How Much Does It Cost to Install a Water Heater? [2025 Data]

Your water heater is the unsung hero of your home systems, providing hot water for bathing, washing dishes, and cleaning clothes. Replacing your water heater can improve your home’s energy efficiency, make your water temperature safer and more comfortable, and even reduce your utility bills.

The average water heater installation cost is $1,400, with prices ranging from $900 to $3,000 for a natural gas, tank water heater. The exact cost will depend on the water heater capacity you need, the type of water heater you choose, and the fuel source. Tankless water heaters will cost closer to the upper end of that range, while tank-style water heaters will bring costs down to the lower end.

Cost of Water Heater Installation

Hot Water Heater Installation Cost by Type

There are four primary types of water heaters, and the type you choose will affect your installation costs.

The most common options are tank-style and tankless water heaters. Tank-style water heaters use large storage tanks with heating elements inside to heat water and keep it hot so that it’s at a good temperature when you’re ready to use it. These use more energy than tankless systems because they continuously heat water, whether you use it or not. Tankless units heat water on demand, which means improved efficiency and reduced utility costs. However, tankless water heaters are close to twice as expensive.

Heat pump water heaters boast a high efficiency, too, especially in warmer climates, where transferring heat rather than producing it takes minimal energy. Indirect water heaters rely on an existing boiler to provide heat and just provide a means of transferring that heat to domestic water and maintaining a good temperature. Because they don’t heat water directly, they have the longest lifespan of any option. Heat pump/hybrid and indirect water heaters cost around twice as much as standard tank water heaters, though, so upfront costs are above average.

Cost of Water Heater Installation by Fuel Type

The type of fuel your water heater uses is a major factor in both installation costs and energy bills. Each fuel source has unique material and labor requirements that affect total cost. The most common fuel types for water heaters include natural gas, electricity, propane, and oil, with solar options also available for those prioritizing renewable energy. 

Natural gas, oil, and propane water heaters all burn fossil fuels to generate the heat required. These usually cost the least for materials, although the labor to connect them to your existing fuel source can get expensive. Gas water heaters and oil water heaters are the most common options and are widely available throughout the country.

Electric water heaters use electricity to send power to internal heating coils that heat up the water inside the tank. This works particularly well for on-demand water heaters, but they may not be efficient enough for colder climates. Solar water heaters often make use of storage tanks that absorb sunlight to heat water naturally, or they use electrical energy from solar panels to provide heat. Some can use electricity or natural gas to generate heat as a backup for when the sun isn’t shining.

*Note that standalone oil-fired water heaters do exist, but most systems that use oil as a fuel source use an indirect water heater linked to an oil-fired boiler. Prices reflect this setup.

Tank Water Heater by Size

Unless you install a tankless water heater, you’ll need to choose a water heater tank size, which should depend on your household’s hot water consumption. Homes with more family members need larger and more expensive tanks to support more frequent bathing and washing. A tank that’s too large can lead to decreased efficiency since it will heat water unnecessarily, and undersizing can lead to cold showers and insufficient temperatures for washing clothes and dishes.

The tank size you choose will have a big impact on your material costs, and it can affect labor costs, as well, especially if you’re changing tank sizes and need to reroute plumbing to fit different tank dimensions.

Water Heater Replacement Labor Cost

Labor makes up an average of between 18% and 50% of your total, on average, or between $300 and $1,500, on average. Some plumbers may charge an hourly rate, in which case you can expect to pay between $45 and $200 per hour, depending on experience and location.

More involved projects, such as converting from a traditional tank unit to a wall-mounted tankless model, or changing the water heater's location, will significantly increase labor costs. Additionally, converting between fuel types, like switching from a gas, propane, or oil unit to an electric one, or vice versa, often requires bringing in specialized professionals. This could mean a licensed electrician to handle new wiring or panel upgrades, or a specialist to install a new gas line, or move the water lines, which would add more to the overall cost.

Water Heater Replacement vs. New Installation Cost

Replacing your existing water heater with a similarly sized unit that uses the same fuel type is usually the most affordable option upfront. It means minimal plumbing and electrical work and should require little more than removing the old unit and connecting the new one. Your material costs will depend on the type and size of the heater you’re installing, but labor costs should be minimal.

