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Cut your electric bill this winter: what actually works

By Kyle Tice · Updated October 2026

For an electrically heated home, heating is roughly half the winter bill, and the three things that cut it are a heat pump, a lower thermostat setting, and a tighter house, in that order. Everything else is single digits. EIA’s October outlook expects homes that heat with electricity to spend about 4% more this winter than last, while natural gas homes spend 9% less and heating oil homes 21% more.

Ranked by savings

1. Replace electric resistance heat with a heat pump (hundreds to over $1,000 a year). Baseboards, furnace heat strips and wall heaters turn 1 kWh into 1 kWh of heat. A heat pump delivers 2 to 3 kWh of heat per kWh of electricity, even in cold climates. RMI’s analysis puts the saving at about $1,530 a year for a typical single-family home that switches both space and water heating. This is the only item on the list that can cut the winter bill in half. If you already have a heat pump, the saving is in not running the backup strips: keep the thermostat steady rather than making big jumps, which triggers them.

2. Set the thermostat back ($50 to $150 a season). DOE’s figure is up to 10% a year on heating and cooling from a 7 to 10 degree setback for 8 hours a day, at work or asleep. On a $200 winter heating month that is about $20. Exception: with a heat pump, use setbacks of 2 to 4 degrees, not 10; large recoveries run the resistance backup.

3. Air seal and insulate the attic ($100 to $300 a season). ENERGY STAR estimates an average 15% saving on heating and cooling, higher in cold climates, from sealing leaks and adding attic, crawlspace and rim-joist insulation. Weatherstripping, caulk and foam for the obvious gaps cost under $100 and are the first weekend’s work; attic insulation is a contractor job that often pays back in 2 to 4 years.

4. Turn the water heater down to 120F ($20 to $60 a year). Water heating is 15% to 20% of a typical bill. DOE puts the saving from dropping from 140F to 120F at 4% to 22% of water heating energy. Takes five minutes. A heat pump water heater, if you are replacing anyway, cuts that line by about 60%.

5. A smart thermostat with a rebate ($30 to $80 a year, net cost near zero). The savings come from item 2 done automatically. Utility rebates in 2026 run $50 at Focus on Energy, $75 at PG&E and up to $100 at some New Jersey utilities, and enrolling it in a demand-response program adds $20 to $100 a year in credits.

6. Space heaters: do the math first. A 1,500-watt heater at the 2026 average price of 18.2 cents per kWh costs about 27 cents an hour, or about $65 a month for 8 hours a day. It only saves money if you turn the central thermostat down several degrees and heat one room. Running it with the rest of the house at the same setting raises the bill.

7. Electric versus gas. At 18.2 cents per kWh, resistance heat costs about $53 per million BTU of heat; a heat pump at a seasonal efficiency of 2.5 costs about $21. Natural gas furnaces cost roughly $16 to $18 per million BTU at 2026 residential gas prices, by independent estimates. Switching fuels is rarely worth it on operating cost alone; replacing resistance heat with a heat pump is.

What doesn’t work

• Closing vents in unused rooms. Raises duct pressure and leaks, and can trip a heat pump’s backup. DOE advises against it.
• Cranking the thermostat to heat faster. Furnaces and heat pumps run at one output; a higher setting just overshoots.
• New windows for the energy savings. Comfort and noise, yes; payback on bills alone usually runs over 20 years.
• Plug-in “power savers” and fireplace heat. The first do nothing; an open fireplace pulls more warm air up the chimney than it delivers.
• Heating with the oven. A 2,000 to 3,000 watt heater with the door open.

Get an energy audit

Most utilities offer a free or low-cost home energy assessment with a blower-door test, and many bundle free LEDs, weatherstripping and a smart thermostat into the visit. DOE describes what a professional assessment includes. Households at or below 200% of poverty can get the work itself paid for through the Weatherization Assistance Program.

Rebates after the federal credits ended

The federal 25C credit (30% back on heat pumps, insulation, windows and audits, up to $3,200 a year) expired for anything placed in service after December 31, 2025. What remains in 2026:

• State HEAR rebates (the IRA’s Home Electrification and Appliance Rebates): up to $8,000 toward a heat pump and $14,000 total, applied at the point of sale for households under 150% of area median income, at energy.gov/save. Live in California, New York, Massachusetts, Minnesota, Wisconsin, Maine and others; more states launched or relaunched in late 2026, and some, like Colorado’s single-family program, have already closed when funds ran out. Check your state energy office before buying.
• HOMES rebates for whole-house retrofits, run through the same state offices.
• Utility rebates for heat pumps, heat pump water heaters, insulation and thermostats, which did not depend on the federal credit and in many territories grew in 2026.

Find your utility from the state list. Each page lists the rebates we have found for that territory and the estimator shows what a lower usage number does to your bill under the current rate.