Tank vs Tankless Water Heater Cost Calculator
See what two water heaters cost to run in a year for your hot water use, and how long a higher price takes to pay back.
The efficiencies are ENERGY STAR minimums; the water use is a sample. Replace them with yours.
Enter the gallons of hot water your home uses in a day.
This is an estimate, not a professional calculation. See the disclaimer and the methodology.
How it is calculated
Heat needed = gallons per day × 365 × 8.34 pounds per gallon × temperature rise in degrees F. One Btu warms one pound of water by one degree, so the result is in Btu. The 8.34 pounds per gallon is a common reference value for water and is approximate.
Uniform Energy Factor (UEF) is the efficiency number on the label of a water heater. ENERGY STAR describes it as the newest measure of the overall efficiency of a water heater. In the calculator, energy bought = heat needed ÷ UEF. Gas is in therms (100,000 Btu each) and electricity in kWh (3,412 Btu each), both EIA factors.
Cost = energy bought × price per therm or per kWh. The calculator starts from the EIA annual 2024 residential averages for the state you pick, so gas and electricity come from the same year, and you can replace them with the rates on your bills.
The temperature rise is the hot water setting minus the temperature of the water coming into the house. Use the setting on your heater and an estimate of your incoming water. The UEF of a real heater depends on the household use pattern it was tested for, and we do not model that. If your household uses water very differently from the pattern, the result is only a guide.
If you enter the installed price of both, the extra price of the dearer one is divided by its yearly saving. That ignores repairs, the life of the equipment, rebates and any change to venting or wiring. Tankless units and heat pump water heaters can need those changes, so check them with an installer.
Worked examples
Gas tank against gas tankless
A home uses 50 gallons of hot water a day with a 70 degree rise (assumed). At the 2024 U.S. average gas price of $1.40 per therm, a gas tank at the ENERGY STAR minimum UEF of 0.81 uses 132 therms and costs $184 a year. A gas tankless heater at the ENERGY STAR minimum of 0.95 uses 112 therms and costs $157, a difference of $27.
Gas tank against a heat pump water heater
With the same water use, an integrated heat pump water heater at the ENERGY STAR minimum UEF of 3.3 uses 946 kWh. At the 2024 U.S. average of 16.5 cents per kWh it costs $156 a year, against $184 for the gas tank. The result flips in a state where electricity is dear and gas is cheap, so try your state.
How long the extra price takes to pay back
Suppose the gas tank costs $1,300 installed and the tankless unit $2,600 (assumed prices). The extra $1,300 is repaid by running costs in about 48 years, before repairs, equipment life and rebates.
Frequently asked questions
Is a tankless water heater cheaper to run than a tank?
Usually the label efficiency is higher for a tankless gas unit than for a gas tank, which lowers the energy used. How much that saves in dollars depends on how much hot water you use and the price of gas. The calculator shows it for your numbers.
What is UEF?
Uniform Energy Factor is the efficiency rating on a water heater label. ENERGY STAR calls it the newest measure of the overall efficiency of a water heater. A higher UEF means less energy for the same hot water.
What UEF do ENERGY STAR water heaters need?
ENERGY STAR lists minimums by type: 3.3 for an integrated heat pump (2.2 for a 120 V model), 0.81 for a gas storage tank of 20 to 55 gallons with a medium draw pattern (0.86 for high draw), 0.86 for a gas tank over 55 gallons and 0.95 for a gas tankless heater. The page lists no minimum for electric tankless or electric resistance tanks.
How do I find my hot water use?
Hot water use is hard to measure. If you have a gas water heater, your bill in months without heating is a rough guide to the gas it burns. Otherwise think about showers, dishes and laundry. Try a few values to see how the result changes.
Does the calculator include installation and rebates?
Only if you enter the installed prices, and then only for the payback. Rebates, tax credits, venting and electrical work differ by home and are not modelled.
Related calculators
Sources and last update
- ENERGY STAR, Residential Water Heaters key product criteria (UEF minimums)
- U.S. Energy Information Administration, Natural Gas Prices: Average Residential Price (annual, 2024)
- U.S. Energy Information Administration, 2024 Average Monthly Bill, Residential (average price by state)
- U.S. Energy Information Administration, Btu conversion factors
- U.S. Energy Information Administration, copyrights and reuse
Last updated: November 3, 2026. See methodology and sources.