Installing a water heater in new construction or adding a second water heater to support a home addition will cost significantly more, as you’ll need new plumbing lines and either new gas or oil lines run to your unit or a new electrical connection if you’re going with an electric water heater. Expect to pay an additional $400 to $1,800 to rough-in the utilities if you’re installing a water heater rather than replacing one.

Additional Cost Factors to Consider

There are many other factors that can affect your water heater installation costs, so be sure to consider all of the following when budgeting for your project.

Old Unit Removal and Disposal

Many plumbers will include the cost of disconnecting and hauling away your old water heater in their initial estimates, but some will charge an additional cost for this service. If yours charges extra, expect to pay between $75 and $500, including dumping fees.

Permits

Most local building departments will require permits to replace a water heater, and all will require permits for new water heater installation. Permit costs vary widely based on your building department's fee schedule, but most fees will fall between $25 and $1,500. The higher end is reserved for homeowners who need new gas lines or new electrical connections to complete their installations, or major changes to plumbing to fit their new unit.

Location and Accessibility

Labor fees vary by location and usually scale with the cost of living, so you can expect labor costs to drive up your total more in more expensive areas. The location of the water heater in your home matters, too, as you’ll pay higher labor costs if your plumber needs to maneuver equipment into and work in cramped crawl spaces or tight utility closets.

Warranties

Some plumbers may offer labor warranties that provide you with peace of mind and protection in case the installation itself leads to property damage or a shortened water heater lifespan. Plumbers who offer these warranties will often charge more for their services due to their increased liability and experience, but it could be well worth the investment, given how integral your water heater is to your home’s functionality, convenience, and safety.

Venting System

Water heaters that use natural gas, oil, or propane as a fuel source will always need a venting system for safety. Venting provides fresh air to improve combustion efficiency and also vents outside to prevent toxic fumes from accumulating in your living area. Venting systems are crucial safety features for standalone water heaters.

There are two types of venting systems: direct and power. Direct venting systems make use of a nearby vertical chimney or flue pipe that vents outside. The exhaust will naturally flow up the vent pipe and outside. A power venting system uses an electricity-powered exhaust fan to blow air out of your home, so it may be required if you don’t have a chimney or flue pipe nearby. The fan and the electrical connection to run it (if you need to install one) will add between $300 and $1,000 to your total.

Note that electric water heaters and indirect water heaters don’t require dedicated venting systems.

Code Requirements and Upgrades

Finally, you may see increased costs if your installation requires changes to adhere to current building codes or upgrades for improved safety.

Recent building code changes aimed at improving home efficiency and ventilation safety may require additional work to keep your unit legal and safe. You may also opt to invest in safety features that add to your upfront cost, like water heater pans to protect against water damage, seismic straps to prevent plumbing breaks in the case of an earthquake, and sediment traps to improve tank lifespan in areas with hard water. These can add value and life to your unit but will drive up your upfront costs.

What Size Water Heater Do I Need?

Your water heater needs to be sized appropriately for your home. Water heaters that are too big will needlessly heat water and waste energy, as well as cycle rapidly, reducing unit lifespan. Water heaters that are too small won’t provide sufficient hot water for you and your family, and they’ll overwork themselves, leading to a shorter lifespan and higher maintenance costs.

You can use the general sizing guidelines below to get an estimate for your water heater size.

• Household size (tank-style): You can get a general idea of the water heater tank size you need based on the number of people in your home. A 30-gallon tank should serve 1 to 2 people, and each additional 10 gallons will accommodate an additional 1 to 2 people.

• Number of bathrooms and appliances (tank-style): You can figure out the right size for your water heater by calculating your energy peak demand. Think about how many things in your home use hot water, like sinks, dishwasher, washing machines, and how many of them you might use at the same time. Estimate how many gallons each one uses per hour and how long you typically use them. Add everything up to get your peak hourly demand. Once you have that number, choose a water heater with a first-hour rating (FHR) that meets or slightly exceeds that number.

