How Much Does It Cost to Replace a Water Heater?

How much does it cost to replace a water heater?

Water heaters are less expensive to replace than some other systems, such as HVAC systems, but they still account for the second-highest source of energy use in the home. You should expect to spend at least $600 on a basic tank-style water heater, while opting for a tankless system will cost $1,400 and up.

There are also high-efficiency and solar options that run significantly higher — expect to pay upward of $5,500 at the high end of the range for the energy efficiency.

Water heater replacement cost factors

Several factors affect the cost of replacing a water heater, including the type of heater, the fuel it uses, size and more.

Tank vs. tankless water heater

The biggest factor in your water heater replacement costs will be whether you choose a tankless or tank-based system.

A tank system is easier to install and holds hot water in a tank (anywhere from 30 to 80 gallons). The downside of tank-based heaters is that they take one to two hours to replenish when the hot water runs out. The cost of a standard tank-storage water heater unit averages $600 to $2,500 for the equipment, and installation costs range from $150 to $450.

Tankless systems heat water on demand and can last twice as long as tank systems, but they cost two to three times as much. The cost to install a tankless water heater is higher than the cost of a tank-based system. This is due to the base price of the unit itself ($1,400 to $3,900) and because of higher labor costs, which average between $600 and $1,900.

That increased labor cost reflects the added complexity and time required for a tankless install. Licensed plumbers charge $45 to $200 per hour for labor, but not all plumbers can install tankless systems, as these may require new gas and water lines. On average, it takes eight to 10 hours to install a new tankless system, compared with the two to three hours for a tank-based system.

According to Sean Richardson, founder of Complete Plumbing Solutions in Ireland: “Tankless water heaters usually have a higher upfront cost, but they typically have a longer lifespan and are more energy-efficient, resulting in lower long-term costs. Ultimately, the decision between a tankless and tank-style water heater should be based on your specific needs and budget.”

Fuel type

The type of fuel used to power a water heater also affects the overall cost. Gas and electric are the most common power sources, but homeowners have other choices depending on their location and needs:

• Gas: While these systems cost $100 to $200 more than electric models upfront, most homeowners end up saving more over the life of the unit because natural gas costs less than electricity, on average.
• Electric: Electric water heaters typically cost between $600 and $3,500 and are cheaper to install. They’re also more energy-efficient than gas, but higher utility bills make them better suited to smaller homes.
• Propane: Common in rural areas without gas line access, these units cost between $700 and $2,500. These water heaters cost more upfront and require additional maintenance to refill the tank.
• Solar: The most environmentally friendly option, but it comes with a high unit price of $1,700 to $5,500.
• Hybrid: Sometimes called heat pumps, these are also very environmentally friendly and energy-efficient. But like solar water heaters, they’re costly to install and may not be a good choice for larger homes. Hybrid systems will range from $1,200 to $3,500.

» MORE: How do solar water heaters work?

How much does water heater installation cost?

The cost of installing your water heater depends on the type of water heater you buy, whether you’re switching energy sources and what extra labor is involved. If your home’s existing infrastructure isn't up to current standards, you may face additional labor charges for:

• Upgraded gas or water lines: Necessary for many tankless conversions
• Electrical wiring: Required if you’re moving from gas to electric or installing a hybrid model
• Structural work: This can include new framing or drywall repair if the new unit requires a different footprint

A tank-based water heater is cheaper upfront, but a tankless system will save you money down the line.

“Replacing a water heater can be a fairly straightforward task, but the costs can vary greatly,” Richardon, the plumbing company owner, noted. “We have seen situations where the preexisting and plumbing infrastructure is not up to standard when installing a new water heater, so this may have to be upgraded also, which will inflate the final cost.”

Labor costs alone for installing a tanked gas or electric water heater range from $150 to $450; installation costs for a tankless water heater range from $600 to $1,900. The best way to determine installation costs is to have a licensed plumber visit your home to assess your space and options.

» PROTECT YOUR INVESTMENT: Is an appliance extended warranty worth it?

Signs you need a new water heater

Most water heaters last between eight and 12 years, though newer tankless systems can last over 20 years. Watch for these key symptoms that indicate your water heater is nearing the end of its lifespan:

• Rusty or metallic water: If you notice a rust color to your water or a metallic taste, this often indicates corrosion. You may need a replacement unit or a new anode rod.
• Leaks: Leaks are usually a sign that the water heater needs to be replaced, as these often occur internally and are very difficult (or cost-prohibitive) to repair.
• Insufficient heat: If water isn't getting hot, check the pilot light and circuit breaker first. If those are fine, have a professional inspect the internal heating mechanism.
• Pops and cracking sounds: These noises usually indicate that the heating element isn’t working properly. It should be inspected and potentially replaced by a licensed technician.
• Advanced age: If your water heater is over 10 years old, you should start budgeting for a replacement. Even if your current one is running fine, a water heater this old is more likely to suddenly stop working without notice.

» MAINTAIN YOUR HOME: Annual home maintenance checklist

Do home warranties cover water heaters?

Yes, most home warranty providers include water heaters in their home system plans. Having a home warranty can significantly reduce the costs of water heater replacement. If your covered water heater breaks, your provider sends a licensed technician to assess the failure.

One Choice Home Warranty reviewer on our site shared their experience being covered by their warranty: “After a one-week vacation, I returned to find my hot water heater was leaking. I called a friend to see if he could help, then I remembered I had Choice Home Warranty. ... I submitted a claim and that day Choice started working on my claim. The next day everything was set up and the claim was approved. I am awaiting delivery of my new water heater.”

In these cases, you typically pay a service call fee between $75 and $150, and the warranty covers the remaining repair or replacement costs. Monthly premiums for these warranties generally range from $30 to $90.

Environmental considerations: what to do with your old water heater

As with all large appliances, you'll need to dispose of or recycle your old water heater when replacing it with a new one. Consider these options for responsible disposal:

• Professional haul-away: Some major installers haul away old units for free or a small fee, though they may not always recycle them.
• Scrap yards: To avoid trashing the unit, you may be able to sell it for scrap metal if a local yard accepts it.
• Recycling centers: Research local facilities to see if they accept large appliances.