Is a Heat Pump Worth the Cost?

In most areas of California, the temperature is relatively moderate. In these cities, a heat pump system is energy-efficient and a cost-effective alternative to using traditional furnaces or air conditioners.

During winter, the heat pump works by pushing heat coming from cold outdoors to keep the inside of your home warm. Conversely, the heat pump pushes heat from inside the home outdoors during summer.

Installing a heat pump system in your home has so many benefits. But what is a heat pump? How does it work? Is it worth the cost to have a heat pump installed? We will answer those questions and more below.


What is a Heat Pump and How Does It Work?

Heat pumps are essentially two-way air conditioners. In the summertime, they work like any other air conditioning unit, removing heat from the air inside and pushing cooled air back into the home. In the cooler months, they do the opposite by drawing heat energy from the air outside and moving it into your home to warm things up. The process is especially efficient, using half as much energy on average than other electric home-heating sources.

The biggest difference between heat pumps and traditional heating and cooling systems is that they are designed to be ultra-energy efficient. This is because heat pumps only move heat, instead of generating it by combusting a fuel source. The system requires an outdoor and an indoor unit (unless using the less common geothermal system), which work together to suck up hot air and introduce it to an inside space or expel it outside.

During warm days, a heat pump moves the uncomfortably hot air out from the home and transfers it to the outside environment. And on cooler days, the heat pump transfers warmer air from outside and pulls it into the home to warm it up. They also provide homeowners with humidity control and air conditioning.

Heat pumps are suitable for areas with moderate cooling and heating needs. So, in the battle between a heat pump vs. an HVAC system featuring a furnace or a boiler, space conditioning costs less with a heat pump in temperate climates.


How Much Does a Heat Pump Cost?

The typical price range of a heat pump is $3,974 to $6,823. A low-end unit costs around $1,500 while a high-end one is about $9,600. A typical heat pump’s cost will depend on the type of heat pump you choose and the size of your home. Heat pump prices can also be impacted by installation and labor costs, so make sure you factor that into the total price tag.

Heat pump costs can be impacted by the variables below:

  • Size: Generally, heat pump capacity is measured in tons, and the typical units on the market fall between 2 and 5 tons. Finding the right size for your home is important — purchasing one that’s too small may require it to run constantly, raising your energy bill and wearing out the system. On the other hand, higher tons can come at pricier up-front costs.
  • Brand: Many brands offer a range of units at different prices — from cheaper, lower-quality to expensive, high-quality systems. Shop around on the market and read reviews for each brand to ensure the best choice, rather than choosing solely on price.
  • Installation: Hiring an HVAC contractor to assist with your heat pump installation is likely necessary. Labor costs can vary depending on the heat pump type. For example, geothermal units require more work to install because they need to be buried under at least 4 feet of ground. But ductless mini-split heat pumps can cost as little as $500 for a quick and easy installation.
  • Seasonal Energy Efficiency Ratio (SEER): This is an efficiency rating metric that each manufacturer discloses to help homeowners choose the most efficient and sustainable HVAC solutions. The SEER number shows how efficiently a heat pump cools a home. Typical SEER ratings on the market fall between 14 and 24, with the higher number being the most efficient.
  • Heating Seasonal Performance Ratio (HSPF): Similar to SEER, this rating is a metric used to measure the efficiency of a heat pump, but specifically for how it heats a home. Typical HSPF ratings on the market fall between 8.2 and 13, with the higher number being the most efficient.


Are Heat Pumps Worth It?

The answer is that it depends on your situation.

Installing a heat pump in your home or building is a long-term investment. We understand that the initial payment can be off-putting, but in the long run, you will end up saving money. A heat pump can make a big difference in your utility bills because it replaces both the air conditioning unit and furnace simultaneously. Technology advancements make a heat pump in Southern California — or any other temperate-climate region — a better alternative for a central heating and cooling system.

Moreover, heat pumps are not only a great energy-saving alternative to air conditioners and furnaces, but also a hybrid of the two. A heat pump can produce both warm and cold temperatures.


5 Benefits of Owning a Heat Pump

The benefits of having a heat pump system in your home include:

  • Lower Operating Costs

Thanks to its energy-efficient design, a heat pump can save you up to $1,000 or more per year on energy bills. Heat pumps are far less expensive to maintain than combustion-based systems though they are more expensive to install. If the initial cost is an issue, you might qualify for a government rebate (see below).

