How much does a water heater cost?
Half of US households who hired a contractor paid under $1,611, according to Census survey data. Price your own job from real equipment prices and the rate plumbers actually bill, then see the number that decides it: what the thing costs to own, not to buy.
Estimated cost
$1,654
Typical range $1,508 – $2,062
- The water heater itself$1,004
- Labor, overhead and profit$400
- Permit, parts and haul-away$250
- Total$1,654
The cheapest water heater to buy is the most expensive one to own. A plain electric
resistance tank is the bargain on the shelf, about $1,409 fitted. It is also the one that costs roughly $670 a
year to run.
More
Spread the purchase over its 15-year life and add the energy, and it works out at about
$763 a year to own. A heat pump water heater costs more than twice as much to fit, around
$3,300, and comes out at about $398 a year, because it moves heat rather than making it and so
buys roughly a quarter of the energy. A gas tank lands at $403. In other words electric resistance costs nearly
double what gas or a heat pump costs to own, and the sticker price points you the wrong way. Two honest catches. First, notice that the heat pump and the gas tank come out within a few
dollars of each other. If you already have gas, switching saves you about $110 a year, which will not repay the
premium inside the unit's lifetime. Cheap gas, not the heat pump, is doing that work. The heat pump's real win
is against electric resistance, where it saves about $491 a year and pays back the extra $1,891 it
costs to fit in a little under four years. Second, the $2,000 federal credit that used to wipe out most of that
premium is gone: Public Law 119-21 terminated the section 25C credit, and the IRS says plainly that it "will not
be allowed for any property placed in service after December 31, 2025." A great many pages still tell you to
claim it. Your state and your utility may still have rebates, and those are worth chasing.
§ 02 The return
US median, hired out (Census)$1,611
Costs you to run, per year$289
TRUE cost per year, buying it and running it$403
Costs are what US households told the Census they paid, restated in 2025 dollars, plus a build-up from federal equipment prices and the measured billed rate. The survey records no scope, so its category covers everything from a like-for-like tank swap to a first-time tankless conversion. Running costs use national average energy prices and the federal test draw. Put your own energy price in, because it is the number that decides the heat pump question.
Where the money goes
By the numbers
- Census (American Housing Survey, 2023): half of US households who hired a contractor to add or replace a water heater paid under $1,611.
More
A quarter paid less than $987 and a quarter paid more than $2,355. The mean is $2,183, which is 35% above the median, because a handful of big jobs drag it up. Most pages quote the mean. - Census: households who did the job themselves paid a median of $767, less than half the contractor figure. That gap is not all labor. The do-it-yourself jobs skew heavily toward like-for-like tank swaps, which are the easy ones.
- Economic Census (2022): the plumbing and heating trade, in aggregate, billed $102.62 per field hour against the $33.17 an hour it paid its construction workers.
More
That is a measured 3.09x markup, and both figures are 2022 dollars. In 2025 dollars the billed rate is $114.20, and the ratio is unchanged at 3.09x because the wage escalates with it; we previously printed the 2025 rate beside the 2022 wage and called the result 3.09x, which does not divide (it is 3.44x). Note the subject as well: this is a ratio of two industry AGGREGATES, so it describes the trade, not the firm that quoted you - Running the federal annual-energy formula at the US average of 18.98 cents per kWh: a plain electric resistance tank costs about $670 a year to run and a heat pump water heater about $179, because a heat pump moves heat rather than making it and delivers roughly three and a half units of heat for every unit of electricity it buys.
- IRS: the energy efficient home improvement credit (section 25C), worth up to $2,000 on a qualifying heat pump water heater, was terminated by Public Law 119-21 for any property placed in service after December 31, 2025.
- The '64.3 gallons a day' figure you will find on nearly every water heater page comes from the retired Energy Factor test.
More
The current federal test draws 55 gallons a day for a normal household. Pairing the old figure with a modern UEF efficiency rating, which is what those pages do, overstates the running cost by about 17%. 3 more
- DOE: a gas tank lasts about 14.5 years and an electric or heat pump tank about 15.1, while tankless units are rated at 20.
More
Over a longer life a tankless unit has more years to earn back its higher installed cost, which is the strongest argument in its favor and one rarely made properly. - Annualising each unit over its own rated life, on our build-up: a gas tankless costs about $343 a year to own, a heat pump tank $398, a gas tank $403, and an electric resistance tank $763.
