Heat Pump Incentives Changed. Here's How to Judge Winter Performance

The federal 25C tax credit, worth up to $2,000 a year for a qualifying heat pump, ended for equipment placed in service after December 31, 2025, and a Department of Energy notice effective May 29, 2026 stopped federal HEEHR rebates from paying to replace gas or other non-electric heating. If you install a heat pump this winter, you will likely pay full price unless a state or utility program helps, so its cold-weather efficiency (its COP) now does more to decide whether it saves money. The lab rating is only a starting point: in DOE-funded field tests at 22 sites, cold-climate prototypes built to reach a COP of 2.1 or 2.4 at 5°F in the lab had a median COP of 1.9 between 0°F and 5°F. Backup resistance heat and defrost pull the season's average down further.

This article is general education, not financial, tax or engineering advice. Incentives and utility rates vary by state and change often.

Key takeaways

COP is heat delivered divided by electricity used, a unitless ratio. A COP of 3 means 3 kWh of heat for every 1 kWh of electricity; electric resistance heat has a COP of 1.
The ENERGY STAR Cold Climate label requires a lab COP of at least 1.75 at 5°F and at least 70% of rated heating capacity at 5°F. In DOE's Cold Climate Heat Pump Challenge field tests, the median COP was 1.9 at 0–5°F, not counting defrost or backup heat.
At national average prices for the 2025–26 heating season (November through March), a heat pump needed a COP of about 3.4 to match the per-Btu cost of a 95% efficient gas furnace; month by month the figure ran from 3.3 to 3.6. Summer prices mislead: fixed charges spread over little gas pushed July 2026's figure down to about 2.0.
At the same heating-season prices, a heat pump running at COP 1.8 cost about 44% less per unit of heat than electric resistance and roughly the same as a 95% efficient propane furnace (about 3% less).
Newly installed home heat pump and AC systems must use refrigerant under EPA's 700 GWP limit, such as R-454B or R-32, but an EPA rule effective July 27, 2026 lets installers keep using R-410A systems whose main components were all built or imported before 2025 until that stock runs out.

What it means for you

Cold-climate homeowners: how much heat the unit can still produce at your coldest temperatures matters as much as its COP. Once the heat pump falls short, resistance strips at COP 1 cover the gap, so check the 5°F capacity and the backup heat setup described below.
Mild-climate homeowners: most of your heating hours fall at temperatures where COP is higher, so the seasonal rating (HSPF2), based on a moderate reference climate, is a closer guide for you than for a home in Minnesota. Whether you save against gas still depends on your local electricity-to-gas price ratio; the cost section shows how to check it.
Replacing a furnace this winter: the federal tax credit is gone, and federal HEEHR rebates, which are limited to households below 150% of area median income, now cover only upgrades from existing electric equipment (plus new construction). Check your state's HOMES program and your utility before you sign. A dual-fuel setup, a heat pump with your gas furnace as backup, is one option to price out.
Renters: you usually can't choose the system, but you can see whether the thermostat is calling for "aux" heat often, which is the expensive mode. In Washington, a 2026 law (ESSB 6200, effective June 11, 2026) bars landlords from prohibiting or restricting tenants' portable heat pumps and air conditioners, with exceptions. A landlord can still say no if the home already has a working permanent heat pump, or if the device would break building codes or the maker's safety guidelines, cause unreasonable damage, or need more power than the existing electrical service can supply.

COP, HSPF2 and the lab ratings

The ENERGY STAR heat pump specification defines the coefficient of performance (COP) as the rate of heat delivered divided by the rate of electricity consumed, measured at one set of conditions. It has no units. That makes COP a snapshot: it applies to one outdoor temperature, one compressor speed and one indoor temperature.

Natural Resources Canada gives the typical spread for air-source units: a COP of 2.0 to 5.4 at 8°C (46°F), falling to 1.1 to 3.7 at -8°C (about 18°F). The heat pump has to lift heat across a larger temperature gap when it is colder outside, which is why COP falls.

The heating seasonal performance factor 2 (HSPF2) is a seasonal number instead. Under the federal test procedure, it is the heat a home needs over a modeled heating season in DOE's climate Region IV, in Btu, divided by the system's electricity use in watt-hours. Dividing HSPF2 by 3.412 converts it to a seasonal average COP.

