Water heater cost

The headline price on a water heater is the least useful number in the quote. Two homes on the same street can pay $900 and $2,600 for the same 50-gallon tank, and both quotes can be fair. What moves the price is access (a basement with a floor drain is cheap, a third-floor closet is not), whether the gas or electrical supply already suits the new unit, and whether the installer has to bring old venting or seismic strapping up to current local code.

Tank size drives price more than brand does. NerdWallet's 2026 figures put a 30-gallon unit at $430-$2,100, a 40-gallon at $440-$2,300, a 50-gallon at $530-$2,900, and a 75-80 gallon at $1,100-$3,100 — those spans cover unit plus installation. Permits, where required, add roughly $25 to $300.

The number that catches people out is tank-to-tankless conversion. Going tankless is not a like-for-like swap. NerdWallet puts the conversion premium at $150 to $2,500 on top of the tankless install, because a gas tankless unit usually needs a larger gas line, different venting, and a dedicated electrical circuit. Get that scoped in writing before you sign, not discovered on install day.

Water heating is about 20% of the average home's energy use and the typical second-largest energy expense in the house, per the Department of Energy. That is why operating cost matters as much as install cost over a 10-to-20-year life — but it is also why a contractor can talk you into a much bigger spend on payback that may not arrive.

How to choose

Get the quote itemized

Unit, labor, permit, disposal of the old tank, expansion tank, new shutoff valve, venting. A single lump sum makes it impossible to compare two bids or to spot a padded line.

Price the conversion, not the appliance

If you are moving from tank to tankless, ask specifically: does the gas line need upsizing, does the vent get replaced, is a new circuit needed? NerdWallet puts these extras at $150-$2,500.

Match tank size to household, not to the old tank

Your old tank may have been wrong for years. Sizing should come from peak-hour hot water demand and the unit's first hour rating, not from what was already in the closet.

Be careful with emergency pricing

A leaking tank on a Sunday is the worst possible time to negotiate. If you can shut the water off and wait until Monday, you will usually pay less.

Check what the federal credit does not cover anymore

The Section 25C federal energy efficiency credit expired for equipment installed after December 31, 2025. Any 2026 quote that prices in a $2,000 federal credit is wrong. State and utility rebates may still exist — verify with your own utility.