More
Electric resistance is the cheapest to buy and close to double the cost to own. Note too that the heat pump and the gas tank land within a few dollars of each other, so if you already have gas there is no real cost case for switching. - Census: water heater jobs cost about the same in the South and the Midwest (median $1,316 in both) and about 40% more on either coast ($1,848 in the Northeast, $1,859 in the West).
More
Very little of that is the appliance, which sells for much the same price everywhere.
- DOE: a gas tank lasts about 14.5 years and an electric or heat pump tank about 15.1, while tankless units are rated at 20.
What is sourced, and what is ours. The anchor is sourced: the Census American Housing
Survey asks households what a completed job actually cost, and half of those who hired a contractor to add or
replace a water heater paid under $1,611, with half of all jobs landing between $987 and $2,355. That is a real
outlay reported by 1,771 households, not a model, and its relative standard error is 4.0%, meaning plus or minus about $65.More
The equipment prices,
efficiencies and lifespans are sourced too, from DOE and its national lab: they price real listed models, so
when we say a heat pump tank runs about $2,479 there is a catalogue behind it. The billed rate is sourced and
measured, not assumed: the Economic Census gives the value of work these firms do and the field hours they do
it in, which comes out at $114.20 an hour billed against $33.17 paid. The running cost is not ours either, and that surprised us. The federal test procedure
(10 CFR 430, appendix E) does not just describe an experiment, it publishes the annual-energy equation and names
every constant in it: 365 days, the draw pattern's gallons, the density of water at 125F, its specific heat, and
the 67F rise. So we run the federal equation rather than one of our own, and the only modeled choice left is
which draw pattern matches your household. What IS ours is the build-up. Multiplying hours by that rate and adding a permit is our
arithmetic, and the hours are our assumption. Here is the check that matters, and you should hold us to it:
built from the bottom up, a gas tank comes to $1,004 of equipment plus 3.5 hours at $114.20 plus $250 of permit
and parts, which is $1,654. Households independently told the Census they paid $1,611. Two sources that have
never met, 3% apart. That is why we are comfortable showing you the other four types, where no survey breaks
the cost out. What we cannot do: the survey records one cost per job and no equipment detail,
so it cannot tell you what a heat pump costs versus a gas tank, and it has no scope, meaning a straight swap and
a full tankless conversion are the same row. Anyone quoting a national survey figure for a specific type is
misreading it.
Where every number above comes from
-
US Census
US Census Bureau, American Housing Survey 2023 National PUF (the microdata itself, JOBTYPE 29: what households actually paid)
www2.census.gov -
US Census
US Census Bureau, AHS 2023 PUF Estimates for User Verification (the table our extraction is validated against)
www2.census.gov -
DOE / NREL, National Residential Efficiency Measures Database (equipment prices, efficiencies and lifespans)
data.openei.org -
Federal law
10 CFR 430 subpart B appendix E, the federal water heater test procedure (draw patterns, 58F supply, 125F delivered)
govinfo.gov -
IRS
IRS, termination of section 25C under Public Law 119-21 (the source of the quoted sentence)
irs.gov -
IRS
IRS, Home energy tax credits (the $2,000 annual limit that applied to heat pumps)
irs.gov -
US Census
US Census Bureau, 2022 Economic Census, NAICS sector 23 tables (the measured billed rate, NAICS 238220)
census.gov -
BLS, average price of electricity per kWh, US city average
fred.stlouisfed.org -
BLS, average price of piped gas per therm, US city average
fred.stlouisfed.org -
BEA, residential improvements price index (deflator)
fred.stlouisfed.org
What this assumes, and where it could be wrong
Every one of these is a place the number could be off. They are here because you should be able to check our working, not because we are hedging.
A NAICS CODE IS A BUCKET, NOT A JOB, AND THE RATE ON THIS PAGE IS THE BUCKET'S.
NAICS 238220 is titled 'Plumbing, heating, and air-conditioning contractors', and only 40.9% of that class's receipts are heating, ventilation and air-conditioning contractor (hvac). The largest single slice, 40.9%, is heating, ventilation and air-conditioning contractor (hv. So the billed rate here is the CLASS's rate, measured from real firms doing real work, and it is the measured figure we have for this job. It is not a rate for specialists in this job specifically, and we have four times called a class rate something it was not. We would rather show you the composition than let you assume it away.
