Water Heater Options: Tankless or Tank?

Hot water is among the most glorious of modern conveniences. Hot water gets your dirty dinner dishes sparkling clean, and a hot shower can brace you for the busy morning ahead or help you unwind after a stressful workday. Losing hot water due to a faulty water heater can be decidedly inconvenient. You have a lot of options when it comes to replacing your water heater, and many different factors can influence your purchasing decision. Let’s take a look at buying a tankless water heater vs a tank water heater. 

Types of Water Heaters

Tank Water Heaters

Tank water heaters are common in homes across America. These hot water heaters have storage tanks ranging in size from 36 to 60 or more gallons. A temperature control on the outside of the tank determines the temperature of the stored water, and temperature also determines total energy usage needed to keep the water at that stored temperature, as well as reheat water when it is used and sent throughout the home for showers or washing. 

Tankless Water Heaters

Tankless water heaters, on the other hand, don’t store hot water; rather, they heat water as needed to meet demand via a heat exchanger. Tankless water heaters are more energy efficient because they don’t waste energy heating standby stored hot water. 

Both hot water heaters are commonly powered by natural gas or electricity. 

Cost Considerations

There’s usually a pretty big difference in cost between a tankless water heater vs a tank water heater. 

With tankless water heaters, size is one of the biggest cost considerations. Bigger families require bigger hot water storage tanks or run the risk of not having enough hot water when needed. 

Here’s a rough estimate of tank water heater cost by size: 

• 30-gallon tank: $550–$1,700 
• 40-gallon tank: $550–$2,000 
• 50-gallon tank: $700–$2,200 
• 75-gallon tank: $1,200–$3,400 
• 80-gallon tank: $1,300–$3,600 

Installation can run anywhere from an additional $1,400 to $3,000 depending on the complexity of the job. 

Tankless water heaters are more expensive because they are much more complicated appliances. Cost for a tankless water heater, with installation, is roughly $4,500 to $6,500. Tankless water heaters typically require new gas and water lines, or electrical wiring for electric models. However, what you pay on the front end may pay off on the back end – tankless water heaters typically have a much longer lifespan. 

Fuel Types & Considerations

The type of fuel used for heating can make a big difference in your energy bills. 

Natural gas is a common heating method for both tank and tankless hot water heaters because it is historically the most inexpensive fuel available. According to the U.S. Department of Energy (DoE), total home heating costs using natural gas average about $930 through the winter. Costs for homes that use electricity for heat, however, are between $1,400 and $1,700. 

Fuel type is dependent on your area, however. Homes are also heated by geothermal, solar, fuel oil, and propane. Fuel costs can vary greatly by region as well. 

Energy Efficiency and Environmental Considerations

Here’s something to consider about choosing a tankless vs tank hot water heater: According to the DoE, your hot water heater uses more energy than the dishwasher, refrigerator, clothes washing machine, and dryer combined. 

 Whatever brand or type of system you choose, make sure it’s got the DOE EnergyStar certification for high efficiency. These models tend to cost more, but they’ll save you money in operating costs. You can tell a unit’s overall efficiency by its UEF rating, which stands for uniform energy factor. Units with a higher UEF are more efficient. You can find this information, as well as projected annual operating costs, on the bright yellow sticker on the outside of both tankless and tank water heaters. There are some ways you can increase the efficiency of your hot water heater as well. 

2024 Homeowner Savings Guide

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Safety Features of Tankless Water Heaters vs Tank Water Heaters

In terms of safety, tankless water heaters have a leg up on traditional storage models. Since there’s no water being stored, there’s no risk of a rupture that could lead to flooding or mold issues stemming from standing/leaking water. There’s also no exposed combustion, which though shielded in tank systems, still can be a hazard for over-curious children. 

Lifespan & Maintenance

When it comes to comparing tankless water heaters vs tank water heaters, longevity and maintenance should definitely be a part of the conversation.  

Storage tank water heaters have a life expectancy between 8 to 12 years for gas-fired units. Electric tank water heaters, meanwhile, have a life expectancy of 10 to 15 years. 

Tank water heaters require routine maintenance in the form of draining to flush out any built-up calcium and magnesium sediments at the bottom of the tank (the process is called descaling). Tankless water heaters also require annual maintenance to ensure descaling. The process can be much easier with tankless models, however, because you don’t have to drain an entire tank of stored water.  

Key Considerations

We’ve outlined many of the considerations for choosing a tankless hot water heater or a traditional tank water heater. Your decision should encompass these factors, as well as total installation cost versus your replacement budget. You should also discuss these issues with a licensed HVAC contractor, who can provide an expert opinion to your decision-making process.