Under 10 CFR 430.32, split-system heat pumps manufactured since January 1, 2023 must reach at least 14.3 SEER2 and 7.5 HSPF2, about a 2.2 seasonal COP, and single-package heat pumps at least 13.4 SEER2 and 6.7 HSPF2. Region IV is one reference climate. A home in Minnesota or Maine spends more hours at the cold end, so its real seasonal average will usually come in below the label; NEEP's product list also reports HSPF2 for the colder Region V.

Rating	What it measures	Threshold to know
COP at 47°F	Heat out ÷ electricity in at a mild test point	Typically 2.0 to 5.4 near 46°F (NRCan); says little about January
COP at 5°F	Same ratio in a steady lab test at 5°F	At least 1.75 for ENERGY STAR Cold Climate and the NEEP cold-climate spec
Capacity at 5°F ÷ 47°F	How much heating output remains when it is cold	At least 70% for ENERGY STAR Cold Climate
HSPF2	Seasonal heat ÷ electricity for a reference climate (Btu/Wh)	7.5 federal minimum for split systems; 8.1 ducted and 8.5 ductless for ENERGY STAR Cold Climate

The ENERGY STAR heat pump specification, 6.2 as revised in February 2026, also requires a controls check confirming that the unit's own controls reach the 5°F results in normal operation. NEEP's cold-climate spec, which requires its 1.75 COP at maximum capacity and a variable-speed compressor, is written as a model qualification standard for efficiency programs. The NEEP cold-climate product list publishes minimum, rated and maximum capacity and COP at 47°F, 17°F and 5°F, plus the lowest temperature in the maker's published data. NEEP's reporting template tells manufacturers to leave out defrost and drain-pan heater power, so the listed COPs are steady-state figures.

Capacity, backup heat and defrost

As it gets colder, a heat pump's output falls while the house loses heat faster. The outdoor temperature where the two lines cross is the thermal balance point, as NRCan defines it. Below that point, supplementary heat makes up the difference. In all-electric systems that is usually resistance elements in the ductwork or baseboards, running at a COP of about 1.

NRCan also defines an economic balance point: the temperature below which running a backup furnace costs less than running the heat pump. Most units also have a cut-off temperature below which they stop running.

Illustrative example. A house loses 36,000 Btu/h at 5°F, with heat loss falling in a straight line to zero at 65°F. Its heat pump delivers 36,000 Btu/h at 47°F and keeps 70% of that, 25,200 Btu/h, at 5°F, the ENERGY STAR Cold Climate minimum. If capacity also changes in a straight line, the balance point lands at about 18°F. At 5°F the strips must supply the missing 10,800 Btu/h.

If the heat pump runs at COP 1.9, it uses 25,200 ÷ 1.9 ≈ 13,260 Btu of electricity per hour, and the strips use 10,800. That gives an effective COP of 36,000 ÷ 24,060 ≈ 1.50, not 1.9. A unit that kept 100% of its capacity at 5°F, as the DOE Challenge prototypes had to, would meet the same 36,000 Btu/h on its own, so the effective COP would stay at 1.9. When it is very cold, a capacity shortfall drags efficiency down more than the COP figure suggests.

Sizing sets where that balance point falls. ACCA's Manual J is the ANSI-recognized standard for calculating a home's heating and cooling loads. NRCan warns that an undersized heat pump leans on backup heat more often. An oversized one cycles on and off in mild weather, which can cost comfort, cause wear and waste standby power.

Defrost is the other winter penalty. Frost on the outdoor coil blocks heat transfer, so the unit briefly reverses into cooling mode to melt it.

Many systems switch on a stage of resistance heat during defrost so they don't blow cold air. In DOE's Cold Climate Heat Pump Challenge field tests, defrost took the most energy between 5°F and 35°F, a median of 5% to 8% of total energy use in those temperature ranges. Sites that ran resistance heat during defrost used more.

What field studies measured

The largest recent U.S. dataset comes from PNNL's January 2025 report on the DOE Cold Climate Heat Pump Challenge. It covers 22 ducted prototype units sized with Manual J and monitored from winter 2022 to early fall 2024: the U.S. units were in occupied homes, and the Canadian ones in a mix of occupied and laboratory homes. In the lab, the prototypes had to reach a COP of at least 2.4 at 5°F (2.1 for units above 48,000 Btu/h) and keep 100% of their 47°F capacity. In the field, with backup-heat and defrost periods excluded, the median COP across sites was 1.6 to 2.7 in temperature ranges below 30°F, and 1.9 between 0°F and 5°F.

