Water Heater Replacement Cost 2024: Tank vs Tankless Complete Price Guide

The average water heater replacement cost ranges from $1,200 to $5,000+ installed, with tank units typically costing $1,200-$2,500 and tankless systems running $2,500-$5,000+. Your final price depends on the unit type, size, installation complexity, and local labor rates.

Quick Cost Summary

Water Heater Type	Equipment Cost	Installation Cost	Total Cost Range
Tank (40-50 gal)	$500-$1,200	$700-$1,300	$1,200-$2,500
Tankless Gas	$1,000-$2,500	$1,500-$2,500	$2,500-$5,000
Tankless Electric	$800-$2,000	$1,200-$2,000	$2,000-$4,000
Hybrid/Heat Pump	$1,500-$3,000	$1,000-$1,800	$2,500-$4,800

As a licensed plumber with 15+ years installing water heaters across different price points and home types, I’ve seen how the right choice can save homeowners thousands in energy costs over time. This guide breaks down every cost factor so you can make an informed decision without overpaying.

Complete Water Heater Replacement Cost Breakdown

Tank Water Heater Costs

Traditional tank water heaters remain the most budget-friendly option for most homeowners. Here’s what you’ll actually pay:

Equipment Costs by Size:

• 30-gallon tank: $400-$800
• 40-gallon tank: $500-$1,000
• 50-gallon tank: $600-$1,200
• 80-gallon tank: $800-$1,600

Installation Labor: $700-$1,300

• Simple replacement (same location/connections): $700-$900
• Relocation or upgrade requirements: $1,000-$1,300
• Permit fees (where required): $50-$150

Total Tank Replacement: $1,200-$2,500 installed

Pro Tip: A 40-50 gallon tank covers 90% of households with 2-4 people. Going larger rarely provides benefits and increases standby energy losses.

Tankless Water Heater Costs

Tankless units cost significantly more upfront but offer long-term savings through 20-40% lower energy bills and 20+ year lifespans.

Gas Tankless Equipment:

• Whole-house units: $1,000-$2,500
• Point-of-use units: $200-$600
• Condensing models: $1,500-$3,000

Electric Tankless Equipment:

• Whole-house units: $800-$2,000
• Point-of-use units: $150-$400

Installation Costs: $1,200-$2,500

• Gas line upgrades: $500-$1,200
• Electrical upgrades (220V): $800-$1,500
• Venting modifications: $300-$800
• Water line rerouting: $200-$600

Total Tankless Installation: $2,500-$5,000+

Factors That Increase Installation Costs

Location Changes (+$500-$1,500) Moving your water heater requires new plumbing runs, electrical work, and potentially gas line extensions.

Electrical Upgrades (+$800-$2,000)

• 240V circuit installation for electric tankless
• Panel upgrades for insufficient amperage
• GFCI protection requirements

Gas Line Modifications (+$500-$1,200)

• Larger gas line for tankless units
• New gas meter installation
• Pressure testing and permits

Venting Changes (+$300-$1,000)

• Tankless units often require different venting
• Condensate drain installation
• Outdoor unit weatherproofing

Code Compliance Upgrades (+$200-$800)

• Earthquake straps in seismic zones
• Expansion tanks for closed systems
• Temperature and pressure relief valve updates

Step-by-Step Water Heater Replacement Process

1. Assessment and Sizing (Day 1)

Professional Evaluation ($100-$200 if not replacing)

• Calculate hot water demand based on fixtures
• Assess existing plumbing and electrical
• Check local code requirements
• Measure installation space constraints

Proper Sizing Formula:

• Peak hour demand = Sum of all fixtures used simultaneously
• Tank size = Peak demand × 1.5 (recovery factor)
• Tankless size = Peak GPM × temperature rise ÷ efficiency

2. Equipment Selection and Ordering (Days 2-3)

Key Selection Criteria:

• Energy Factor (EF) rating for efficiency
• First Hour Rating (FHR) for tank units
• Gallons Per Minute (GPM) for tankless
• Warranty coverage (6-12 years typical)

