A water heater is a piece of equipment that warms your home’s water whenever you turn on a tap to wash your hands, take a shower, or wash the dishes. Water heater installation costs $1,950 on average, based on data from The Home Depot, though prices can range from $1,600–$5,400 depending on the unit you pick and where you live.
Basic tank models start at $1,200 with installation. If you prefer a more energy-efficient model, tankless units cost around $2,800 on average, while premium options such as solar water heaters can reach $5,500. However, energy-saving models can cut your monthly power bills by 15%–30%, offering long term savings. In this article, the This Old House team will break down the different types of water heaters, what you can expect to pay for installation, and signs you need a replacement.
Note: Cost data for this article was sourced from The Home Depot and by conducting market research on various water heater equipment and installation costs.
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Average Water Heater Installation Cost
Your final bill when installing a water heater will depend on both parts and labor. In addition to the cost of the equipment, plumbers charge around $40–$200 hourly for installation, based on market research, with most jobs taking around 1–3 hours. You may also need additional work depending on the type of water heater you buy—for example, tankless units may need extra work on your home’s gas lines and electrical panel.
Size is another significant factor when it comes to water heater installation cost. Smaller homes generally require a 40 gallon tank but size—and price—will increase with the number of people in your household.
| Water Heater Tank Size | Installation Cost Range |
|---|---|
| 40 gallons | $600–$1,200 |
| 50 gallons | $700–$1,800 |
| 75 gallons | $900–$2,300 |
| 80 gallons | $1,000–$3,000 |
Note: We obtained cost estimates based on national averages from The Home Depot.
Cost will also vary based on the type of water heater your purchase. You can classify water heaters based on the fuel source: electricity, propane, or natural gas. Electric units cost about $850, while gas models cost around $800, plus venting. If you want to switch fuel types compared to your current unit, we recommend budgeting an extra $1,500–$2,000 for new electrical or gas lines.
High-efficiency options cost more upfront but can deliver long-term savings in the form of lower utility bills. Heat pump water heaters range from $2,500–$3,500, solar water heaters from $2,000–$5,500, and tankless units from $2,100–$4,0000. These premium models help lower your energy bills and often last twice as long as standard tank units.
What Factors Affect Water Heater Installation Cost?
Several key factors influence your total cost when investing in a new water heater installation.
Where You Live
Your home’s location affects installation as prices vary across the country. Pacific Northwest homeowners face the steepest prices, based on data from The Home Depot, paying up to 45% above the national average of $1,950 due to strict building codes and higher labor rates. Gulf Coast installations run 10%–20% above average, while Mid-Atlantic and Midwest residents enjoy modest discounts of around 5%–10%. South Florida has the best deals, with prices running 20% lower than the national average.
Switching Fuel Types
Converting from an electric water heater to a gas water heater requires installing new gas lines, adding $1,500–$2,300 to your project. Electric conversions may require new wiring and upgrades to your electrical panel. Gas units start at $800 plus venting costs, electric models average $850, and propane systems begin at $700 before tank installation.
Location in Your Home
Installation location impacts both accessibility and cost. Basement installations offer the easiest access and lowest labor costs. Attic installations may cost you $200–$1,000 extra for more challenging access and additional safety measures. Garage installations require $100–$300 in freeze protection for homes in colder climates, while utility closet retrofits may need $200–$800 in ventilation improvements.
Tank Size and Support Needs
A 40-gallon unit serving a household of two or three people costs $600–$1,200 for basic installation, with potential bracing (installing floor supports for the added weight) adding $100–$200. Larger 80-galloon units for households of five or more people run $1,000–$3,000, sometimes requiring $300–$800 in floor reinforcement.
Venting Setup
Gas water heaters need proper ventilation for safe operation so you and your family can avoid exhaust fumes. The type of venting you need will influence the overall cost. For example, power venting systems cost $300–$600 plus $300–$500 for electrical work. Direct venting runs $500–$1,000, while basic gas venting costs $300–$500. Homeowners needing new chimney liners face an additional $500–$700 expense.