Between -10°F and 0°F, backup heat ran about 25% of the time, though only 8 and 11 sites had enough data in the two coldest ranges. Many sites had milder winters than normal, and only 8 of the 22 logged 10 or more hours below 0°F.

An earlier Minnesota field study by the Center for Energy and Environment (2017) tested older cold-climate equipment. Heat-pump-only COP was about 1.3 near the 10°F switchover to a propane furnace, rising to about 3.0 to 4.5 between 50°F and 60°F. Weather-normalized seasonal COP for three ducted heat pumps, not counting propane backup, was 2.51 to 2.78. The condensing propane backup furnaces ran at 70% to 85% efficiency in furnace-only cycles, 8 to 15 points below their ratings, partly because the cycles were short; field results can fall short of lab ratings for furnaces too.

The running-cost math

To compare heat sources, convert each fuel price into dollars per million Btu (MMBtu) of heat delivered to the house. EIA's conversion factors are 3,412 Btu per kWh and 1,036 Btu per cubic foot of natural gas.

Heat pump or resistance: $ per MMBtu = (electricity $/kWh × 293.1) ÷ COP
Gas furnace, price per Mcf:   $ per MMBtu = (gas $/Mcf ÷ 1.036) ÷ AFUE
Gas furnace, price per therm: $ per MMBtu = (gas $/therm × 10) ÷ AFUE
Break-even COP            = (electricity $/kWh × 293.1) ÷ gas $ per MMBtu

293.1 = kWh in one million Btu; 1.036 = MMBtu in 1,000 cubic feet (Mcf) of gas;
10 = therms in one MMBtu; AFUE = furnace efficiency as a decimal (0.95 for a 95% furnace)

Illustrative example, national averages for the 2025–26 heating season. In EIA's Electric Power Monthly (preliminary figures), residential electricity averaged 17.74¢/kWh across November 2025 through March 2026, a simple average of the five monthly figures, and 17.45¢ in January 2026. The residential natural gas price averaged $14.85 per Mcf over the same five months and was $13.96 in January, according to EIA's September 30, 2026 release. Propane comes from EIA's weekly heating-season survey: $2.575 a gallon averaged over its 22 November-to-March readings and $2.566 in January, at 91,452 Btu per gallon.

Heat source	$ per MMBtu, Nov 2025–Mar 2026 average	$ per MMBtu, January 2026
Heat pump, COP 3.0	$17.33	$17.05
Heat pump, COP 1.8	$28.88	$28.41
Gas furnace, 95% AFUE	$15.08	$14.18
Electric resistance, COP 1	$51.98	$51.14
Propane furnace, 95%	$29.64	$29.54

At heating-season prices, the break-even COP against a 95% gas furnace is about 3.4; month by month it ran from 3.3 in March to 3.6 in January. A COP 3.0 heat pump therefore cost about 15% more per unit of heat than gas over the season, and about 20% more in January. Against other fuels the picture changes: at COP 1.8 a heat pump cost about 44% less than resistance heat and roughly the same as propane (about 3% less), whose break-even COP is about 1.75.

Don't run the formula with summer gas prices. EIA explains that residential gas prices are usually highest per unit in summer because fixed charges are spread over less gas. The national price was $26.45 per Mcf in July 2026, which would put the break-even COP at about 2.0 and wrongly suggest that almost any heat pump beats gas.

The same logic applies to your own bills: fixed monthly charges don't change with how much you heat, so compare the per-kWh and per-therm charges from a winter bill. The fixed gas charge only counts as a saving if you would close the gas account entirely.

The 95% figure is a rating, and the field studies above show that real performance can fall short for furnaces as well as heat pumps. If your furnace ran closer to the 70% to 85% the Minnesota study measured in short backup-furnace cycles, gas heat would cost more: at 80%, the heating-season break-even COP falls to about 2.9.

