Gas vs Electric Furnace: Which Is Cheaper to Run in 2026?

At national average energy prices, heating a typical 2,000 sq ft home with an electric resistance furnace costs about $2,800/year, versus roughly $790/year for a 95% AFUE natural gas furnace. That’s not a close call — where natural gas is available, a gas furnace wins on operating cost by a wide margin. A heat pump, which is technically electric but moves heat instead of generating it, lands between them at around $930/year.

If you’re choosing between a standard electric furnace and gas, this guide covers the real numbers. If you’re weighing a heat pump against gas — a much closer race — see our heat pump vs gas furnace breakdown and run the furnace calculator with your local rates.

The Numbers: Annual Heating Cost Compared

A typical single-family home in a moderate-to-cold climate needs roughly 50 million BTU of delivered heat per year. Here’s what that costs to deliver three ways, at national average rates ($0.19/kWh electricity, $1.50/therm gas):

Gas furnace (95% AFUE)

$0

Heat pump (COP 3.0)

$0

Electric resistance

$0

Gas furnace (95% AFUE): 50,000,000 BTU ÷ 0.95 efficiency = 52.6M BTU input = 526 therms × $1.50 = $789/year

Electric resistance (100% efficient): 50,000,000 BTU ÷ 3,412 BTU/kWh = 14,654 kWh × $0.19 = $2,784/year

Heat pump (COP 3.0): 14,654 kWh ÷ 3.0 = 4,885 kWh × $0.19 = $928/year

The reason electric resistance loses so badly is simple arithmetic: at these prices, a therm of gas delivers about 100,000 BTU for $1.50, while the equivalent electricity costs roughly $5.57. Even at 80% AFUE, gas stays far cheaper than resistance heat.

Why a Heat Pump Changes the Math

A heat pump runs on electricity but doesn’t make heat — it moves existing heat from outdoor air into your home. With a coefficient of performance (COP) of 3.0, it delivers 3 units of heat for every 1 unit of electricity, which is why it costs roughly a third of what an electric resistance furnace costs to run.

That’s the key distinction most “gas vs electric” comparisons miss. If your only electric option were resistance heat, gas would be the obvious choice. But the modern electric option is a heat pump, and against a heat pump the decision is genuinely close and depends on your local gas and electricity prices.

Upfront and Installation Costs

	Electric resistance	Gas furnace	Heat pump
Equipment	$1,000–$2,500	$2,000–$4,500	$4,000–$8,000
Typical installed cost	$2,000–$4,500	$3,800–$10,000	$6,000–$15,000
Requires gas line	No	Yes	No
Requires 240V high-amp circuit	Yes (large)	No	Yes
Also provides cooling	No	No	Yes

An electric furnace is the cheapest to install, which is exactly why builders put them in homes without gas access — the savings are upfront, and the homeowner pays for it on every winter bill. A heat pump costs the most to install but replaces both your furnace and your air conditioner, which changes the comparison if you’d be buying or replacing AC anyway.

When an Electric Furnace Actually Makes Sense

Electric resistance heat isn’t always the wrong choice:

• No gas line, mild climate, low heating load. If you only need heat a few weeks a year and a heat pump’s upfront cost won’t pay back, a cheap electric furnace can be the rational pick.
• Very low electricity rates. In states like Washington or Idaho ($0.13–0.14/kWh) with hydro power, the resistance penalty shrinks — though gas and heat pumps still usually win.
• Backup or supplemental heat. Electric resistance is common as the auxiliary heat strip inside a heat pump system, kicking in only on the coldest days.
• Small spaces. For a garage, addition, or single room, the simplicity and low install cost can outweigh the running cost.

Frequently Asked Questions

Is an electric furnace cheaper to run than gas?

No. At national average prices, an electric resistance furnace costs about 3.5 times as much to run as a 95% efficient gas furnace — roughly $2,800/year vs $790 to deliver the same heat. Electricity costs far more per BTU than natural gas, and resistance heating can’t make up the difference because it’s already at 100% efficiency.

Why is an electric furnace 100% efficient but still more expensive?

Efficiency measures how much of the energy you buy becomes heat — and resistance heat converts nearly all of it. But the price of that energy is what matters for your bill. A therm of gas delivers about 100,000 BTU for $1.50; the same heat from electricity costs around $5.57 at $0.19/kWh. The fuel is the issue, not the efficiency.

Is a heat pump better than both gas and electric furnaces?

In most of the country, yes, on operating cost. A heat pump with a COP of 3.0 costs roughly a third of an electric resistance furnace and is competitive with — sometimes cheaper than — gas, depending on local rates. The main exceptions are very cold climates with cheap gas, where a high-efficiency gas furnace can still come out ahead in the dead of winter.

What does AFUE mean for gas furnaces?

AFUE (Annual Fuel Utilization Efficiency) is the share of gas energy that becomes usable heat over a year. An 80% AFUE furnace wastes 20% up the flue; a 95–98% condensing furnace captures nearly all of it. Higher AFUE costs more upfront but lowers your gas bill — and is increasingly required by code for new installations.

Should I switch from electric to gas heat?

If you have a high-running electric resistance furnace and gas is available on your street, the operating savings (often $1,500–$2,000/year) can pay back a gas line and furnace within a few years. But before committing, price a heat pump too — it avoids running a gas line, adds air conditioning, and often beats gas on total cost in moderate climates.