The $1,611 anchor is the Census American Housing Survey median for households who hired a contractor to add or replace a water heater, restated in 2025 dollars using the BEA price index for residential improvements.
Each job is deflated from the year it was actually completed, not the survey year. The relative standard error on that median is 4.0%, so it is a precise figure by survey standards.
The survey category is literally 'added or replaced water heater' and it records no scope and no equipment type.
A like-for-like tank swap, a first-time install, and a tankless conversion needing a new gas line and new venting are all the same row. That is why we do not pretend the survey can price a specific type, and why the per-type numbers come from a bottom-up build instead.
Equipment prices are the median of real listed models in DOE and NREL's residential efficiency measures database, escalated from 2023 to 2025 dollars with the BEA residential improvements index.
The sample is 101 to 123 models for the tank types and 28 for heat pump tanks, so the heat pump figure is the least precise of them.
We deliberately do not use that database's own labor and installed-cost columns.
They are unreliable: its 'installed cost' for an electric tank comes out below its own equipment price, which cannot be right, and its heat pump labor figure rests on three data points. We model labor from the Economic Census billed rate instead, and then check the answer against what households actually reported.
The billed rate of $114.20 per field hour is measured, not assumed, but be precise about what it is.
The 2022 Economic Census gives the value of construction work NAICS 238220 firms do, what they spend on materials and subcontractors, and their construction worker hours. Strip the materials and subcontracts out of the value of work (you are buying those separately on this page, as the equipment and the extras) and divide by the hours, and you get $114.20 in 2025 dollars. Do not strip them out and you get $170.58, which is the all-in figure a customer pays per field hour including their materials. Both are real; we use the first because this page bills materials separately. It is a trade-wide average either way, not a quote for your job.
The plumber hours are our assumption and the least solid input on this page.
Three and a half hours for a straight tank swap is a fair half-day. A tankless conversion can run far longer than the eight hours we default to, because the gas line and the venting usually both have to be redone, and an electric tankless unit often needs a new high-amp circuit and sometimes a panel upgrade, which we do not include at all. If you are pricing a conversion, get a quote before you trust this number.
The regional index is the Census regional median for water heater jobs divided by the national one.
We apply it to the labor and permit part of the bill and not to the equipment, because a water heater sells for much the same price in every state while a plumber's hour does not. The index itself is measured; that choice about where to apply it is ours.
Running cost is not our model. 10 CFR 430, appendix E does not merely describe a test, it publishes the annual-energy equation and names every constant in it: annual energy = 365 x V x rho x Cp x 67 / UEF, where V is the draw pattern's daily gallons (10, 38, 55 or 84), rho is 8.24 lb per gallon, 'the density of water at 125F', Cp is 1.00, and 67F is the nominal difference between the 58F supply and the 125F delivery.
We run that equation as written. The only modeled choice left is which draw pattern fits your household, and we default to Medium because that is the bin a standard 40-50 gallon tank is rated in.
This matters more than it sounds, and we got it wrong twice before getting it right.
The '64.3 gallons a day' figure repeated across nearly every water heater page belongs to the retired Energy Factor test, not the UEF test that every label sold today carries; pairing it with a modern UEF rating overstates the energy by about 17%. And when we first tried to sum the draw tables ourselves we got 10 to 14% under, because the last row of each table is marked up differently and a naive parse drops it. The regulation states the four totals outright. We now use the stated totals, which is the general lesson: do not re-derive a number the source gives you.
Efficiency is the UEF median across the listed models in DOE and NREL's database: 0.64 for a gas tank, 0.92 for an electric tank, and 3.44 for a heat pump tank.
Notably the electric tankless median is also 0.92, the same as an electric tank, so an electric tankless unit saves you nothing on running cost while costing more to fit. Gas tankless at 0.92 against a gas tank's 0.64 is a genuine saving.
Lifespans are DOE's own figures from its rulemaking analysis: 14.5 years for a gas tank, 15.1 for an electric or heat pump tank, 20 for tankless.
Your unit's actual life depends heavily on water hardness and whether anyone ever flushed it.
The headline comparison is the ANNUALISED cost of ownership: the installed cost spread over that unit's own rated life, plus its running cost.
We do this deliberately. A raw total-cost-over-its-lifetime figure is misleading here, because a tankless unit is rated for 20 years and a tank for about 15, so the longer-lived unit racks up more total energy simply by lasting longer and ends up looking worse. Dividing by each unit's own life is the only way to compare them fairly. It ignores the time value of money, which would slightly favor the cheaper-to-buy option.
