Furnace Replacement Cost in 2026 (The Two Jobs Behind Your Quote)

Two quotes for a new furnace can differ by thousands, and the reason is almost always that they are quoting structurally different jobs. Replacement runs $3,500–$6,500 for an 80% AFUE unit going into existing venting, and $5,000–$9,000 for a 90%-plus condensing furnace, before the venting and condensate work that a condensing furnace requires. A modulating variable-speed furnace pushes past $10,000. The single biggest reason two quotes for “a new furnace” can differ by thousands is that they are quoting two structurally different jobs, and most homeowners are never told which one they are looking at.

The short answer: two different jobs, two different prices

Every gas furnace quote is one of two jobs.

Job one is a like-for-like 80% AFUE change-out. The new furnace connects to the metal flue that is already there, to the gas line that is already there, and to the ductwork that is already there. It is a one-day job for a competent crew. Contractor cost guides put it at $3,500–$6,500.

Job two is a conversion to a 90%-plus condensing furnace. A condensing furnace extracts so much heat from the exhaust that the exhaust is no longer hot enough to rise up a chimney — it leaves through plastic pipe out a sidewall or roof, usually with a second pipe bringing combustion air in. It also produces liquid condensate that has to be drained. So the job is the furnace plus a venting conversion plus condensate work, and quite often plus a fix for the water heater that was sharing the old chimney. Contractor cost guides put the equipment and install at $5,000–$9,000, with $7,000–$10,000+ for a 96–99% modulating variable-speed unit.

Read those two top rows together and the gap between an 80% job and a condensing job is roughly $1,500 on the equipment and install alone, before a dollar of venting or condensate work is added. Hold onto that number — it decides the efficiency question further down this page.

80% AFUE versus 90%-plus condensing, in plain terms

AFUE is annual fuel utilization efficiency — the share of the fuel’s energy that ends up as heat in your house across a whole heating season, with the rest going up the flue. An 80% AFUE furnace sends about a fifth of the gas you buy outside. A 96% furnace sends about a twentieth.

That difference is why the two furnaces vent differently, and the venting is where the money hides:

• Metal flue versus plastic pipe. An 80% furnace vents hot exhaust up a metal flue or masonry chimney by natural draft. A condensing furnace vents cool, wet exhaust through PVC or CPVC pipe, driven by its inducer fan, terminating at a sidewall or through the roof. A conversion means running that new pipe, terminating it properly, and sealing off the old flue connection.
• The condensate drain. A condensing furnace produces liquid water, and that water is acidic. It needs a trap and a route to an approved drain, sometimes a small pump if the furnace sits below the drain, and in some jurisdictions an acid neutralizer before it enters the plumbing. Whether a neutralizer is required where you live is a local code question — ask, rather than assuming a national rule.
• The orphaned water heater. This is the line most commonly missing from a condensing furnace quote, and it is a safety line, not just a money line. If your old 80% furnace shared a masonry chimney with a gas water heater, that chimney was sized for two appliances. Take the furnace off it and the water heater is left alone on a flue that is now far too large to draft properly. A water heater that cannot draft can backdraft — pushing its combustion products, carbon monoxide included, into the house. EPA names back-drafting from furnaces, gas water heaters, wood stoves and fireplaces and a flue that is improperly sized, blocked or disconnected among the sources of household carbon monoxide.

Is the condensing upgrade worth it in California? Frequently not, on fuel savings alone. Working from the U.S. Department of Energy’s own furnace cost tables for its Southern region, which is the region California sits in, and re-pricing them at California’s actual residential gas rates, the most you could pay for the 90% furnace over the 80% furnace and still come out ahead across the furnace’s life is roughly $1,200 (our arithmetic on DOE’s published figures, not a DOE result). The installed step above is about $1,500 before a $500–$2,500 venting conversion. The full arithmetic, shown so you can check it, is in when to replace your furnace. The short version: a condensing furnace is usually bought for a code requirement, for comfort and modulation, for a rebate, or because the old flue has to be dealt with anyway, not because the gas savings pay for it.