Meeting Code Requirements
Cities and states have building code and permitting mandates that outline specific safety features for home projects such as water heater installation. For example, municipalities requiring an expansion tank can add $40–$150 to your total cost. In other areas, earthquake strapping costs $100–$300 if required, and proper drainage systems can add $50–$200. Temperature and pressure relief valves can contribute another $20–$200 to the total.
Additional Water Heater Installation Costs
Beyond the basic unit and installation price, your project might include several additional expenses. Here’s a general list of what to budget for:
- Old unit removal: $100–$300 for disconnection and disposal according to local regulations
- Permits and inspections: $50–$200 for permits, especially when changing water heater fuel types
- Site preparation: $100–$500 for updating gas or electric connections in older homes
- Water line changes: $200–$600 for relocating water lines or adding shutoff valves
- Emergency service: $200–$500 for after-hours or weekend installations
- Water damage repair: $500–$2,500 if a failing unit has caused flooding in your home
- System flush: $100–$250 to clear sediment from plumbing lines
Tank vs. Tankless Water Heater Costs
While a traditional water heater uses a tank to store pre-heated water, tankless systems heat water instantly without a storage tank. Both systems offer distinct advantages and cost considerations for homeowners.
Tank Water Heaters
Tank water heaters can store 40–80 gallons of hot water, which is ideal for busy households. With installation costs of $1,200–$2,300, this type of water heater represents the most affordable upfront option. However, tank heaters have a 58%–60% efficiency rating, which is lower than tankless options, and 8–12 year lifespan, which can mean higher long-term operating costs.
A complete tank installation includes the $600–$1,000 unit price, $300–$800 in labor, $300–$500 for venting on gas models, and $100–$200 for water line connections. These systems need dedicated floor space and constant energy input to maintain water temperature.
Tankless Water Heaters
Tankless water heaters heat water on demand, eliminating standby energy loss. While installation runs $2,100–$4,000, these units have an 92%–95% efficiency rating and 20–year lifespan that can offset the higher initial cost. Plus, tankless heaters use a mounted design that can help save floor space in your home.
Installation involves the $1,000–$2,000 unit cost, $800–$1,500 in labor, potential gas line installation priced at $500–$1,000, electrical upgrades around $300–$800, and venting work for $500–$1,000. For households using more than 40 gallons of heated water daily, the energy savings can justify the higher cost of a tankless water heater.
Signs You Should Replace Your Hot Water Heater
Your water heater sends clear signals when it needs attention. Here’s what to watch for so you can tell when your water heater needs a replacement.
Signs You Should Repair a Water Heater
Minor issues with hot water heaters often have simple fixes costing $150–$500. For example, a failing pilot light, faulty heating element, or thermostat problems usually don’t require a full replacement. Small leaks at connections, sticky relief valves, or new noises might also have straightforward solutions. You can often address these types of issues with maintenance rather than a full replacement.
Signs You Should Replace a Water Heater
Consider replacement when your unit reaches 10 years old, produces rusty water, or fails to meet your hot water demands. Having to make multiple repair calls within a year, seeing visible rust on the tank, or water pooling around the base also can indicate serious problems. Rising energy bills without usage changes, rumbling sounds from sediment, and temperature fluctuations also suggest it’s time for an upgrade. Generally, when repair costs exceed half the price of a new unit, replacement becomes the more economical choice.
Ways To Save on Water Heater Installation
Water heater installation costs can add up quickly, but several strategies can help reduce your total investment. The Investment Tax Credit currently offers up to $2,000 as a federal tax credit on energy-efficient models. Local utility companies may provide additional rebates ranging from $100–$2,500 depending on the unit type and your location.
Contractors may offer seasonal discounts during slower periods, typically spring and fall. Booking installation during regular business hours can also help you avoid energy service charges. Some plumbers also discount multi-service packages when you combine water heater installation with other plumbing work your house may need.
Proper timing can help you save money, too. For example, you can replace your unit before it fails to avoid emergency rates. It’s also worth getting multiple quotes from licensed plumbers, as pricing varies widely. Ask about available manufacturer rebates and financing options—many companies offer zero-interest periods of lower monthly payments.
