Tank vs Tankless Water Heater Cost Calculator

Compare the yearly running cost and the total cost of a tank water heater and a tankless water heater for your home. Enter your own prices, ratings and quotes. All starting values are examples only, so replace them with the numbers from your energy bill, the product label and your installer's quote.

Enter your numbers and press Compare.

How we calculate this

Heat needed per year = gallons per day x 365 x 8.34 x temperature rise (°F). Water weighs 8.34 pounds per gallon and one BTU raises one pound of water by one °F.
Energy used = heat needed divided by the UEF. UEF (uniform energy factor) is the heat delivered to the water divided by the energy the heater uses, so a higher UEF means less energy used. Federal guidance shows this relationship: a 0.95 UEF electric unit uses about 3,437 kWh a year in its example, a 3.93 UEF heat pump uses about 826 kWh.
Electric energy is converted at 3,412 BTU per kWh and gas at 100,000 BTU per therm. Cost = energy x your price.
Cost per year of ownership = yearly energy cost + (installed price divided by expected life).
Simple payback = extra price of the tankless heater divided by its yearly energy savings.

Worked example

At the starting values (55 gallons a day, water heated from 55 to 120°F), the heat needed is 55 x 365 x 8.34 x 65 = about 10.9 million BTU a year, or 109 therms of heat. With a gas tank at 0.64 UEF that is about 170 therms; with a gas tankless at 0.87 UEF about 125 therms. At $1.50 a therm that is about $255 and $188 a year, a saving of roughly $67 a year. Against an extra $1,700 installed price the payback is long, which is common for households that use little hot water.

What this tool does not cover

Real-world use. UEF comes from a standard test. Your pipes, usage pattern and incoming water temperature change real results.
Installation extras. Venting changes, a larger gas line, electrical upgrades, permits and removal of the old unit may add cost. Put them in the installed price.
Maintenance. Tankless units may need descaling in hard-water areas. Tanks may need an anode rod replacement.
Incentives and heat pump models. Rebates and tax credits can change the result. Heat pump water heaters have much higher UEF values and are worth comparing.
Comfort factors. Running out of hot water, flow limits and space are not priced here.

Sources and further reading

U.S. Department of Energy, Federal Energy Management Program: Purchasing Energy-Efficient Residential Water Heaters. Defines UEF and shows how energy use falls as UEF rises (20,075 gallons per year used in its test).
U.S. Energy Information Administration: Factors affecting electricity prices. Average residential price of 17.30 cents per kWh in 2025 (preliminary).
ENERGY STAR: Water heaters. Find certified models.
Oklahoma State University Extension: Save energy and money with tankless water heaters. Typical life spans of tankless units and tank heaters.

Last reviewed: October 27, 2026. This calculator gives estimates only and is not a quote or professional advice.