Heat Pump vs. AC: Which Is Best for Your Home?

If you are considering a new cooling system for your home, or suddenly need one in the middle of summer, a new air conditioner will work for the summer. A new heat pump will give you energy-efficient cooling and heating. 

Upgrading to a new heat pump can cut your energy bills. Efficiency tax credits and heat pump leasing can make them more affordable. Here’s how heat pumps and air conditioners compare in the summer and all year long.

How Are Heat Pumps Different From Air Conditioners?

Heat pumps and air conditioners are built on the same principles. When a substance is compressed and condenses, it heats up. When it expands and evaporates, it cools down.

Air conditioners and heat pumps in cooling mode work in the same way. 

1. A refrigerant is compressed, raising its temperature. 
2. It travels through a condenser coil as a liquid. Some of that heat is removed with a fan. 
3. The refrigerant then travels indoors and evaporates in the evaporator coil, cooling it off. 
4. It sucks up some of the heat from indoors when room temperature air is blown over it, which cools off the house. 
5. The refrigerant then moves back outside, carrying the heat it gained. There it’s compressed again and the cycle starts again. 

If you’ve ever felt the hot air coming out of the back of a window AC unit, you’ve felt the heat being removed from indoors.

The key difference between the two technologies is, while the air conditioner works in only one direction (taking heat from inside and dumping it outside), a heat pump can be reversed. A heat pump can also move heat from outside to an interior space, even when it’s very cold outside. A heat pump provides cooling and heating in one package.

Benefits of Heat Pumps vs. ACs

The main difference between heat pumps and air conditioners is also a heat pump’s biggest benefit.

Heating and cooling in one machine

While an AC is of no use to you for much of the year, a heat pump can replace both an air conditioner and a furnace. This means you pay for and maintain one machine instead of two and, if it’s part of a home electrification project, it can help eliminate a gas bill.

Lower energy bills

Using one machine to heat and cool can help most Americans save right now, the Department of Energy says, especially when the heat pump replaces expensive alternatives like electric resistance baseboard heating or a gas furnace. While heat pumps and air conditioners likely cost about the same during the cooling season, a heat pump can reduce your bills during the heating season.

Higher energy efficiency

Heat pumps and air conditioners are similarly efficient when cooling, but heat pumps are the most efficient way to heat a home, too, even down to very low temperatures. Replacing an old air conditioner with a new heat pump will also boost your home’s energy efficiency.

Cost of Heat Pumps vs. ACs

Heat pumps are a bit more complicated than air conditioners, so they’re a bit more expensive than their one-way counterparts. Don’t forget that a heat pump can do everything an air conditioner can do, and replace or reduce the heating you get from more expensive or dirtier sources.

Upgrading from an AC may require additional wiring or a new thermostat, which may increase the cost to install it.

Heat pump tax credit

However, heat pumps are eligible for a federal tax credit of up to 30% of the purchase and installation price or $2,000. This can bring heat pumps much closer in price to air conditioners.

Tax credits count against your tax liability (the taxes you owe or have already paid) for the year your heat pump is installed. Everyone’s tax situation is different and tax credits can change, so be sure to consult a tax professional about your situation.

Note: The tax credits and other incentives discussed in this article are being reconsidered by Congress as of June 2025. Legislation can change. As always, consult your tax advisor about your eligibility and other financial or legal advice.

Heat pump leasing

If the upfront cost of a heat pump is too much but you still want to bring its heating and cooling power to your home, a heat pump lease could be the answer. Like leasing a car, you’ll get a heat pump installed while the leasing company takes the responsibility of ownership, including maintenance and repair. You make monthly payments and enjoy a comfortable home.

A Palmetto LightReach heat pump lease gets you a $0 heat pump installation, full service coverage, and access to government rebates (where available).

Is a Heat Pump or Air Conditioner Better for Your Home?

If you opt for an air conditioner over a heat pump, you’re passing on a machine that could improve how you heat and cool your home. Heat pumps have real advantages over air conditioners. They can cool your home efficiently, but also heat it more efficiently than any other active heating system.

If you’re interested in a heat pump for your home, explore Palmetto’s Energy Advisor to see what you can save or reach out for a heat pump quote today.

Frequently Asked Questions

Do heat pumps replace air conditioners?

Heat pumps can replace air conditioners. Because they can also heat homes they can replace furnaces and other heaters, too. Heat pumps are the most efficient way to heat your home and often the cheapest, too.

Are heat pumps or air conditioners better?

Because heat pumps can heat and cool, they’re more versatile and helpful than air conditioners. Heat pumps may not cool your home any better than an air conditioner, but an air conditioner can’t provide heat at all.

Can heat pumps replace a furnace?

Yes. Heat pumps can replace furnaces. A heat pump should be sized to your home and rated for your climate, but the technology is used all over the world, even within the Arctic Circle.