Regular maintenance plans from local plumbers often include priority scheduling and discounted service rates. While these plans cost $100–$300 per year, they can help prevent expensive emergency replacements and extend your water heater’s lifespan.
How To Choose the Right Hot Water Heater
Selecting the best water heater for your home ultimately comes down to what your family needs. Here are some factors to consider as you start your home improvement project.
Sizing Guidelines
Tank size depends directly on household size. A family of 1–2 people typically needs a 30–40 gallon water heater, while 2–3 people require 40–50 gallons, according to The Home Depot. Households with 3–4 people should consider 50–60 gallons, and families of five or more need at least 75 gallons.
Tankless units focus on flow rate, or how much hot water it can deliver, instead of capacity. Small homes with 1–2 bathrooms typically function with 2–3 gallons of water per minute (GPM), while medium homes need 4–6 GPM. Large homes with multiple bathrooms require at least 7 GPM for adequate hot water supply.
A professional installer can help you decide on the right size water heater for your home.
Fuel and Efficiency Options
Your location largely determines available fuel options. Urban areas typically offer natural gas, providing the lowest operating costs. Electric water heaters work anywhere but cost more to run based on utility prices. Rural homes without natural gas access often rely on propane, while areas with abundant sunshine might benefit from solar installations.
The most efficient options include heat pump water heaters, tankless gas units, and high-efficiency gas tanks.
Can You Install Your Own Water Heater?
While you might save a couple hundred dollars with a do-it-yourself (DIY) installation, professional water heater installation protects your investment and safety. Licensed plumbers understand complex venting requirements, gas line specifications, and electrical safety standards. This helps ensure proper unit removal, code-compliant connections, thorough pressure testing, and valid warranty registration.
Installing your own water heater can also expose you to risks such as gas leaks, carbon monoxide exposure, flooding, or voided equipment warranties. Licensed plumbers also carry insurance protecting against installation-related damages.
Advice From a Homeowner
Paul B., a homeowner in Indiana, faced a dilemma when his 11-year-old water heater flooded on a weekend night. Rather than attempting a DIY installation for a water heater replacement, he hired a professional plumber after researching gas line and venting requirements. Though weekend service added $400 to his bill, proper installation prevented future issues.
“I recommend being proactive with replacing your water heater,” said Paul. “I learned from my plumber that if your tank is eight years or older, you’re pushing its limits and asking for a disaster. At the very least, hire a plumber to inspect it and see what they recommend.”
Is Installing a New Hot Water Heater Worth It?
Installing a new water heater is worth it if you need a replacement unit or want increased energy savings. Replacing your water heater usually makes financial sense when repair costs exceed more than half of the replacement cost or the unit is 10 or more years old. Modern units offer 15%–30% better efficiency, noticeably reducing your monthly energy bills depending on usage. Available tax credits and utility rebates can also help offset your installation costs by $100–$2,500.
Early water heater replacement before the unit fails can help prevent flooding, property damage, and loss of hot water during peak times. While minor issues in newer units warrant repairs, older systems with multiple defects may benefit from a total replacement. New installations increase home value and can provide peace of mind by including water heater warranty coverage if certain issues arise.
FAQs About Water Heater Installation Costs
How much is labor when installing a hot water heater?
Plumbers typically charge $40–$200 hourly, based on our team’s market research. Complex projects involving fuel changes or location modifications will require additional time and expertise. Standard tank installations usually take 1–3 hours, while tankless systems need 4–6 hours for complete setup, including gas lines, electrical work, and venting.
What is the life expectancy of a hot water heater?
Traditional tanks last 8–12 years with regular maintenance, while tankless and solar units often exceed 20 years. Water quality and maintenance frequency significantly impact longevity.
Why do water heaters have such high installation costs?
Installation prices reflect the complexity of the work and safety requirements. Water heater install costs cover professional labor, quality equipment, necessary permits, and any required system upgrades to meet building codes.
Do I need installation permits for a new water heater?
Most jurisdictions require installation permits for water heaters, especially for fuel type changes or venting modifications. Professional installers typically handle permit acquisition as part of their service.
