begin saving up to $500 per year on energy bills while also helping the environment by lowering carbon emissions.

Advantages of Replacing a Gas Furnace with a Heat Pump

In addition to financial incentives provided by the IRA rebates, you’ll also realize these benefits when replacing a gas furnace with a heat pump.

Lower Carbon Emissions

Replacing your gas furnace with an electric heat pump can typically cut the carbon footprint of your HVAC system in half. A heat pump efficiently uses electricity as its sole source of power while a furnace uses both electricity and natural gas (or LP gas) to heat your home. The carbon emissions from using fossil fuels to heat your home are much higher than the emissions caused by using electricity.

Collectively, our country could cut carbon emissions by more than 100 million metric tons if everyone converted gas furnaces to heat pumps.

Image of healthy environment because of low carbon emissions

Energy Bill Savings

Typically, you can save more than $400 per year on energy bills by replacing a gas furnace with a heat pump. A heat pump is more energy efficient than a gas furnace because it uses expansion properties of refrigerant to heat your home instead of burning fuel to heat air.

If you install a heat pump and go all-electric in your home, you can kiss that monthly gas bill good-bye for good.

Less Health Risks

Because there’s no combustion involved with a heat pump, the unit is inherently safer than a gas furnace. Although built-in safeguards in furnaces help keep the risk of fire and carbon monoxide poisoning low, safety devices aren’t fool-proof. Accidents still happen.

According to the National Fire Protection Association, “heating equipment is a leading cause of fires in U.S. homes.” About 12 percent of heating equipment fires are caused by central heat systems.

You can reduce the risk of accidents by replacing your gas furnace with a heat pump.

Image of gas furnace combustion

How Do I Qualify for a Heat Pump Rebate?

The 2022 IRA provides heat pump rebates for low- and medium-income families.

How to Qualify for the 100 Percent Low-Income Heat Pump Rebate

According to the IRA, a low-income household qualifying for a 100 percent heat pump rebate up to $8,000 earns “less than 80 percent of the area median income.”

An easy way to find the median income for your area is to use the Fannie Mae Area Median Income Lookup Tool. For example, a household in a Chicago area earning less than $85,460 (80 % of $105,700 median income) would qualify for 100% of heat pump replacement costs up to $8000.

These are general income guidelines defined in the 2022 IRA bill. States will administer the 2022 IRA heat pump rebates that will begin in 2023, so you’ll need to work with your HVAC expert when replacing your gas furnace to determine the exact heat pump rebate that you qualify for (based on your household income).

How to Qualify for the 50 Percent Moderate-Income Heat Pump Rebate

A medium-income household as defined by the 2022 IRA is a one whose income “is not less than 80 percent and not greater than 150 percent of the area median income.”

Use the general guidelines described above to see if you’re considered a medium-income household and qualify for 50% of heat pump replacement costs up to $8,000.

I’m Ready–What Do I Do Now?

You’ve got to wait for now—until your state sets up the rebate program in your area. Bookmark this page and check for updates so you can take action when the heat pump rebate becomes available in your area.

Frequently Asked Questions about the Inflation Reduction Act of 2022

Here are current answers to frequently asked questions about the 2022 Inflation Reduction Act. Check back for updates as more details unfold.

When Will Heat Pump Rebates be Available?

The timing of IRA heat pump rebates depends on which state you reside. Congress allocated funds for the rebates and delegated the administration of those rebate funds to individual states. The Department of Energy (DOE) expects that some states will be providing rebates as early as the spring of 2023, but currently acknowledges that some states may not have rebates available until 2024. Check back for updates on availability of IRA heat pump rebates as states develop their individual rebate programs.

Can I Replace My Gas Furnace With a Heat Pump Now and Get the Rebate Later?

Not likely. Rebates provided by the Inflation Reduction Act of 2022 are intended to be administered by the individual states at the time that the heat pump is sold. Unless your state government makes provisions in their administration of the heat pump rebate for you to get the rebate after purchasing the heat pump, you won’t be able to get money back if you purchase a heat pump before the program starts in your state.