• Gallons per minute (tankless): Tankless water heaters come with ratings in gallons per minute (GPM), which tells you how many gallons of hot water they can supply per minute total. A general rule of thumb is to begin with a tank that has a minimum of 5 GPM and then add 1 GPM for each member of your household. As an example, a 2-person household would need 7 GPM, and a 5-person household would need 10 GPM.

While these methods can help you estimate what size water heater you need, you should have a professional plumber size your water heater for you. A pro will consider home size, household size, the number of fixtures, fixture efficiency ratings, fixture flow rates, climate, and more.

Signs Your Water Heater Needs Replacement

Replacing a water heater can quickly get expensive, so if yours is more or less doing its job, you may be tempted to put off the replacement. Unfortunately, this can lead to higher costs in the long run. Here are some signs to look out for that it might be time to replace your water heater.

• Old age: Tank-style water heaters last an average of 8 to 12 years, and tankless water heaters last for 15 to 20 years. If your unit is approaching or sitting beyond its expected lifespan, a replacement is a good idea to avoid problems, like leaks and outages.

• Leaks: They’re another good sign that it’s time to replace your water heater. A small amount of water from time to time could just be a result of your unit relieving pressure, but water pooling around the base of your water heater likely means the tank is cracked or corroded and needs to be replaced.

• Lack of hot water: Water heaters can lose efficiency for a variety of reasons, and when you get to the point where yours is no longer providing the hot water you need, you should consider a replacement. 

• Noises: Tank-style water heaters can suffer from sediment buildup, which eventually causes clinking noises when your tank is operating. Sediment buildup will reduce efficiency and can lead to insufficient hot water for your needs, so hearing noises means it’s a good time to consider a replacement.

• High utility bills: A dated water heater that’s no longer working efficiently will consume more electricity, gas, oil, or propane, leaving you with unusually high utility bills. If you notice higher costs, it may be time to replace your water heater.

• Strange odors in your water: In areas with soft water, the sacrificial anode rod in your water heater can degrade. When that happens, your water may start to smell like eggs, and the tank itself will start to corrode. This may be a sign that there’s damage inside, and a replacement could be necessary.

• Discoloration in your water: Rust-colored water can also be a sign of interior corrosion and suggests that you may need a water heater replacement.

DIY vs. Professional Water Heater Installation

Hiring a professional to install your water heater can double the cost of the unit itself, and even in the best-case scenario, you’ll be paying a minimum of $300 for labor. If you’re confident in your ability, you have the necessary tools, and it’s legal in your area to do your own plumbing work, DIYing your water heater replacement could save you hundreds of dollars.

However, it’s always best to hire a professional for this kind of work. A pro will make sure your water heater is sized appropriately and installed properly, minimizing the risk of poor efficiency and leaks. If you DIY the work and something goes wrong, any resulting damage will be your responsibility to fix. In the case of expensive water damage from a major leak, your insurance company may not cover the repairs if they find out you did the installation yourself.

Finally, most municipalities only allow licensed plumbers to carry out water heater replacements, so hiring a professional is a good way to ensure the work is permitted and legal.

How to Save on Water Heater Installation

With hot water heater replacement costs commonly reaching as high as $4,600, it’s normal for homeowners to look for ways to reduce costs. Here are some things you can do to stay within your budget.

• Replace your water heater with a similar type and size: Avoid high costs associated with rerouting plumbing, electrical, and gas lines by sticking with the same size, type, and fuel source.

• Size your water heater properly: Have a professional size your unit for your home to avoid high utility and repair costs from an undersized or oversized water heater.

• Install a high-efficiency model: Choose a high-efficiency water heater that’s certified by ENERGY STAR to reduce long-term operating costs.

• Take advantage of tax credits and rebates: Check the Database of State Incentives for Renewables and Efficiency (DSIRE) to see if there are tax credits or rebates available for water heater replacement in your area.

• Time the work for the off-season: Aim to get the work done in the late spring or early summer. This is the slow season for plumbers, which may mean lower labor costs due to decreased demand.

• Get at least three quotes: Finally, get quotes from at least three plumbers and compare to find the best deal.

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