Heat pumps use electricity to circulate air from outside to inside your home. During this process, the air passes through a refrigerant, which either cools or heats the air. All of this is achieved without the use of an additional fuel source.

  • Have Heating and Cooling Modes

A heat pump system can be used in heating mode in the winter and cooling mode in the summer. Consequently, there will be no need for two separate systems for each season. As a result, you will save money spent on energy bills as well as maintenance for air conditioners and heaters.

  • Enhance Air Quality

Most standard HVAC systems help trap airborne pollutants in your home, especially if they are not well maintained. Some heat pumps transfer air through ducts that purify the air, other heat pumps have ductless air purifiers that are even more effective at air purification.

Additionally, to achieve a high level of filtration, modern units now include ionic filters, plasma filters, and high-efficiency particulate air (HEPA) filters.

  • Increase Safety

Unfortunately, any gas-powered unit is susceptible to carbon monoxide leakage. Carbon monoxide leaks kill approximately 400 Americans each year, especially during the winter, when people are heating their homes and not properly ventilating them. As a result, carbon monoxide continues to accumulate until it reaches dangerous levels.

Heat pumps run on electricity, so you will not have to worry about that.


Tax Credits and Rebates for Families

When homes need to replace their heating or cooling systems, families can get tax credits for efficient heat pumps that ensure comfortable home temperatures. By doing the job of both a furnace and air conditioner, heat pumps work to keep homes warm in the winter and cool in the summer.

Right now, households can receive a $300 tax credit for purchasing a heat pump.  The total of current and previous year’s credits, including those for energy efficiency improvements, high efficiency furnace and air conditioners cannot exceed $500.

Starting next year, households will be able to claim a tax credit for 30% of the costs of buying and installing a heat pump, up to $2,000 including support for any electric system upgrades needed to make the home heat-pump-ready.

Beginning in 2023 state programs will offer low- and moderate-income households rebates for heat pumps at the point-of-sale, cutting costs of purchase and installation up to $8,000. If home electrical upgrades are needed to integrate new heat pumps, rebates of up to $4,000 will also be available to households.


Heat Pump Installation Tax Credits

You can also claim up to $1,200 in total tax credits per year on a wide range of expenditures related to certain efficiency upgrades, including for heat pumps. These include but are not limited to:

  • $600 for air-sealing materials or systems, which can improve your home’s overall energy efficiency
  • $150 for a home energy audit, which can point out ways you can improve your overall energy efficiency
  • $600 for upgrading your electrical supply if it’s required for efficiency projects—for example, in order to power an electric heat pump when you previously used natural gas to heat your home

State-administered rebates on efficiency and electrification upgrades associated with installing your heat pump may also be available for low- and moderate-income households. Parameters of who qualifies and for how much would be decided by the state according to your household income measured against your state’s median household income. This includes:

  • $1,600 for insulation, air sealing, and ventilation
  • $4,000 for upgrades to your electrical panel and service
  • $2,500 for electrical wiring


Who Qualifies for a Heat Pump Tax Credit or Rebate

Any taxpayer would qualify for the federal tax credits.

For the tax credit program, the new incentives will apply to equipment installed on January 1, 2023 or later. (A smaller tax credit of up to $300 for a heat pump meeting the CEE’s top tier of efficiency is available for heat pumps installed during 2022.)

As for the rebate programs, Urbanek says it would be “surprising” if they turn out to apply retroactively. The rebates depend on income. Specifically:

  • If your household income is less than 80 percent of your state’s median household income, you are eligible for 100 percent of the rebates available. So if you spend $10,000 on a heat pump and a heat pump water heater, you could get $9,750 back, depending on the specifics of your state’s rebate program.
  • If your household income is 80 percent to 150 percent of your state’s median income, you are eligible for 50 percent of the rebates available. So for a $10,000 heat pump and heat pump water heater, you could get $4,875 back, depending on specifics.
  • If your household income is more than 150 percent of your state’s median income, you are not eligible for these rebates.



Give Us a Call

At Aire-Tech, we can help keep your home at the optimal temperature! We give you countless resources to help you explore and learn about HVAC options, including incentive programs. We work closely with agencies to pass on savings programs and information to our valued customers.

If your system needs repair or inspection, call Aire-Tech on 951-926-1002. You can also visit our Contact page and complete the contact form.