Image of modifying home wiring and circuit breaker box

Will I Need to Modify My Home’s Wiring When Installing a Heat Pump?

You’ll very likely need to have an installer or electrician modify wiring and your home’s circuit breakers when replacing a gas furnace with a heat pump.

The good news is that the IRA provides these additional rebates for revising your home’s electrical system when replacing a gas furnace with a heat pump:

  • Up to $4,000 for an electrical load service center (breaker box) upgrade.
  • Up to $2,500 for electrical wiring upgrades.

As with the heat pump rebate, low-income households can get rebates up to the above limits to cover 100 percent of electrical system modifications. Moderate-income families can get rebates up to the above limits to cover 50 percent of electrical revisions.

The maximum amount of rebates allowed for an electrification project by the Inflation Reduction Act is $14,000.

Can I Get an IRA Heat Pump Rebate for Replacing My Old Heat Pump With a New One?

No. The purpose of the IRA heat pump rebate is to promote the electrification of homes that use gas appliances. According to the provisions of the act, replacing an old heat pump with a new one won’t qualify for an IRA rebate.

You may be able to take advantage of federal income tax credits even if you don’t qualify for an IRA heat pump rebate.

When to replace your furnace with a heat pump

Deciding when to replace a furnace with a heat pump depends on several factors, primarily the energy efficiency and heating requirements of your home. The average lifespan of a gas furnace is 15 years. If your existing furnace is older, inefficient, or prone to frequent breakdowns, and you want to reduce utility costs and lower your carbon footprint, transitioning to a heat pump could be a wise choice. Heat pumps are particularly beneficial in moderate to mild climates. A heat pump works by efficiently extracting heat from one area and moving it to another. This makes them an ideal choice for replacing both a gas or electric furnace to warm your home in the winter, and an air conditioner for cooling your home in the summer.

Additionally, if you’re interested in renewable energy sources and maximizing year-round comfort, you may find the versatility and long-term cost savings of a high-efficiency heat pump system compelling reasons to make the switch from a traditional furnace system. However, it’s crucial to consult with HVAC professionals to assess the specific needs of the property and ensure a seamless and appropriate transition. H2: How Can I Replace My Furnace with a Heat Pump? Schedule a free consultation with a Sears Home Services heating and cooling expert to replace an old heat pump with a new one.

Our Sears HVAC experts are knowledgeable about all rebates and tax credits that you can get when replacing your heating and cooling system. We’ll explain your options, so you can choose the HVAC unit that’s right for your house and budget.

Sears Home Services Can Help with Heat Pump Repair and Maintenance

When it comes to ensuring the smooth operation and longevity of your HVAC systems, Sears Home Services stands ready to provide top-notch service and expertise. With our specialized knowledge and experience in heat pump repair and maintenance, as well as proficiency in central air conditioning, furnace, and mini-split system repairs and maintenance, we are your one-stop solution for all HVAC needs. Our team of skilled technicians is committed to delivering exceptional service, addressing any issues promptly, and keeping your systems running efficiently.

At Sears Home Services, we understand that your HVAC system play a vital role in maintaining comfort and indoor air quality. That’s why we strive to offer reliable and cost-effective solutions to enhance the performance of your systems and save you from unnecessary expenses. Whether it’s a minor repair, routine maintenance, or a complete system overhaul, our professionals are equipped with the latest tools and techniques to handle every aspect of HVAC servicing.

Don’t let HVAC problems disrupt your comfort and productivity. Reach out to us today and experience the unparalleled expertise and customer-centric approach that sets us apart. Trust Sears Home Services for all your heat pump repair and maintenance, central air conditioning, furnace, and mini-split system needs. Let us be your trusted partner in keeping your HVAC systems running at their best, so you can enjoy a comfortable and pleasant environment year-round.

Get a free in-home consultation

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