Gas Furnace vs Heat Pump

The Inflation Reduction Act includes a $2,000 tax incentive for homeowners to upgrade their gas furnace with a heat pump. I’m not going to get into the politics of it all because I’m an HVAC Technician, not a politician. In other words, I made my mom proud. That said, this article focuses solely on the differences of a gas furnace vs heat pump for your home.

gas furnace vs heat pump

Gas Furnace vs Heat Pump Tax Incentives 

The tax incentive alone is pushing a lot of people to choose heat pump vs gas furnace this year. Largely because the tax incentive is $1,400 more for installing a heat pump instead of a gas furnace. The incentive for replacing your gas furnace with a qualifying heat pump is up to a $2,000 tax credit. The incentive for replacing a gas furnace with another qualifying gas furnace is only $600.

As one client put it recently, “Uncle Sam just gave me 1,400 more reasons to choose a heat pump system.”


Gas Furnace vs Heat Pump Technical Differences (in simple terms)

A gas furnace uses both natural gas (or propane) as well as electricity to heat your home or building. It uses electricity to power the fan that moves the heated air and gas to produce the flame that heats.

A gas furnace utilizes a “straight AC” condenser outdoors and an “A coil” connected to the furnace to provide cooling.

A heat pump uses electricity only and doesn’t burn gas fuel. The electricity is used to power the same type of fan found in a furnace as well as a compressor that pumps refrigerant. As the refrigerant moves between the indoor & outdoor coils it transfers heat into your home.

A heat pump provides both cooling & heating using a heat pump condenser outdoors and an air handler indoors.


Gas Packs & Packaged Heat Pumps

Rooftop and ground “packaged units” come in both heat pumps and gas heat/electric cooling. These work the same way as the “split systems” above (condenser outside / furnace or air handler inside). The difference being all those components are “packaged” inside one cabinet. Rooftop units are also commonplace in the Phoenix Metro area and other parts of the southwest.


Climate Matters

Magic Touch Mechanical is in Mesa, AZ., a suburb of Phoenix. Our service area is Phoenix and all the surrounding cities, like Scottsdale, Tempe (home of ASU), Chandler, Gilbert, Glendale, etc. We are in the ‘land of heat pumps’, in fact we have more homes with heat pumps than gas furnaces.

Why? The Phoenix area is ideal for heat pumps due to our hot summers and relatively mild winters. We rarely get below freezing and on the occasions we do, it is at most a few degrees below freezing. Temperatures that are no problem for modern heat pumps.

In Fairbanks, Alaska, where the lowest recorded temperature on record was -66°F., heat pumps must rely on backup heat. In other words, gas and oil heating are probably a better choice there.


gas furnace vs heat pump in phoenix az


Cold Climate Heat Pumps

In recent years, more and more manufacturers have developed better “cold climate heat pumps”. It’s not unusual to see data sheets on cold climate heat pumps that remain operable in temperatures below -30°F nowadays.

That said, having operated Magic Touch Mechanical for 26 years in Phoenix, cold climates are out of my wheelhouse. Ask me anything about what’s best in a hot climate and I’m an expert. If you’re considering a gas furnace vs heat pump in Alaska, I’d advise you rely on a cold climate heating expert.


Which Offers Better Heating Performance

15 years ago, if you asked me which performs better gas furnace vs heat pump, I’d choose the gas furnace. Today, with so many inverter-driven, variable speed heat pumps available I’d probably say the inverter heat pump.

That said, we use different furnaces in the Phoenix area than they do in colder parts of the country. The furnaces we use here (mostly) are not ‘high-tech’ so to speak. Conversely, we use very high-tech heat pumps here, whereas in many parts of the country they use predominantly older technology.

We have ‘extreme’ heat in the summer, whereas places like Minnesota have extremely cold winters. Our mild winters (comparatively) don’t necessitate the need for ultra-efficient furnaces – we need ultra-efficient cooling. The beauty of the heat pump is the same compressor that gives us ultra-efficient cooling is used to provide very efficient heating.


