Tankless vs Tank Water Heater Cost
Enter how much hot water your household uses a day and your fuel, pick your state, and see a year of hot water on five kinds of water heater, side by side.
Tankless vs tank water heater
B12Scenario A
Sets the electricity rate. Pick US average if you're not sure.
From EIA for US average. Use the rate on your bill if you know it.
Rate used: 18.4¢/kWh · US average · EIA reference 2025–26 · gas $1.55/therm (data as of 2026-09-26) ·
About 16 gallons per person per day (DOE).
Gas tankless saves per year
Cheapest to run: heat pump water heater at $210.12 a year.
- Electric tank, per year
- $799.39
- Electric tankless, per year
- $750.45
- Gas tank, per year
- $340.94
- Gas tankless, per year
- $224.87
- Heat pump water heater, per year
- $210.12
- Tankless saves vs tank (gas)
- $116.06
Estimate. Formula and sources are under “How it works”. Change any input; the result updates as you type.
2026 note: The federal 25C and 25D tax credits ended for installations after Dec 31, 2025. Our numbers use 2026 rules. State rebates, HEAR/HOMES programs and utility programs may still apply.
Formula
How it works
- Heat needed per day (BTU) = gallons × 8.34 lb per gallon × 70 °F temperature rise
- Energy bought = heat needed ÷ UEF (Uniform Energy Factor)
- Cost per year = energy bought × price × 365 (electric: ÷ 3,412 BTU per kWh × rate; gas: ÷ 100,000 BTU per therm × price per therm)
- UEF used: electric tank 0.92, electric tankless 0.98, gas tank 0.62, gas tankless 0.94, heat pump water heater 3.5
A tank loses heat all day through its walls and, on gas, up the flue. A tankless heater only burns when a tap is open, which is why DOE puts the savings at 8–34%: more for households that use less hot water, less for big users. On gas the gap is wide (UEF 0.62 → 0.94); on electric it is small (0.92 → 0.98). A heat pump water heater changes the picture more than either, because it moves heat instead of making it.
Sources: DOE 10 CFR 430 test procedure and ENERGY STAR (typical UEF values); DOE Energy Saver (tankless savings range); EIA Electric Power Monthly table 5.6.A (electricity); EIA Natural Gas Prices (residential).
Worked example
A worked example
A California household using 50 gallons of hot water a day, at the reference prices of 32.0¢/kWh and $2.30/therm, would spend an estimated $395.24 a year with a gas tank and $260.69 with gas tankless: a difference of $134.55 a year. On electricity the same hot water costs $1,086.13 with a tank, $1,019.63 tankless, and $285.50 with a heat pump water heater.
Reference
By state, at the default inputs
Gas tankless saves per year, with this page's default inputs and each state's reference prices (EIA reference 2025–26, data as of 2026-09-26).
| US average | $116.06 | 18.4¢/kWh |
|---|---|---|
| Alabama | $157.25 | 15.5¢/kWh |
| Alaska | $97.34 | 25.0¢/kWh |
| Arizona | $142.27 | 15.0¢/kWh |
| Arkansas | $112.32 | 13.0¢/kWh |
| California | $172.22 | 32.0¢/kWh |
| Colorado | $82.37 | 16.0¢/kWh |
| Connecticut | $149.76 | 30.0¢/kWh |
| Delaware | $119.81 | 17.0¢/kWh |
| District of Columbia | $127.30 | 19.0¢/kWh |
| Florida | $194.69 | 15.0¢/kWh |
| Georgia | $127.30 | 14.5¢/kWh |
| Hawaii | $374.40 | 42.0¢/kWh |
| Idaho | $74.88 | 12.0¢/kWh |
| Illinois | $89.86 | 17.0¢/kWh |
| Indiana | $89.86 | 15.5¢/kWh |
| Iowa | $82.37 | 13.5¢/kWh |
| Kansas | $97.34 | 14.5¢/kWh |
| Kentucky | $97.34 | 13.0¢/kWh |
| Louisiana | $112.32 | 12.5¢/kWh |
| Maine | $157.25 | 26.0¢/kWh |
| Maryland | $119.81 | 19.0¢/kWh |
| Massachusetts | $179.71 | 29.0¢/kWh |
| Michigan | $82.37 | 19.5¢/kWh |
| Minnesota | $82.37 | 15.5¢/kWh |
| Mississippi | $112.32 | 13.5¢/kWh |
| Missouri | $104.83 | 13.0¢/kWh |
| Montana | $74.88 | 13.0¢/kWh |
| Nebraska | $82.37 | 12.0¢/kWh |
| Nevada | $104.83 | 15.0¢/kWh |
| New Hampshire | $149.76 | 27.0¢/kWh |
| New Jersey | $104.83 | 22.0¢/kWh |
| New Mexico | $97.34 | 15.0¢/kWh |
| New York | $134.78 | 25.0¢/kWh |
| North Carolina | $134.78 | 14.5¢/kWh |
| North Dakota | $71.14 | 11.5¢/kWh |
| Ohio | $97.34 | 16.5¢/kWh |
| Oklahoma | $112.32 | 13.0¢/kWh |
| Oregon | $119.81 | 14.5¢/kWh |
| Pennsylvania | $112.32 | 18.5¢/kWh |
| Rhode Island | $164.74 | 29.0¢/kWh |
| South Carolina | $134.78 | 15.0¢/kWh |
| South Dakota | $74.88 | 13.0¢/kWh |
| Tennessee | $104.83 | 13.5¢/kWh |
| Texas | $97.34 | 15.5¢/kWh |
| Utah | $74.88 | 12.0¢/kWh |
| Vermont | $142.27 | 22.0¢/kWh |
| Virginia | $112.32 | 15.5¢/kWh |
| Washington | $104.83 | 12.0¢/kWh |
| West Virginia | $97.34 | 15.5¢/kWh |
| Wisconsin | $82.37 | 17.5¢/kWh |
| Wyoming | $74.88 | 12.5¢/kWh |
Questions
FAQ
Does tankless save money?
On gas, yes: at the US-average reference prices and 64 gallons a day, a gas tank costs an estimated $340.94 a year and a gas tankless $224.87, $116.06 less. On electric, the gap is $48.94 ($799.39 vs $750.45). Whether that pays for the higher installed price depends on your quote.
Gas tankless vs electric tankless?
At US-average prices, gas tankless costs $224.87 a year and electric tankless $750.45 for the same 64 gallons a day. In California (32.0¢/kWh, $2.30/therm) at 64 gallons it's $333.69 vs $1,305.12.
Is a heat pump water heater cheaper than gas tankless?
Sometimes. At US-average prices the heat pump water heater costs $210.12 a year against $224.87 for gas tankless. In California, where electricity is expensive, gas tankless is ahead at 64 gallons a day ($333.69 vs $365.43).
How long does a tankless water heater last?
Our sources don't give a lifespan, so we don't estimate one. Ask the installer for the warranty term on the heat exchanger.
Why 70 °F of temperature rise?
It is the difference between typical incoming cold water and a typical tank setting. In a cold-water state in winter the real rise is higher and every option costs more in the same proportion.
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