How Much Do Water Heaters Cost?

Water heaters are an essential component of homes, providing the comfort of hot water for various daily activities. Water heater replacement costs vary based on several factors, including what type you need and how big it is. In this guide, we will break down the costs associated with different types of water heaters so you can make an informed decision based on your needs and budget.

How Much Does It Cost to Replace a Water Heater?

The cost to replace a water heater ranges from $300 to $5,000, plus installation. That’s a wide range that may not be helpful for homeowners who need to budget for this crucial system. Below, take a look at our table to find a quick look at more specific ranges for each type of water heater.

Now let’s explore what each type of water heater is for so you know you are getting the right system.

Types of Water Heaters

1. Tank Water Heaters

• Cost range: $300–$1,200

Traditional water heaters with an insulated tank where water is heated and stored. There are lots of different sizes on the market ranging from 30 to 120 gallons, and their prevalence makes them the most affordable choice.

Pros: Lower initial cost and easy installation.

Cons: Higher operating costs and limited hot water supply.

2. Tankless Water Heaters

• Cost range: $500–$2,000

Tankless water heaters are compact units that heat water on demand, meaning your hot water supply is endless. They are also only half the size of a traditional water heater tank, so they work well in smaller homes and spaces.

Pros: Energy efficient and endless hot water.

Cons: Higher upfront cost and may require additional plumbing.

3. Heat Pump Water Heaters

• Cost range: $1,000–$3,000

Also called “hybrid water heaters,” these utilize heat from the air or ground to heat water. Their higher up-front cost is offset by their extreme energy efficiency as well as by federal rebates.

Pros: Extremely energy efficient.

Cons: Higher purchase cost and requires ample space.

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4. Solar Water Heaters

• Cost range: $2,000–$5,000

As the name says, this type of water heater uses solar panels to capture heat from the sun. They have a tank like a traditional water heater does. You can choose from either an active or passive system. Like hybrid water heaters, there are federal solar water heater rebates that can help offset the high price tag.

Pros: Very low operating costs and eco-friendly.

Cons: High initial investment and is dependent on climate.

You can visit our guide to solar water heaters to learn more about how these work and whether a passive or active system is best for your home.

5. Condensing Water Heaters

• Cost range: $800–$2,000

Utilizes unused gas fumes from your home’s natural gas system to heat water. For this reason, you should only consider this type of water heater if your home already uses natural gas as a primary source. If you have a gas stove and gas heater, then this could be an energy-efficient addition to your home.

Pros: Energy efficient for homes using natural gas.

Cons: More suited for larger homes with high water usage.

What Other Factors Influence Your Water Heater Replacement Cost?

There are two buckets that water heater costs fall into: costs associated with the unit itself and costs associated with installing the unit. In this section, let’s look at the costs associated with the unit itself.

1. Size. As you’d expect, larger units cost more. For example, a 30-gallon tank water heater will cost less than an 80-gallon tank.
2. Energy efficiency. More efficient units are typically more expensive due to the additional parts that make them more efficient in the first place. However, those upfront costs will be mitigated by lower utility bills. You might also be able to find rebates.
3. Fuel type. Gas, electric, and solar heaters vary in price. Typically, solar, electric, and other highly efficient units cost more, while gas units cost less.
4. Brand and model. Premium brands often command higher prices.

Installation Costs

Installation costs can range from $300 to $1,500, depending on the water heater type and complexity of the installation.

The only way to find out how much your installation will cost is to get a quote. However, you can expect it to be on the lower end of the cost range if your unit is easy to reach (ground floor/garage/etc.) and if you are replacing like-for-like (meaning you are replacing a tank water heater with a new tank water heater).

The more unwieldy the installation location is, the more expensive it can be to install. And if you are switching water heater types — say, switching from tank to tankless — you may need new plumbing lines or other additions that can become quite expensive.

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Operating Costs

One final area to be aware of as you are budgeting for a new water heater is how much each will cost to run. Energy-efficient units cost significantly less to run annually. On average, here are operating costs:

• Tank models: $400–$600.
• Tankless and other energy-efficient models: $100–$200.

Regular maintenance will extend the life of your water heater but will also come with a cost.

Potential Rebates and Tax Credits

Investing in energy-efficient models can qualify homeowners for rebates and tax credits, reducing the overall cost. We mentioned a few above, but you can find out more about all of the tax credits for homeowners at EnergyStar.

The Bottom Line on Water Heater Replacement Costs

A water heater is a long-term investment. Understanding the different types, their costs, and operational expenses is crucial in choosing the right one for your home.

You can visit our guide to all things plumbing for more information about a variety of projects.

If you’re ready for a quote, check out our contractor directory to see who in your area has availability. If you’d rather have Modernize do the research for you, click below to answer a few questions about your project, and we’ll match you with up to four contractors.

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