Water Heater Replacement Cost 2025: Tank vs. Tankless Prices
There is nothing worse than waking up to a freezing cold shower. When your water heater fails, it’s usually an emergency. But before you call a plumber, you need to decide: Stick with a traditional tank or upgrade to a modern tankless system? How much does water heater replacement cost in 2025?
The national average cost to replace a water heater is between $800 and $3,500. A standard 40-gallon tank installation typically costs around $1,200, while converting to a high-efficiency tankless system can range from $2,500 to $4,500+ depending on your home's gas line and electrical capacity.
In this guide, we compare the installation prices of Gas vs. Electric models and break down the pros and cons of going Tankless.
⚠️ Warning: Do It Yourself?
Installing a water heater involves Gas Lines (Carbon Monoxide risk), 240V Electricity, and Pressure Relief Valves. If installed incorrectly, it can explode or flood your home. This is strictly a job for a licensed plumber. (See our Plumbing Cost Guide).
1. Average Cost by Type
The biggest price factor is the technology you choose.
| Type | Unit Price | Total Installed Cost |
|---|---|---|
| Standard Tank (40-50 Gallon) | $400 - $900 | $800 - $1,600 |
| Tankless (On-Demand) | $1,000 - $2,500 | $2,500 - $4,500 |
| Hybrid (Heat Pump) | $1,500 - $3,000 | $2,500 - $5,000 |
2. Tank vs. Tankless: Which is Better?
Standard Tank:
Pros: Cheaper upfront. Easy to replace in an emergency.
Cons: Runs out of hot water. Heats water 24/7 (waste of energy). Lasts 10-12 years.
Tankless System:
Pros: Endless hot water. Saves 30% on energy bills. Small size (wall-mounted). Lasts 20+ years.
Cons: Expensive installation. Often requires upgrading your gas line or electrical panel (See Electrical Panel Costs).
3. Labor and Hidden Costs
The unit itself is only half the battle. Plumbers charge $45 to $150 per hour.
Common add-ons include:
- Permits: $50 - $200 (Mandatory in most cities).
- Expansion Tank: $150 - $300 (Required by code to prevent pressure buildup).
- Disposal: $50 - $100 (Hauling away the old rusty tank).
- Carpentry: If the new tank is wider, you might need to modify the closet or stand.
4. Signs Your Water Heater is Failing
Don't wait for a flood. Replace it if you see these signs:
- Rusty Water: If hot water comes out brown, the inside of the tank is rusting.
- Rumbling Noises: Sediment buildup at the bottom is hardening.
- Leaking: Any moisture around the base means the tank has cracked. Turn off the water supply immediately.
- Age: If it's over 12 years old, it's on borrowed time.
Conclusion
While a tankless upgrade offers long-term savings and luxury, a standard tank is still the most cost-effective solution for most homeowners. Whichever you choose, ensure you hire a licensed professional to handle the gas and water connections safely.
Planning more home upgrades? Check our guide on Bathroom Remodeling Costs to match your new fixtures.
Disclaimer: Costs are national averages for 2025. Prices vary by region and brand (Rheem, Bradford White, AO Smith).