Heat Pump or Gas Furnace in Middle Tennessee?

When the furnace or AC dies in a Middle Tennessee house, the replacement question is usually the same: stay with a gas furnace and central air, or switch to a heat pump that does both? Our climate makes it a real choice. Summers are long and humid, so cooling matters most of the year, and winters are mostly moderate with occasional hard cold snaps. Here's how the options compare on cost, incentives and practical details, using HomeGuide's dated national cost guides and TVA EnergyRight's rebate list.

The options

Air-source heat pump. One outdoor unit heats and cools by moving heat. Electric only. Pairs with an air handler indoors.

Gas furnace plus central AC. The furnace burns natural gas or propane for heat. A separate AC condenser cools.

Dual fuel (hybrid). A heat pump handles most heating and all cooling, and a gas furnace takes over in the coldest weather.

Ductless mini split. A heat pump with wall, floor or ceiling heads, no ducts. Good for additions, bonus rooms and houses without ductwork.

Geothermal. A heat pump connected to buried ground loops. Highest upfront cost and highest efficiency.

Installed cost ranges

From HomeGuide's national guides (not Nashville quotes):

HomeGuide also notes that if you're converting to gas from another fuel, running a gas line often adds $350 to $2,000 or more.

Upfront, a furnace-plus-AC replacement can come in below a heat pump in HomeGuide's ranges. Operating cost depends on your electric and gas rates, the equipment's efficiency, and how tight the house is. Ask each bidder for an operating-cost estimate based on your actual bills.

Incentives tilt toward heat pumps

TVA EnergyRight (accessed Oct. 20, 2026) lists:

• Heat pump: $800 at 17+ SEER2, $500 at 15–16.99 SEER2;
• Ductless mini split: $800;
• Geothermal: $1,500;
• Central AC: $400 at 17+ SEER2, $200 at 15–16.99 SEER2;
• nothing for gas furnaces. They aren't on TVA's list.

The work must be done by a TVA Quality Contractor Network member. Federal 25C credits no longer apply to 2026 installs. See our TVA rebate guide.

Practical details that decide it

Do you have gas now? If there's no gas service, a heat pump avoids a new line, a meter and venting. If you have gas and like a gas range or water heater, a furnace or dual fuel keeps it in use.

Cold-snap comfort. A heat pump's output falls as outdoor temperatures drop, so systems typically include backup heat, often electric strips, for the coldest weather. Ask the contractor what the backup is, how it's sized, and what a cold January does to your bill. A dual-fuel system answers that question with gas.

Ducts. Leaky ducts in an attic or vented crawl space waste heat either way. TVA rebates duct sealing at $300. Fix ducts and sizing before deciding the system is the problem.

Venting and gas rules. Gas furnaces and water heaters need proper venting. Thompson's Station requires gas vent pipe that's UL 1738 listed and doesn't accept ordinary schedule 40 PVC, even where a manufacturer lists it. Check your city's rules before you buy.

Permits. HVAC replacement needs permits. Gallatin's list, for example, calls for a mechanical permit and an electrical permit, each with a final inspection, for an HVAC changeout. The contractor should pull them.

Additions and bonus rooms. A mini split often beats extending ductwork. TVA calls them "perfect for new additions." See home additions.

A quick decision guide

• No gas, or gas only for heat: a heat pump is the simplest choice.
• Gas in the house and you want gas heat in the coldest weather: compare dual fuel with a furnace plus AC.
• Ducts in bad shape or none at all: consider mini splits.
• Long-term owner with land for loops: get a geothermal quote and include the $1,500 TVA rebate.

Costs and permits for every option are in our HVAC guide and the HVAC replacement cost post.