3. Preparation Work (Day of Installation)

Pre-Installation Steps (1-2 hours)

• Turn off water, gas, and electricity
• Drain existing water heater completely
• Disconnect all supply lines
• Remove old unit (disposal may cost $50-$100)

4. New Unit Installation (3-6 hours)

Tank Installation Process:

1. Position new tank and level
2. Connect water supply lines with new fittings
3. Install gas line or electrical connections
4. Add temperature/pressure relief valve
5. Connect venting (gas units)
6. Install earthquake straps (where required)

Tankless Installation Process:

1. Mount unit on wall with proper clearances
2. Run new gas line (often larger diameter required)
3. Install electrical connections and controls
4. Connect water lines with isolation valves
5. Install condensate drain (condensing units)
6. Configure venting system

5. Testing and Commissioning (1 hour)

Safety and Performance Checks:

• Pressure test all connections
• Verify proper gas combustion
• Test electrical safety systems
• Check temperature settings
• Confirm proper venting operation

When You Need Water Heater Replacement: Warning Signs

Immediate Replacement Required

• Water leaking from tank base - Tank failure is imminent
• No hot water production - Internal components failed
• Gas smell near unit - Safety hazard requiring immediate attention
• Electrical burning smell - Fire risk with electric units
• Rusty water from hot taps - Internal tank corrosion

Plan Replacement Within 6-12 Months

• Unit age 8-12+ years - Approaching end of useful life
• Frequent repairs needed - Annual repair costs exceed $400
• Rising energy bills - Efficiency declining significantly
• Inconsistent water temperature - Internal components wearing out
• Strange noises - Sediment buildup or element failure

Consider Upgrading for Efficiency

• Energy Factor below 0.60 - Modern units achieve 0.80+
• Oversized for current needs - Empty nesters with 80-gallon tanks
• Planning home renovation - Opportunity to relocate or upgrade

Pro Tip: Don’t wait for complete failure. Planning replacement allows you to research options, compare quotes, and avoid emergency pricing premiums of 20-30%.

Tank vs Tankless: Complete Comparison

Factor	Tank Water Heaters	Tankless Water Heaters
Upfront Cost	$1,200-$2,500	$2,500-$5,000+
Lifespan	8-12 years	15-20+ years
Energy Efficiency	60-80% efficient	80-98% efficient
Monthly Energy Cost	$35-$60	$25-$40
Space Required	16 sq ft floor space	4 sq ft wall space
Hot Water Supply	Limited by tank size	Unlimited (at flow rate)
Recovery Time	30-60 minutes	Instant
Installation Time	2-4 hours	4-8 hours
Maintenance	Minimal	Annual descaling
Best For	Budget-conscious, simple replacement	Long-term savings, space savings

15-Year Total Cost Analysis

Tank Water Heater:

• Initial cost: $1,800
• Replacement at year 10: $2,000
• Energy costs (15 years): $8,100
• Total 15-year cost: $11,900

Tankless Water Heater:

• Initial cost: $3,500
• Maintenance costs: $600
• Energy costs (15 years): $5,400
• Total 15-year cost: $9,500

Tankless saves $2,400 over 15 years despite higher upfront costs.

Expert Money-Saving Tips

Timing Your Replacement

Best Times to Buy:

• Fall season - Contractors less busy, better pricing
• End of model years - Manufacturers clear inventory
• Off-peak demand - Avoid emergency summer/winter pricing

Smart Shopping Strategies

Get Multiple Quotes - Prices can vary by 30-40% between contractors

• Compare total installed costs, not just equipment
• Verify licenses, insurance, and local permits included
• Ask about financing options and rebates

Available Rebates and Incentives:

• Federal tax credits: Up to $300 for high-efficiency units
• Utility rebates: $100-$500 for ENERGY STAR models
• Local programs: Many cities offer additional incentives
• Manufacturer rebates: $50-$200 seasonal promotions

DIY vs Professional Installation

DIY Potential Savings: $700-$2,000 Risks of DIY Installation:

• Gas line work requires licensed professionals in most areas
• Electrical work needs permits and inspections
• Warranty may be voided without professional installation
• Safety risks with gas and electrical connections

Pro Tip: Save money on preparation work (draining old unit, clearing access) but hire professionals for connections and final installation.

