How much does a water heater cost?

• Census (American Housing Survey, 2023): half of US households who hired a contractor to add or replace a water heater paid under $1,611. A quarter paid less than $987 and a quarter paid more than $2,355. The mean is $2,178, 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 labour. The do-it-yourself jobs skew heavily toward like-for-like tank swaps, which are the easy ones.
• Economic Census (2022): a plumbing and heating firm bills $114.20 per field hour in 2025 dollars and pays the person doing the work $33.17. That is a measured 3.09x markup, not an estimate. Overhead, insurance, vehicles, licensing, non-billable time and profit all live in that gap.
• 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. 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%.
• 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. Over a longer life a tankless unit has more years to earn back its higher installed cost, which is the strongest argument in its favour 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. 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). Very little of that is the appliance, which sells for much the same price everywhere.

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 1,734 households, not a model, and its relative standard error is 4.0%, meaning plus or minus about $65. 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 modelled 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.

Sources: US Census Bureau, American Housing Survey 2023 National PUF (the microdata itself, JOBTYPE 29: what households actually paid) · US Census Bureau, AHS 2023 PUF Estimates for User Verification (the table our extraction is validated against) · DOE / NREL, National Residential Efficiency Measures Database (equipment prices, efficiencies and lifespans) · 10 CFR 430 subpart B appendix E, the federal water heater test procedure (draw patterns, 58F supply, 125F delivered) · IRS, termination of section 25C under Public Law 119-21 (the source of the quoted sentence) · IRS, Home energy tax credits (the $2,000 annual limit that applied to heat pumps) · US Census Bureau, 2022 Economic Census, NAICS sector 23 tables (the measured billed rate, NAICS 238220) · BLS, average price of electricity per kWh, US city average · BLS, average price of piped gas per therm, US city average · BEA, residential improvements price index (deflator)