Rules and incentives, October 2026

Item	Status as of October 3, 2026	What it changes
25C home improvement credit	Ended for property placed in service after December 31, 2025, under Public Law 119-21 (IRS FAQ, FS-2025-05)	Heat pumps that met the CEE highest non-advanced tier, installed at an existing main home (not new construction) in 2025 and reported with the maker's qualified manufacturer ID could earn a nonrefundable 30%, up to $2,000, on 2025 returns (IRS 25C page). The credit follows the installation date, not the purchase date, so a unit bought in 2025 but installed in 2026 gets nothing.
HEEHR rebates (IRA §50122)	Launched in some states; Program Notice 26-2, effective May 29, 2026, applies to state and territory programs and gave launched ones three months from publication to comply, with extensions only by DOE approval	No new rebates for replacing non-electric equipment, though reservations approved under the old rules can still be paid; homes must insulate and air-seal first unless already at a state-set level. The statute allows up to $8,000 for a heat pump and $14,000 per household, for incomes below 150% of area median: up to 100% of project cost below 80% of median, and 50% from 80% to 150% (42 U.S.C. 18795a).
HOMES rebates (IRA §50121)	Launched in some states (DOE program page)	Whole-home rebates open to all income levels, with a 20% modeled-savings minimum; heating equipment can be part of the project. Under the statute's modeled pathway, most households can get up to $2,000 (20% to 35% savings) or $4,000 (35% or more), capped at 50% of project cost; households below 80% of area median income can get up to $4,000 or $8,000, capped at 80% (42 U.S.C. 18795). States can raise amounts for lower-income households with DOE approval.
EPA refrigerant rule	New residential and light commercial AC and heat pump systems, including mini-splits, must use refrigerant under a 700 GWP limit (EPA restrictions by sector)	The final rule at 91 FR 31284 (published May 26, 2026, effective July 27, 2026; EPA fact sheet) removed the January 1, 2026 installation deadline for systems whose specified components (outdoor units, compressors, coils) were all made or imported before 2025

The DOE page only says the rebates are available "in select states" and sends readers to state energy offices; it publishes no state-by-state list. A June 2026 factsheet from the Building Performance Association, an industry group rather than DOE, counted twelve states and the District of Columbia with launched HOMES or HEEHR programs as of June 2026; South Dakota did not apply. Check your state energy office for the current status. Lower-GWP refrigerants such as R-454B and R-32 are mildly flammable, and EPA's HFC phasedown FAQ says they may not be used in systems that weren't designed for them.

Frequently asked questions

Can I still repair my R-410A heat pump?

Yes. EPA says homeowners can maintain and repair existing systems for their whole useful life, including replacing a failed condensing unit or indoor coil with a similar R-410A component. Components made after January 1, 2025 for R-410A must carry a label saying they are for servicing existing equipment only. Replacing the outdoor unit and the indoor coil together counts as a new system, which must meet the 700 GWP limit unless all of its specified components were made or imported before 2025.

Will a heat pump run below 0°F?

Many cold-climate models do, but most air-source units have a cut-off temperature set by the maker or installer, below which only the backup system heats. NEEP's list reports each model's lowest cataloged operating temperature, the coldest point with published performance data, so you can compare it with your area's design temperature.

Is a ground-source heat pump different?

Ground-source systems draw heat from the ground, which in winter is warmer than the outdoor air. NRCan estimates they save about 10% to 20% more than a top cold-climate air-source unit sized for most of the load. The separate 25D residential clean energy credit, which covered geothermal heat pumps, ended for expenditures made after December 31, 2025.

Why do older brochures show higher HSPF numbers?

Ratings before 2023 used HSPF, and current ratings use HSPF2 under a revised test procedure, so the numbers are not interchangeable. NEEP's specification treats 8.5 HSPF2 as roughly equal to 10 HSPF, and 7.7 HSPF2 as roughly 9 HSPF. Compare models only on the same metric.

Should I turn the heat pump down at night?

NRCan advises keeping setbacks to no more than 2°C (about 4°F). The alternative is a thermostat that starts recovery early, because heat pumps warm a house more slowly than furnaces. A deep setback can trigger backup heat during recovery, which erases the savings.

Before you sign a quote

Ask for a written Manual J load calculation and your area's design temperature. Then ask at what outdoor temperature the proposed unit stops meeting that load.
Look up the unit's capacity and COP at 5°F (and 17°F) on the NEEP list or ENERGY STAR data, not just its HSPF2 or COP at 47°F.
Ask how backup heat is staged, at what outdoor temperature it is locked out, and whether it runs during defrost. In a dual-fuel system, ask what switchover temperature will be programmed.
Run the break-even formula with the per-kWh and per-therm usage charges from a winter bill, not an annual or summer average, and leave out fixed monthly fees unless you would close the gas account.
Before you buy, confirm with your state energy office and utility which rebates are live and whether insulation or a specific refrigerant is required to qualify.