Hybrid Heat Pumps

It’s possible to install a hybrid heat pump that incorporates both a heat pump and gas furnace into one system. With a hybrid heat pump the homeowner has the best of both worlds and can choose to heat with either gas or electric. Magic Touch installs a handful of hybrid heat pumps each year at our client’s request. Keep in mind that’s a handful out of the hundreds upon hundreds of HVAC systems we install each year. Why do so few people choose a hybrid system if it’s the best of both – cost.

Let me put it this way, I own a large heating & air conditioning company and even I didn’t install hybrid systems in my home. Frankly, I’d rather invest my money in other things that provide more benefits for the dollar spent. Again, I’m speaking of my home in Phoenix. I very well may consider a hybrid system if I lived in a colder climate.


Gas Furnace vs Heat Pump Install Costs 

When I started Magic Touch ¼ century ago, the install costs of a furnace/AC were much less than heat pumps. Today, it’s the opposite in most cases – a complete gas furnace with straight AC usually costs slightly more installed than a heat pump.

This is especially true when comparing inverter, aka variable speed compressor systems, which are the best technology available nowadays. Brands like Bosch, Gree, and Amana are all selling inverter heat pumps for significantly less than comparable furnace/AC systems.

Add the additional $1,400 IRA tax credit (furnaces only get up to $600) and the cost of a heat pump vs gas furnace is thousands less. Many utility companies around the nation also provide generous rebates for customers who install inverter heat pumps. In Phoenix, SRP customers can get up to $1,125 in additional cash rebates on top of tax credits and equipment savings.

At the time of writing this, we have a few systems that have a combined savings of $6,108 when you add in Magic Touch promotions. That’s a lot of bread!


How Much Trane vs Bosch Price Difference


What Do I Have in My Own Home?

I’m a consumer and homeowner myself so I too have been faced with the Gas Furnace vs Heat Pump decision. What did I choose … both.

Let me explain, I have 3 HVAC systems in my home. 3 years ago, I replaced two gas/electric systems with Lennox high-end inverter straight ACs with gas furnaces. Just recently, I installed a Gree inverter heat pump.

Had the IRA tax incentive been available when I installed the two gas furnaces, I would’ve gone with heat pumps. The Gree Flexx heat pump – which is by far the best value on the market today of all the brands we carry (a dozen brands) wasn’t available in the USA then either. If I had to choose again today, the savings alone would make it a no-brainer and I’d have three heat pumps.

I installed the Gree Flexx in my elderly mother’s Chandler, AZ home as well.


Heat Pumps Aren’t Always Applicable

Just this week we had a client who wanted us to install a heat pump in her home. She’s a longtime client that’s ready to replace a gas furnace and AC we installed 14 years ago. Her home is in a historical district in Phoenix which poses some unique and challenging design constraints.

Bottom line, her home and the application really aren’t suited for converting the gas system to a heat pump. She was disappointed because she was excited about what she would get for the price, but it would’ve been a bad idea to force it.

While it’s rare that we come across applications that converting from a gas furnace to a heat pump is ill-advised, it happens. Always seek the advice of an expert when considering a gas furnace vs heat pump.


Gas Furnaces vs Heat Pumps Today & Past

Like everything else the technology of both gas furnaces and heat pumps have advanced exponentially. Gas furnaces are far safer, burn cleaner, and operate more efficiently than the gas furnaces of the past. Heat Pumps no longer have the performance issues and “quirks” they once did in cold weather.

Again, I’m not going to get into the politics of it, but clearly gas furnaces are in the EPA’s crosshairs. HVAC equipment manufacturers have taken notice and there’s been a shift towards advanced heat pumps from every brand.

That said, when facing the question, what’s the future hold for gas furnaces vs heat pumps – my money is on heat pumps. Even Elon Musk, founder of Tesla, the electric car company is currently working on the next generation of heat pump.


If Your Home is in the Phoenix, AZ Area – Just Call Us

Ask around and you’ll find out that Magic Touch Mechanical is the leading expert in furnace to heat pump conversions. We’ve installed thousand upon thousands of both types of heating & cooling systems and will show you both side by side. Even better, as we carry a dozen different brands, you get to decide what’s best for your needs and budget.




about the author rich morgan

Author: Rich Morgan, CEO Magic Touch Mechanical



Magic Touch Mechanical

942 West 1st Avenue
Mesa, AZ 85210
United States (US)
Phone: 4808558789









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