Should You Replace a Gas Furnace with a Heat Pump

Current as of October 2026.

On December 31, 2025, the federal tax credit for heat pumps ended.

A qualifying heat pump that would have earned up to $2,000 off a 2025 tax bill earns nothing federally in 2026.

That changed the math for Inland Empire homeowners thinking about a furnace swap. It also hit just as many of them were plugging an electric car into the same panel every night. Say Maria commutes from Fontana to Irvine in an EV, and her furnace is near the end of its life. Should she switch to electric heat too? If your furnace or air conditioner is failing, a heat pump is usually still the better replacement here, because one unit heats and cools the house and our winters are mild. If your furnace works fine today, losing the credit is a good reason to plan the switch rather than rush it.

Why does my electric bill matter more than my furnace now?

Starting at the end of 2025, every SCE household that charges a car at home also took on a new fixed cost.

SCE revamped its rate structure at the end of last year to include a "Base Services Charge" of $24 per month for customers not enrolled in any special rate program.

To balance that out,

SCE instituted a roughly 10% decrease in its per-kilowatt-hour electricity rate

. The overall result hasn't been gentle. Heatmap News found that

the typical household has seen a bill increase from the new service charge of 13%

.

For drivers, this flips an old habit of thinking. That fixed charge adds up to about $288 a year before you use a single kilowatt-hour. The more you use, the cheaper each kilowatt-hour gets relative to the fixed charge.

High-usage homes or EV owners may come out ahead, with savings on each kWh offsetting the new fee.

A house that already charges a car is often the one where electric heat makes the most sense.

Does driving an EV change the heat pump math?

Yes. How much depends on what you drive, when you drive it and where it sleeps at night.

Start with the EV owner who charges at home. SCE offers three time-of-use plans, and one of them, TOU-D-PRIME, is aimed squarely at this household. EnergySage lists it as the plan for

EV owners, battery, heat pump, NEM 3.0 solar

customers.

There's also a fixed $0.79 per day Base Services Charge on all three TOU plans

so you pay that charge on any plan. The difference is what each extra kilowatt-hour costs once you add a heat pump on top of overnight charging. If you're still weighing what an electric car really costs to own, this guide to EV coverage costs here covers the side most buyers don't price in.

The long-distance gas commuter is a different case. If you drive a gas pickup from Ontario to Los Angeles five days a week, your home electric use may be modest. A heat pump then adds kilowatt-hours to a bill that wasn't spreading the fixed charge across much use to begin with. The switch can still pay off. It just has a thinner margin.

Rideshare and delivery drivers who charge at home in the middle of the day face a third pattern. Midday charging avoids the evening peak, but the heat pump runs hardest on winter evenings and early mornings, which is exactly when rates climb.

Then there's geography. Heat pumps lose efficiency as outdoor temperatures drop. A home on the valley floor in Chino rarely gets cold enough for that to matter much. A cabin in Wrightwood or Big Bear is a different story, and a dual-fuel setup that keeps a gas furnace as backup often makes more sense up the mountain.

What can a heat pump install cost you on the driving side?

Most people price a heat pump by the equipment and labor. Fewer think about the driveway.

An install often brings a crew, a box truck and sometimes an electrical panel upgrade. If the panel feeds your Level 2 charger, the charger may be off for the duration of the work. For an EV commuter with no backup plan, that can mean a missed shift or a long wait at a public fast charger.

The physical risk is real too. Crew trucks back up next to parked cars all day. A scraped bumper can run a few hundred dollars to fix. A crushed EV battery housing can push the repair toward the value of the whole car, which on a newer model can reach tens of thousands. When a contractor's vehicle causes the damage, the contractor's commercial auto liability is usually the first place to look. If those limits fall short, your own collision coverage may pay instead, depending on your policy and deductible.

What to ask before the crew pulls into your driveway

Ask the contractor three plain questions. Will any panel work cut off your EV charger, and for how many hours? Where will the work trucks park? Ca they show proof of commercial auto liability for the vehicles coming to your home? A legitimate installer answers all three without fuss.

