Water Heater Cost Calculator: Electric vs Gas vs Tankless vs Heat Pump

How the calculation works

Heating water takes a predictable amount of energy: about 8.34 BTU to warm one gallon by 1°F, since a gallon of water weighs about 8.34 pounds. The calculator finds the heat your household needs each year, then divides by each water heater’s efficiency rating to get the energy it buys.

Heat needed per day (BTU) = gallons per day × 8.34 × (tank setting − incoming water temp)
Heat needed per year      = heat per day × 365
Electric models: cost     = heat per year ÷ UEF ÷ 3,412 × price per kWh
Gas models: cost          = heat per year ÷ UEF ÷ 100,000 × price per therm

UEF (Uniform Energy Factor) is the federal rating that captures how much energy becomes useful hot water, including heat lost from the tank while it sits. The tool uses:

• Electric storage tank: 0.93
• Gas storage tank: 0.64 (you can change it)
• Gas tankless: 0.93
• Heat pump water heater: 3.5 (you can change it)

ENERGY STAR says most traditional water heaters fall between 0.63 and 0.95, and certified heat pump models typically rate 3.3 to 4.1, according to its UEF explainer.

Energy content is from EIA: 3,412 BTU per kWh and 100,000 BTU per therm. Default prices are EIA averages: electricity 18.31¢ per kWh (U.S. residential, July 2026) and natural gas about $1.35 per therm (January 2026).

For context, the federal UEF test uses 58°F incoming water, 125°F delivery, and 55 gallons a day for its medium-usage draw pattern.

Worked example

The default household uses 50 gallons of hot water a day. Water comes in at 55°F and the tank is set to 120°F. Electricity is $0.18 per kWh and gas is $1.35 per therm.

At these prices, gas tankless and a heat pump water heater are close, a gas tank is next, and a standard electric tank costs far more to run.

A second example

A larger household uses 70 gallons a day. Incoming water is colder, 45°F, as in many northern winters, and the tank stays at 120°F. Electricity is $0.25 per kWh and gas $1.80 per therm.

• Gas tankless: $309 a year
• Heat pump water heater: $335
• Gas storage tank: $449
• Electric storage tank: $1,259

More hot water, colder inlet water and higher prices all raise the bill. A standard electric tank is hit hardest.

What your result means

The bars show yearly energy cost only. The cheapest bar is the cheapest to run at your prices, not necessarily the cheapest to own. Add purchase and installation, expected life and any rebates before choosing.

If you have a standard electric tank, the gap to a heat pump water heater is usually the biggest saving on this page. Our heat pump water heater guide covers sizing, the space and air a unit needs, and 120-volt plug-in models. To see whether the extra cost pays back, take the yearly difference to the energy efficiency payback calculator.

Hot water use matters as much as equipment. Showers are usually the biggest draw; see what yours cost with the shower cost calculator.

Climate, space and incentives that change the answer

Incoming water temperature. Groundwater is colder in the North and in winter, which raises the energy needed. Use a typical yearly figure for your area, or the temperature at a cold tap after the water has run for a minute.

Where a heat pump water heater sits. It pulls heat from the air around it. ENERGY STAR notes that in colder conditions a unit may temporarily switch to standard electric backup mode, which raises energy use in those months. A warm basement or garage in a mild climate helps it perform close to its rating.

Utility rates. Time-of-use electric rates can lower costs if the tank heats mostly off-peak. Gas customers pay fixed monthly charges that this tool does not include. Our guide on how to lower your energy bill lists no-cost water heating fixes too.

Incentives. The federal 25C credit does not apply to water heaters placed in service after December 31, 2025. State-run Home Energy Rebates exist in some states. Under DOE Program Notice 26-2, they no longer pay for switching from gas, propane or oil to electric. The federal law’s top rebate for a heat pump water heater is $1,750, but your state program sets the actual amount and rules. Check our state rebate guide and your utility.

Common mistakes

• Assuming an old tank still performs like new; DOE notes that sediment in the tank lowers efficiency.
• Using a summer incoming water temperature for the whole year.
• Forgetting that a household with a dishwasher and washer uses hot water beyond showers.
• Leaving the tank at 140°F or higher without a reason.
• Picking a heat pump water heater for a small, closed closet without checking the space and airflow it needs.

Limits of this calculator

The tool uses rated UEF values, which come from a standard test. Real efficiency changes with your usage pattern, the air temperature around a heat pump unit, tank size, pipe losses and age. It ignores fixed monthly charges, equipment cost and maintenance. This is an educational estimate, not a quote or advice. Get at least three written quotes, and ask each installer for the exact model’s UEF and first-hour rating.