Cost by furnace size, and why size means BTU input, not tons

Air conditioners are sold in tons. Furnaces are sold in BTU per hour of input, and that distinction costs people money.

Input is what the furnace burns. Output is what your house gets, and output is input multiplied by AFUE. A 100,000 BTU input furnace at 80% AFUE delivers 80,000 BTU/h. The same 100,000 BTU input at 96% delivers 96,000. Which means that when you move up in efficiency, the correctly sized replacement is often a smaller input rating than the furnace you are removing. “Just put in the same size” is the wrong instruction.

Those spans overlap the AFUE spans above because size and efficiency move the price together. A small 80% furnace sits at the bottom of both; a large modulating condensing furnace sits at the top of both.

The right size comes from a load calculation, not from the label on the old furnace and not from a square-foot rule of thumb. That is ACCA Manual J. Two companions matter just as much and are almost never mentioned: Manual S selects the specific equipment against its rated capacity at your design conditions, and Manual D checks that your ducts can actually carry the airflow — measured in CFM — that the furnace and blower produce. A 100,000 BTU furnace on ductwork that will only move 1,000 CFM is the classic residential mismatch: high external static pressure, a blower working against itself, hot supply air, and a high-limit switch that trips over and over. Our guide to Manual J sizing covers the method; ask whether the furnace quote includes one, because many installers do it and simply never say so.

An oversized furnace does not heat better. It short-cycles: it satisfies the thermostat fast, shuts down, and leaves the far rooms cold while the near rooms overshoot. You pay more to buy it and get worse comfort.

What is actually in a complete quote

The fastest way to tell a real quote from a thin one is to check what it names. A complete furnace replacement quote lists most of these as separate lines:

• The equipment — model number, input BTU, AFUE, and stages (single-stage, two-stage, or modulating).
• Venting and combustion air — the flue connection on an 80% job; the full PVC run, terminations and old-flue seal-off on a condensing job.
• Gas line and shutoff — reconnection, and any pipe alteration if the new furnace sits differently or draws differently.
• Electrical — the service switch or disconnect at the furnace, and the low-voltage connections to the thermostat.
• Condensate — trap, drain routing, pump if needed, neutralizer if your jurisdiction requires one. Condensing furnaces only.
• Thermostat — whether one is included, and whether the new furnace’s staging needs one that can control it.
• Permit and inspection. Permit fees are set by each city or county from its own published fee schedule, so there is no honest national number. The City of Sacramento, for example, publishes a dedicated residential HVAC change-out fee page that names five separate charges — building permit fee, general plan fee, green building fee, technology fee, and a city operations tax charged when a California licensed contractor holds the permit — with the amounts set by valuation rather than as one flat figure. Look up your own jurisdiction; do not accept a round number invented on the spot.
• Disposal — hauling the old furnace away, $100–$500 in contractor-reported terms, and it is not optional.
• Duct modification at the plenum — a new furnace is rarely the exact dimensions of the old one, and the transition has to be rebuilt and sealed properly rather than taped.
• Startup and combustion check — see the next section.

In California there is one more line that out-of-area cost guides leave out entirely: Title 24 compliance, which can require third-party HERS verification of duct leakage when ducts are altered. The requirement is real and it is separate from the permit itself. We do not put a dollar figure on it, because the figure the industry quotes conflates the permit and the test.

What drives the price up

• Access. An attic furnace on a pull-down ladder, a crawlspace furnace, or a closet furnace that has to come out through a doorway that is a half-inch too narrow all add hours. A basement furnace with room around it is the cheap case.
• Venting route. How far the new plastic vent has to run and where it can legally terminate. A long horizontal run through finished space costs far more than a short one through a garage wall.
• Duct condition and static pressure. If the ducts cannot carry the airflow, a good contractor will say so and price the fix. See ductwork replacement cost for what that work runs.
• Regional labour rates. HVAC labour is contractor-reported at roughly $80–$200 an hour nationally, and it varies more than the equipment does. We do not publish a Northern California multiplier, because no defensible one exists.
• Emergency mid-winter replacement. The worst time to buy anything is when you cannot say no. See the timing section in when to replace your furnace.

Are furnaces actually getting more expensive?