No federal tax credit is applied, because none exists for equipment placed in service after December 31, 2025.
State and utility rebates are separate, frequently still available, often worth several hundred dollars on a heat pump water heater, and vary far too much to publish a number for.
Frequently asked questions
How much does it cost to replace a water heater?
Half of US households who hired a contractor paid under $1,611, according to the Census American Housing Survey, with half of all jobs landing between $987 and $2,355. Households who did it themselves paid a median of $767. A standard gas or electric tank swap is the cheap end of that range; a tankless conversion is what pushes jobs toward the top of it.
Is a tankless water heater worth it?
It depends entirely on the fuel, and the honest answer splits in two. A gas tankless unit is genuinely more efficient than a gas tank (a median UEF of 0.92 against 0.64), saving roughly $88 a year, and it is rated to last 20 years against a tank's 14.5. But it costs about $1,671 rather than $1,004, and the conversion usually needs a bigger gas line and all-new venting, which is real money. An electric tankless unit is a much weaker case: its median efficiency is 0.92, exactly the same as an electric tank, so it saves nothing at all on running cost while costing more to fit and often demanding a new high-amp circuit. Its real selling point is endless hot water and a smaller footprint, not a lower bill.
Is a heat pump water heater worth it?
If you currently heat water with electricity, it is one of the clearest wins in the whole house. A heat pump water heater buys about a quarter of the energy an electric resistance tank does, roughly $179 a year against $670, so it saves around $491 a year. Fitted, it costs about $1,891 more than an electric tank, which at that saving pays back in a little under four years against a 15-year life. If you are on gas, the case largely collapses: you would save about $110 a year, which will not repay the premium inside the unit's lifetime. Two practical catches. It needs space and warm-ish air around it, because it is pulling heat from the room, so a cramped closet is a problem. And it cools and dehumidifies whatever room it sits in, which is a bonus in a Houston garage and a nuisance in a Minnesota basement.
Is there still a $2,000 tax credit for a heat pump water heater in 2026?
No. The energy efficient home improvement credit under section 25C was terminated by Public Law 119-21. The IRS states that the credit will not be allowed for any property placed in service after December 31, 2025. What counts is when the equipment is placed in service, not when you sign or pay, so a deposit in 2025 on a 2026 installation does not save it. Many manufacturer pages and cost calculators still advertise this credit. Your state and your utility are a different matter: utility rebates on heat pump water heaters are common and often worth several hundred dollars, so check yours before you write the credit off.
How long does a water heater last?
DOE's rulemaking analysis puts a gas tank at about 14.5 years, an electric or heat pump tank at about 15.1, and a tankless unit at 20. Hard water shortens all of those considerably, because scale builds on the heating surface. If yours is over ten years old and starting to leak from the tank itself rather than a fitting, it is done: a leaking tank cannot be repaired.
Why is the labor so expensive when the heater only costs $1,000?
Because you are not paying the plumber's wage, you are paying the company's rate. The 2022 Economic Census lets you measure both: a plumbing and heating firm bills $114.20 per field hour and pays the person holding the wrench $33.17. That 3.09x gap covers the truck, the tools, the license, the liability insurance, the workers' compensation, the time spent driving between jobs and not billing, the office, and the profit. It is worth knowing the real multiple rather than the 'two to three times' the internet repeats, because it tells you what a quote is actually made of.
Should I just replace it myself?
Census data says a lot of people do: the do-it-yourself median is $767 against $1,611 for a contractor, and those jobs are 30% of the sample. A like-for-like electric tank swap is genuinely within reach for a competent DIYer. Gas is a much more serious proposition, because you are working on a gas line and a combustion vent, and getting the venting wrong vents carbon monoxide into the house rather than out of it. Many jurisdictions require a permit and an inspection regardless of who does the work, and an unpermitted water heater can become an insurance problem after a leak or a fire.
Why are the costs I see online so much higher?
Two reasons, and one of them is a genuine statistical trap. Most water heater cost pages are run by contractor lead-generation companies that get paid when you request a quote, so a bigger number makes a better funnel. But even honest pages tend to quote the mean, which here is $2,183, some 35% above the $1,611 median, because a small number of very large jobs pull the average up. The median is the typical job. We publish it, and we show you the quartiles so you can see the spread instead of hiding it inside one number.