How Much Does Water Heater Installation Cost? (2023)

A new water heater can cost anywhere from $820–$3,500, based on the various types of heaters and fuel sources available. Whether you’re in search of a water heater for a new home or need to replace a broken one, it’s important to understand the types of water heaters and their average costs. We’ll break down the pricing factors below.

The type of water heater you want greatly influences your price. A tank water heater may cost as little as $820, while a tankless water heater costs $1,200 and up. Labor for the installation typically costs $40–$200 per hour and takes between one and three hours. We’ll go over the various cost factors in more detail below.

Water Heater Cost by Size

Below is a breakdown of the average water heater cost by tank size.

• 30-gallon: $270–$1,000
• 40-gallon: $300–$1,600
• 50-gallon: $400–$2,500
• 75-gallon: $900–$3,200
• 80-gallon: $1,000–$3,200

Tank and tankless water heaters are two of the most common types of water heaters available.

Tank Water Heaters

Storage tank water heaters constantly hold and heat gallons of water. They’re installed out of sight, often in a garage, basement, or utility closet. Tank water heaters typically use electricity or natural gas.

Storage tank water heaters are easier to install than their tankless counterparts, requiring about three hours of labor. This makes them less expensive, running between $820 and $1,290.

Although a more affordable option, tank heaters are less energy-efficient since they constantly run to maintain the desired tank temperature. This means higher utility bills and a shorter life span. Tank water heaters use 58%–60% of energy to heat your water effectively, and they last for around 8–12 years.

Tankless Water Heaters

Tankless water heaters work by heating water as needed. They use a gas burner or electricity to heat the water pipe, supplying water on demand.

Like hot water storage tanks, tankless units can be stored in a basement or utility closet. They’re smaller than a tank unit, so they can also be mounted to a bathroom or bedroom wall.

Tankless water heaters cost more than tank options, ranging from $1,200–$3,500. This is because they’re more labor-intensive to install, as they require new gas and water lines.  Electrical tankless heaters require new electric wiring.

Though priced higher than tank options, tankless heaters generate more energy savings. They have an efficiency factor (EF) of 0.92%–0.94%, meaning they effectively convert 92%–94% of their energy to heated water. Tankless water heaters also last longer, with a typical life span of about 20 years.

Gas and electrical models are available for both tankless and tank water heaters, each with pros and cons.

You’ll also decide between power venting and direct venting models. Power venting uses a fan to push exhaust air out of your home. This adds around $300–$600 to the water heater’s price, plus $300–$500 for more wiring and electrical work. Direct venting, which brings combustion air from outside and exhausts directly outside your home, adds around $500–$1,000 to your total.

Electric Water Heaters

An electric tank is less expensive to buy and install than a gas tank, with a residential 50-gallon tank water heater priced around $500. However, monthly operation tends to be more expensive than that of a gas heater. This heat source is considered safer than gas, as there’s a smaller risk of a leak or combustion.

The downside to an electric heater is that if the power goes out, so does the hot water. Electric water heaters feature an EF rating of  0.90%–0.95% and an average life span of 8–12 years.

Gas Water Heaters

Gas heaters are more expensive to purchase at around $700 for a 50-gallon tank. However, the operational cost is less than an electric model. Although natural gas is more apt to combust or leak, a gas model provides hot water without electricity.

The biggest downside of gas water heaters is that they emit carbon dioxide, thus harming the environment. They also have lower EF ratings, resulting in 60%–70% energy efficiency and an 8–12 year life span.

Read more: A Guide to the Best Water Heater Warranty

Consider these energy-efficient water heaters if you want to be more environmentally conscious.

Solar Water Tank Heaters

Solar water heaters use natural sunlight to heat water. They consist of a storage tank that holds water and solar collectors that generate heat. Typically, a solar water heater relies on a traditional water tank in case of an emergency.