Yes, and this is the one number on this page that is not an estimate. The Bureau of Labor Statistics publishes a Producer Price Index for warm air furnaces, and it is federal monthly data.

What it measures matters as much as what it says. The PPI tracks what domestic manufacturers receive for the equipment at the factory gate. It contains no labour, no contractor margin, no permit, no venting, no disposal and no regional difference — everything between the factory and your invoice is missing from it. It answers one question well: has the equipment itself been getting more expensive, and by how much. It is not an answer to what your furnace will cost installed, and nobody should present it as one.

The shape of that curve is more useful than the headline. Furnace equipment prices jumped 21.4% in the year to March 2022, then went nearly flat for three years, and actually fell 2.0% in the year to March 2025 — before turning sharply upward again into 2026. Over the full seven years, March 2019 to March 2026, the index is up 58.8%. The index values are BLS actuals; every percentage here is our own arithmetic on them.

Two things we are deliberately not going to do with that. This page will not tell you why 2026 turned upward — the index records that prices moved, not what moved them, and the obvious candidates are speculation. And we will not build a Northern California claim on it, because a national manufacturer index carries no regional information at all. One dating note, stated plainly: BLS data run through July 2026, but April through July are flagged preliminary with earlier values carried forward, so March 2026 is the last firm reading and it is the one every figure above uses.

Doing it alongside an AC or coil replacement

If your air conditioner is the same vintage as your furnace, replacing both at once is usually cheaper than replacing them a few years apart, because one crew does one set-up, one electrical connection, one plenum rebuild and one permit. Contractor cost guides put a combined gas furnace and central AC change-out at $7,000–$14,000.

There is also a technical reason. The indoor coil sits on top of the furnace and shares its blower, so the two have to be matched. Fitting a new furnace under an old coil, or a new coil on an old blower, can leave you with a system whose rated efficiency it will never reach. If your AC is the piece in question, AC replacement cost is the companion page, and repair or replace your AC covers that decision.

And it is worth asking whether the replacement should be a furnace at all. A heat pump does both jobs from one machine, and in some California utility territories it is the only path to a meaningful rebate. That comparison — including the running-cost arithmetic, which turns on your local electricity-to-gas price ratio rather than on any single price — belongs on heat pump vs furnace.

Incentives in 2026

There is no federal residential tax credit for a furnace in 2026. Section 25C was terminated for property placed in service after December 31, 2025 under Public Law 119-21, and Section 25D ended for expenditures made after the same date (IRS Fact Sheet FS-2025-05, August 21, 2025). A high-efficiency furnace earns nothing federally this year. Anyone telling you otherwise is working from a pre-2026 page.

What remains is utility and state rebates, and in California those are aimed at electrification rather than at better gas furnaces. SMUD, for example, publishes rebates of up to $3,000 for a gas-to-electric heat pump HVAC conversion and $1,000 for an electric-to-electric heat pump upgrade, and says plainly that it raised those amounts to offset the expiry of the federal credits. LADWP publishes up to $2,500 per ton for heat pump HVAC. Neither pays you for a furnace. Every one of these programs is funding-limited and revised often, so check the current amount and status with your own utility before you count on it.

How to compare three quotes without comparing three different jobs

1. Make every quote state the AFUE and the venting. If one says 80% and another says 96%, they are not competing. Ask each contractor to price both, so you are looking at the same decision twice rather than two different decisions once.
2. Make them state the input BTU and how they got it. “Same as the old one” is not a sizing method. A load calculation is, and it costs $150–$500 as a standalone purchase — often included in a replacement quote if you ask.
3. Check the condensing quote for venting, condensate and the water heater. All three, by name. The absence of any of them is the single most common reason a condensing quote comes in suspiciously low.
4. Check for permit and disposal. Both should be there. If neither is, ask why.
5. Ask for the commissioning combustion reading. “Will you run a combustion analysis and show me the numbers?” The answer tells you a lot about the company before you sign anything.
6. Ask what the warranty covers and who registers it. Manufacturer warranties cover parts, not labour, and some require registration within 60 days of installation to give you the longer term. Ask who files it and get the confirmation in writing.

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