Tankless vs Tank Water Heater: Cost, Savings and Which to Buy

Tankless vs tank: the price side by side

A tank water heater is the cheaper buy. A tankless unit costs more up front, mostly because installation takes more work, but it lasts longer and wastes less energy.

Sources: NerdWallet, Sep 2025 (costs, labor); U.S. Department of Energy (lifespan, efficiency).

Angi’s own data for tankless lands in the same place: an average of $2,641, with most projects between $1,406 and $3,902. Small electric units can cost as little as $384.

If you are simply replacing an old tank with a new one, our water heater replacement cost guide breaks down tank prices by size and fuel.

Tankless cost by fuel and size

Fuel type matters more for tankless than for tanks. Gas units cost more to buy, but they can heat more water at once.

Source: Angi, Aug 2026.

Size is measured in gallons per minute (GPM), not tank gallons. Angi says an average home needs about 5.5 to 7.5 GPM so a shower and a dishwasher can run together. Smaller single-point units that serve one sink cost $100 to $300 each, while whole-house systems run $450 to $1,500 for the unit.

Extra costs when you switch to tankless

Most of the price gap comes from changing the setup your home already has. A tank swap is usually a like-for-like job. Going tankless often is not.

Source: Angi, Aug 2026.

NerdWallet puts the full cost of switching from tank to tankless at $150 to $2,500 on top of the unit, depending on how much has to change. Hard-to-reach spots can add 10% to 15% to labor, per Angi.

How much energy tankless really saves

A typical tank keeps 40 to 60 gallons hot all day (per Bob Vila), and it loses heat while it waits. A tankless unit heats water only when a tap opens. The Department of Energy says that makes tankless:

• 24% to 34% more energy efficient in homes using 41 gallons of hot water a day or less.
• 8% to 14% more efficient in heavy-use homes using around 86 gallons a day.

In dollars, that is modest. Angi, citing the Department of Energy, puts the savings at about $100 a year for gas tankless and about $50 a year for electric. Bob Vila gives a similar $80 to $100 a year. Water heating is a real chunk of your average utility bill, but tankless trims it rather than cutting it in half.

Other differences that affect cost

Price and energy are not the whole story. A few practical points can tip the decision.

• Space. Bob Vila puts a typical tank at about 60 by 24 inches, while a tankless unit is about 28 by 20 by 10 inches and hangs on a wall. In a small utility closet, that freed-up floor space has real value.
• Flow limits. A tankless unit never runs out, but it can only heat so much at once. Bob Vila notes electric units rarely go above 7 to 8 GPM, so large households often need gas or a second unit.
• Condensing vs non-condensing. Condensing gas models are about 90% to 96% efficient, versus about 80% for non-condensing, per Bob Vila. They cost about 25% more.
• Maintenance. Tankless units need periodic descaling, especially with hard water. Bob Vila lists maintenance at $45 to $200 an hour, usually for 1 to 2 hours.
• Warranty. Angi says tankless warranties range from a one-year limited plan to 25 years of full coverage, so compare them before you buy.

Does tankless pay off? A 20-year look

Because the yearly savings are small, the payoff depends on how long you stay. Here is a simple 20-year comparison for a gas home, using Home Depot’s average installed prices and Angi’s $100 a year savings figure.

Our calculation using NerdWallet (Home Depot averages, Sep 2025) and Angi (savings, gas line), Aug 2026. Assumes one tank replacement in 20 years, based on the DOE’s 10 to 15 year tank lifespan.

Over two decades, tankless comes out ahead in this example, mainly because you avoid buying a second tank. Over five or ten years, the tank wins easily, since you have paid about $2,350 more for tankless (our calculation) and recovered only $500 to $1,000 of it.

Which one should you buy?

A tank makes sense if:

• Your current tank failed and you need hot water this week at the lowest price.
• You may sell the home within about 10 years.
• Your home uses a lot of hot water at once, where the DOE efficiency edge shrinks to 8% to 14%.

Tankless makes sense if:

• You plan to stay 15 to 20 years or more.
• You already have a gas line and venting that can handle it, which keeps the switch cost low.
• You want the space back, or endless hot water for back-to-back showers.

If your furnace is also near the end of its life, it can be cheaper to plan both jobs together. Check the furnace replacement cost and HVAC replacement cost before you call a plumber, so you can budget for the bigger picture.

See how we research every number on our method page, or browse more home and repair costs.