Maintenance to Extend Lifespan

Tank Water Heaters:

• Drain and flush annually to remove sediment
• Replace anode rod every 3-5 years ($100-$200)
• Test temperature/pressure relief valve annually
• Insulate tank and pipes in cold climates

Tankless Water Heaters:

• Descale annually in hard water areas ($150-$300)
• Clean air intake filters monthly
• Professional inspection every 2-3 years
• Replace inline filters as recommended

Frequently Asked Questions

How long does water heater installation take?

Tank replacement: 2-4 hours for straightforward replacement, up to 6 hours for complex installations requiring code updates. Tankless installation: 4-8 hours due to additional electrical, gas, and venting work typically required.

Can I install a tankless where my tank was located?

Not always. Tankless units require:

• Wall mounting space with proper clearances
• Adequate gas supply (often larger line needed)
• Proper venting (different requirements than tanks)
• Electrical connections for controls and safety systems

Many installations require relocating the unit, adding $500-$1,500 to costs.

What size water heater do I need?

For tank units:

• 1-2 people: 30-40 gallons
• 2-3 people: 40-50 gallons
• 3-4 people: 50-60 gallons
• 5+ people: 60-80 gallons

For tankless units: Calculate based on simultaneous use:

• Shower: 2.5 GPM
• Kitchen sink: 1.5 GPM
• Washing machine: 2.0 GPM
• Add 20% buffer for peak demand

Do I need permits for water heater replacement?

Most areas require permits for:

• Gas line modifications
• Electrical work (new circuits)
• Location changes
• Tankless installations (often require inspections)

Simple tank-to-tank replacements may not need permits, but check local codes.

How much can a high-efficiency water heater save on energy bills?

Tank upgrades: Moving from 0.60 EF to 0.80+ EF saves 15-25% on water heating costs. Tankless upgrade: Can reduce water heating costs by 20-40% compared to standard tank units. Average savings: $200-$400 annually for typical households.

Should I repair or replace my 8-year-old water heater?

Replace if:

• Repair costs exceed $400
• Multiple components failing
• Energy bills increasing significantly
• Planning home renovations

Repair if:

• Single component failure under $300
• Unit maintained regularly
• No signs of tank corrosion
• Budget constraints require delaying replacement

What’s the difference between condensing and non-condensing tankless?

Condensing tankless (90-98% efficient):

• Higher upfront cost (+$500-$1,000)
• Requires condensate drain
• Significantly lower operating costs
• Better for high-usage households

Non-condensing (80-85% efficient):

• Lower purchase price
• Simpler installation
• Higher operating costs
• Adequate for moderate usage

Final Thoughts: Making the Right Choice for Your Home

Choosing between tank and tankless water heaters isn’t just about upfront costs—it’s about finding the right balance of initial investment, long-term savings, and your family’s hot water needs.

Choose a tank water heater if:

• Your budget is under $2,500 total
• You’re doing a simple replacement
• Hot water usage is moderate and predictable
• You prefer minimal maintenance requirements

Choose a tankless water heater if:

• You’re planning to stay in your home 10+ years
• Space savings are important
• You want unlimited hot water supply
• Energy efficiency is a priority
• You’re comfortable with higher maintenance needs

The most important factor is working with a qualified professional who can properly assess your home’s requirements and provide accurate installation costs. A properly sized and installed water heater—whether tank or tankless—will provide reliable service for many years.

For comprehensive guidance on all aspects of home plumbing systems, including water heater selection and maintenance, check out our complete home plumbing guide. You can also learn more about typical plumber costs and detailed water heater information in our related guides.

Ready to get accurate quotes for your water heater replacement? Connect with licensed, local plumbers who can assess your specific needs and provide detailed cost estimates. Get free plumbing quotes from pre-screened professionals in your area.