Furnace Prices: Types, Taxes, & Cost

Total Furnace Resource | Furnace Prices, Advantages, Disadvantages, How it Works, and What to Consider When Considering Furnace Contractors

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Choosing the right furnace among numerous options can be a challenging decision, but a smart investment in heating can save you from burning through your wallet--or worse--in the future.

When it comes time to replace an aging unit, many homeowners wrongfully base their decision on initial, up-front furnace prices, but that’s a small part of the equation.

Savvy buyers consider the other factors that determine long-term savings: type of furnace, size, and energy efficiency. In other words, a willingness to pay for higher initial price can translate into saving more money down the road.

The reasons for price differences between two similar furnaces are often numerous and complex. So before you dive into a pile of dense textbooks to decipher the differences, know that these other factors can be a simpler and better guide when pinpointing the best price.

For prices specific to brands and models, check out our furnace guides:

If you're looking for a general overview of furnace prices, scroll toward the bottom of the page.

EFFICIENT SPENDING

Efficiency refers to the amount of energy converted to heat and the amount wasted.

A higher efficiency rating is more environmentally friendly and, depending on your energy usage, usually saves you money over the course of a furnace’s life, which is generally about 20 years. This efficiency rating is commonly called Annual Fuel Utilization Efficiency, commonly referred to as AFUE.

Fuel costs fluctuate depending on location and other factors, but there is a general rule of thumb: electricity is more expensive than oil, oil is more expensive than gas, and gas is the least expensive of the three.

If replacing an old furnace with one that uses that same type of fuel, a simple math equation can help you determine the best long-term option and could mean the difference between thousands of dollars over the long-haul. Contractors will likely use a similar formula to determine your furnace prices and recommend the best efficiency level for your home.

Scroll to the bottom of the page to see the equation.

BIGGER ISN’T BETTER

A furnace operates at full power or no power. There is no "medium" or "in-between" setting. Furnaces operate by running at full power whenever the thermostat drops below a set heat level. Therefore, an oversized furnace will continually turn on and off in brief intervals, wasting more energy than a continuously running furnace and, generally, will break down more often. And an undersized furnace will fail to heat your home properly.

There is no single identifying rule about the correct size because so many factors must be considered, including size and shape of the home, insulation, window location, air infiltration, number of occupants, temperature preferences, and more.

Because of these many factors, watchdog groups recommend hiring contractors who use industry standard sizing guides, such as Manual J: "Residential Load Calculation". Watchdog groups also suggest seeking multiple furnace prices and sizing quotes to ensure you’re buying a furnace that fits.

TAX CREDITS

Industry experts recommend buying furnaces carrying the Energy Star logo, which can significantly reduce your furnace costs. Furnaces that meet certain environmental specifications are eligible for significant federal tax credits and, in some states, other tax deductions. These deductions vary and not all Energy Star-certified equipment is eligible for tax credits. To find out your eligibility, visit Energy Star.

FURNACE PRICES

The following is a rundown of the most popular options available and the expected price to buy and install a new furnace.

Because numerous factors can determine the difference in furnace prices, experts recommend seeking quotes from multiple contractors. The following prices include the cost of installation, which is subject to major fluctuation. Some homes may need new ductwork, which can cost several thousand dollars, while others may already be outfitted for a new furnace.

For more specific prices for your needs and location, follow this link for four free estimates from licensed, verified contractors in your area.

Gas Furnaces

  • Cost: $2,500 to $14,000
  • Recommended for most homes due to the low cost of natural gas.

Oil Furnaces

  • Cost: $2,000 to $8,000; potentially more if the installation requires major modifications.
  • Recommended only if a gas furnace is not an option due to lower efficiency and required routine maintenance.

Electric Furnaces

  • Cost: $1,000 to $2,500
  • Recommended only if gas and oil heaters are not an option due to high energy costs, unless used sparsely or to heat a small area.

Heat Pumps

  • Cost: $1,500 to $7,000 for air source heat pumps, $7,000 to $25,000 for ground-source heat pumps. Price depends on size, efficiency, location, and infrastructure work.
  • Recommended for hot climates, because heat pumps can become unworkable when the outside temperature drops to freezing. Unlike other traditional heating options, which rely on fuel combustion, heat pumps create warmth through a refrigerant that pulls in heat from the outside air, which in some cases can significantly lower energy costs. Most heat pumps double as air conditioning units, but are less efficient than traditional cooling systems.

CALCULATING YOUR SAVINGS

How to calculate long-term savings from different efficiency ratings in furnaces that use the same type of energy for fuel:

  1. Multiply your annual energy bill by your old furnace’s efficiency rating (such as .75 for a 75% efficiency-rated furnace) and divide by the higher efficiency rating in a new furnace (such as .85 for 85%) This will give you your annual savings.
  2. Take the cost difference for a more efficient unit (such as $1,000 more for an 85% rated efficiency furnace) and divide by your annual savings. This will give you the amount of years it’ll take to recoup the difference.
  3. When considering the annual savings, note the furnace’s expected lifespan. Generally, furnaces last about 20 years.

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