Before the crew arrives, move your car to the street or a neighbor's driveway if you can. If you can't, take dated photos of all four sides of the car and the driveway surface. Keep your charger's install permit and receipt in the same folder as the heat pump paperwork.

If you're financing the heat pump while also paying off a car loan, ask the lender what the combined monthly payment looks like before you sign. If those numbers already feel tight, this piece on affording your car coverage covers options many drivers miss.

Planning for the week your car or charger is out of action

Have a backup charging plan before work starts. The Level 1 cord that came with many EVs plugs into an ordinary outlet and can keep a short commuter going for a few days. Find the nearest public fast charger on your route before you need it, not after.

Watch for red flags. A contractor who asks you to move their truck yourself is handing you their liability. Pulling no permit is another warning sign, and so is insisting on cash. So is anyone promising a big state rebate.

HEEHRA, the income-based California rebate of up to $8,000, is fully reserved statewide as of February 24, 2026. New applicants can only get on a waitlist.

A sales pitch built around that money doesn't match what's actually available.

How do prepared drivers come out ahead?

They know their numbers before anyone shows up with a quote. Drivers who keep maintenance records, check tire wear on heavy EVs and photograph their cars once a season can prove a car's condition quickly if a crew damages it. That turns a he-said, she-said argument into a short claim. The same habit pays off when renewal season comes. Running a side-by-side coverage comparison with current records in hand takes a fraction of the time.

One thing worth doing this week

Pull your last twelve SCE bills and your gas bills. Write down your winter gas use in therms, your monthly kilowatt-hours and which rate plan you're on. If you charge an EV at home and you're still on the default plan, you've found the first question to settle before any heat pump quote. It takes about an hour, and you don't need anyone's help.

Common Questions

Can I still get the federal tax credit for a heat pump in 2026?

No, not for a new install.

Heat pump purchases or installations completed after Dec. 31, 2025 are not eligible for the 25C tax incentive.

If your system was up and running by that date, you can still claim it on your 2025 return.

Does SCE's fixed charge make EV charging more expensive?

Not always. The fixed charge came with a lower per-kilowatt-hour rate, so households that use a lot of electricity, such as those charging a car at home, can come out ahead. Low-use households are more likely to see their bills rise.

Is a heat pump worth it in the Inland Empire?

For most valley homes with a failing furnace or air conditioner, yes, because the winters are mild and one unit handles both heating and cooling. Mountain homes get colder winters, so a backup heat source is worth pricing out there.

Who pays if a contractor's truck hits my parked car?

Usually the contractor's commercial auto liability comes first, since their driver caused the damage. If that falls short or the claim stalls, your own collision coverage may step in, depending on your policy and deductible.

Protecting Your Car and Driveway With the Right Coverage

A home electrification project brings trucks, crews and a few days of disruption to the place your car spends most of its time, so it's worth knowing what your auto policy does before work begins. At Farmers Insurance - Young Douglas, our agents go through your liability limits and walk you through how collision and complete coverage would respond if your parked car is damaged at home. We'll also explain whether rental reimbursement or roadside assistance makes sense for an EV owner whose charger may be offline for a few days. If a contractor's vehicle is involved and their limits fall short, we'll help you understand your options under your own insurance. When you're ready, we're glad to review your current coverage with you at no cost.

Sources:

• Rewiring America. "25C Heat Pump Federal Tax Credits: A Guide." Rewiring America. homes.rewiringamerica.org/federal-incentives/25c-heat-pump-tax-credits
• Heatmap News. "Why SoCal Electricity Customers Are Paying for Utility Reforms." Heatmap News, 2026. heatmap.news/sparks/august-2026-electricity-prices
• EnergySage. "SCE Time-of-Use Rates: 2026 Peak Hours and Plan Costs." EnergySage, 2026. energysage.com/electricity/sce-tou-rates/

DISCLOSURE: This article may feature independent professionals and businesses for informational purposes. Farmers Insurance - Young Douglas collaborates with some of the professionals mentioned; however, no payment or compensation is provided for inclusion in this content.