Solar water tank systems can be broken down into two types: active systems and passive systems. An active system uses a pump to supply homes with water, while a passive system uses natural convection to circulate water throughout the home. Homeowners can expect to pay around $2,000 for a passive system and $3,000 for an active system. The higher cost is due to the extensive labor and need for a backup water heater.

Indirect Water Heaters

Indirect water heaters use the energy from an existing furnace or boiler to heat water in the tank. To do this, water from the boiler is circulated into the tank’s coils, heating the water inside. This water heater model is energy efficient but more expensive than traditional heaters at around $1,500. The monthly cost to run these heaters is lower than traditional models.

Hybrid Heat Pump Water Heaters

Hybrid heat pump water heaters are the most efficient option, but they’re also the most expensive. These units use heat from surrounding air to generate hot water using a compressor and coils. Hybrid heat pump water heaters are relatively large and not ideal for smaller spaces, as they need 7 feet of clearance. These units cost an average of $1,200 to $3,500 for installation and materials.

Here are some additional cost factors to consider beyond the heater itself.

• Location in the home: The water heater’s location in your home will influence the cost of labor. For example, placing the water heater in a difficult-to-reach area such as the basement or an attic corner will drive up the installation cost.
• Size: Your water heater’s size is determined by the number of people in your home, and prices increase as the size does. A 40-gallon water heater meets the needs of a home with two people and costs around $320–$1,600. Homes with five people or more may need a 75-gallon ($900–$3,000) or 80-gallon ($1,000–$3,200) water heater.
• Relocating unit or converting from fuel type: The price greatly varies if you want to have a water heater moved. Relocating a water heater may cost as little as $200 or as much as $10,000. Converting fuel types for your water heater can be more costly. For example, switching from electric to gas requires new gas lines, which may add an extra $1,500–$2,300 to installation.
• Venting system: As stated earlier, power venting can add a total of $600–$1,100 to your installation. Direct venting may add anywhere between $500 and $1,000.
• Tank removal: An installer may charge extra to remove a previous water tank.
• Materials: Water heater installation requires various materials, including venting pipes, pressure valves, piping for water and gas, thread compound, solder, and more. A professional installer may use more materials for more complicated installations.
• Expansion tank: A professional installer may add an expansion tank, which is designed to handle the thermal expansion of water and prevent excessive water pressure. Expansion tanks cost around $40–$150.
• Local permits (if needed): Local permits may be required for water heater installation, depending on your home’s location. Sometimes these permits come with an additional cost.
• Carpentry work (if needed): Carpentry work may be required in certain circumstances, such as if you need to remove or add woodwork in your attic to fit a heater. This adds more cost to labor and hours worked.

Signs of a Failing Water Heater

If you currently have a water heater, look out for the following warning signs that it may be time for a replacement. You can prevent these issues by maintaining your system with products from reputable companies, such as Corro-Protec.

• A hot water heating system that’s older than 15 years
• Discolored or odd-tasting water
• Loud or odd noises coming from your water heater
• Leaks
• Water that takes longer than normal to heat or doesn’t heat at all

Read more: How to Maintain a Water Heater

Keep these factors in mind when choosing a water heater for your home:

• Fuel type and availability: Before selecting a water heater, consider whether the needed fuel type is available to you and compatible with your home. For example, if you’re considering a natural gas water heater, check to make sure your property has or can receive a natural gas line.
• Home size: You should purchase the proper-sized gas tank for the amount of people in your home. For example, a household of two needs a 30–40 gallon tank while a four-person home needs a 50–60 gallon tank.
• Cost and energy savings: Weigh the cost of each water heater and its fuel source. Some heaters have a higher up-front cost, but their energy efficiency may save you money in the long run.

When You Should Call a Plumbing Professional

If your water heater is experiencing any signs of decline or unexpectedly breaks down, you should call a professional. While you may be able to replace a water heater on your own, the intense labor and comprehensive knowledge of installing a system makes water heater repairs and replacement best suited to a plumber.

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