How Much Does It Cost to Replace a Water Heater?

Replacing a water heater can be an expensive home improvement project, with costs ranging widely depending on the type, size, features, and installation of the new unit. However, it’s an investment that can pay off in the long run through improved efficiency and reliability. Here’s a detailed look at the factors that influence the cost to replace a water heater and what you can expect to budget for this important home upgrade.

What Influences the Cost to Replace a Water Heater?

Several key factors determine how much you’ll pay when replacing an existing water heater:

Type of Water Heater

The type of water heater you select is the biggest variable affecting replacement costs. The main options include:

  • Conventional Storage Tank – This is the most common and affordable type of water heater. Prices start around $500 for a 40-gallon model. Labor adds $200-$500 for installation.
  • Tankless – Also called on-demand or instantaneous, these units heat water as needed instead of storing it. Tankless water heaters cost $900 to $3,500 but need more complex venting. Installation ranges from $350-$1,000.
  • Heat Pump – A heat pump water heater pulls heat from the air to warm water. It’s energy efficient but expensive, with costs of $1,100-$3,500. Installation costs about $500-$1,200.
  • Solar – Harnessing the sun’s energy reduces utility bills but solar water heaters have high upfront costs of $2,000-$7,000 installed.


The size of the water heater impacts price. Standard models range from 20 to 80 gallons. Larger units cost more but may provide cost savings from added efficiency.

Energy Efficiency

Higher efficiency ratings like Energy Star increase the purchase price but deliver savings on monthly bills. Heat pump and condensing tankless models offer premium efficiency.

Special Features

“Smart” digitally controlled water heaters, longer warranties, leak protection, and other features add to the total replacement cost.

Installation Factors

Location, gas line or electrical work, permits, disposal fees, and custom venting for tankless heaters influence labor charges. Complex jobs cost more.

Cost to Replace a Conventional Storage Tank Water Heater

For many homes, a standard storage tank unit is the most economical water heater replacement option. Here are typical costs:

  • Basic 40-gallon model – $500 to $900 for the unit plus $200 to $500 for professional installation.
  • 50-gallon size – $650 to $1,000 for the tank and $300 to $600 for installation.
  • Higher efficiency model – Add $200 to $400 to upgrade to an Energy Star certified energy efficient water heater.
  • Premium features – Expect to pay $100 to $300 more for extras like leak detection, longer warranty, or WiFi monitoring.
  • Difficult installation – If the job requires extra time, parts, or labor, installation fees could run $700 to $1,000 or more.

In total, replacing a basic 40-gallon water heater with a like unit will likely cost $700 to $1,400, with higher efficiency options running $900 to $1,700 installed.

Cost to Replace with a Tankless Water Heater

Tankless water heaters provide hot water on demand without a bulky storage tank. Their higher purchase price is offset somewhat by energy savings and space efficiency. Cost factors include:

  • Basic unit – Budget $900 to $1,500 for the tankless heater itself.
  • Premium model – Better brand names with higher flow rates run $1,600 to $3,500 before installation.
  • Venting – Expect to pay $350 to $1,000 for proper exhaust venting, which is typically more complex than for tank models.
  • Gas line work – Gas tankless models may require gas line upgrades adding $200 to $500.
  • Total installed cost – With venting and labor, you’ll pay about $1,500 to $5,000+ to replace a water heater with a tankless version.

Though pricier, tankless water heaters can save on energy costs and may be eligible for rebates. The payback period averages 3 to 5 years.

Cost to Replace with a Heat Pump Water Heater

Heat pump water heaters pull heat from ambient air to heat water, providing very high efficiencies. Upfront costs are higher but energy savings quickly offset the difference. Typical costs include:

  • Unit price – $1,100 to $3,500 for the heat pump heater. Higher efficiency models cost more.
  • Installation – Expect $500 to $1,200 for professional installation of these complex systems.
  • Electrical upgrades – Some homes need upgraded electrical service to power a heat pump water heater, which could add $200 to $500.
  • Total installed cost – A new heat pump water heater will run about $1,600 to $5,000 installed. Rebates up to $500 are available in some areas.

While expensive, a heat pump water heater can cut water heating costs in half compared to conventional models. The energy savings often provide a payback in just 2 to 3 years.

Cost to Replace with a Solar Water Heater

For eco-friendly homeowners, solar water heaters reduce your carbon footprint. But these systems also carry higher upfront costs:

  • Equipment – $2,000 to $4,000 for the solar thermal collectors and storage tank. Larger systems for bigger families can run $5,000 to $7,000.
  • Installation – Approximately $1,000 to $3,000 for rooftop mounting, wiring, plumbing, permits, and labor.
  • Total system cost – Installed solar water heating systems range from $3,000 to $10,000 or more. Tax credits defray 25% of the costs. Rebates may also apply.

With solar water heating, your fuel source is free. But the payback period is a lengthy 10 to 20 years in many regions. The substantial installation costs make solar water heaters most practical for eco-conscious homeowners.

Cost to Replace Different Types of Water Heaters

Here’s a comparison of estimated total installed costs for common water heater replacement options:

| Water Heater Type | Size | Average Cost |
| Standard tank | 40 gallons | $700 – $1,400 |
| Standard tank | 50 gallons | $950 – $1,600 |
| Tankless | On-demand | $1,500 – $5,000 |
| Heat pump | 50 gallons | $1,600 – $5,000 |
| Solar | 80 gallons | $3,000 – $10,000 |

As you can see, conventional storage tank models provide the most budget-friendly replacement option for most households. Upgrading to tankless or heat pump models costs more upfront but provides energy savings over time. Solar water heating is the most expensive option but harnesses renewable free energy.

Additional Replacement Cost Factors

Beyond the water heater itself, additional factors influence the total project cost:

Permits – Most areas require permits to replace a water heater, adding $50 to $150.

Leak pan – Local codes may mandate a drain pan under the new unit in case of leaks, around $75.

Seismic straps – Earthquake-prone regions require straps to secure the tank, about $50 installed.

Disposal fees – Removing an old water heater often incurs $50 to $100 in disposal costs.

Sales tax – Figure an additional 7-10% for sales tax on materials and labor.

When budgeting your project, remember to account for all these incidental replacement costs beyond the base cost of the unit itself. And it’s always smart to get 2-3 quotes for comparison. Replacing a water heater is not a DIY project for most homeowners.

FAQs About Replacing a Water Heater

How long do water heaters typically last?

The average lifespan of a traditional water heater is 8-12 years. Tankless models may last up to 20 years. Signs yours may need replacing include rumbling, leaks, loose parts, and insufficient hot water.

Should I repair or replace my aging water heater?

Once a water heater is more than 8-10 years old, replacement is usually better than repairing an old, inefficient model. The costs of fixing an aging unit often approach the price of installing a new one.

Is it worthwhile to upgrade to a tankless water heater?

Tankless models provide a continuous supply of hot water on demand. The higher efficiency and space savings make them worth the added upfront cost for many homes. Calculate the payback time in your area.

How much does it cost to replace a water heater with a heat pump model?

Though pricier upfront at $1,600-$5,000 installed, a heat pump water heater can pay for itself in energy savings within 2-3 years. Their very high efficiency makes them a sound investment for suitable homes.

Should I hire a plumber or handyman to replace my water heater?

Licensed plumbers have the necessary skills, experience, and credentials to properly remove and install a new water heater. Unless you have expertise, you should hire a pro rather than attempting a DIY replacement.

Does home insurance cover water heater replacement?

Homeowners insurance may cover repairs if the old unit fails and causes water damage. But wear and tear or reaching the end of its useful life is not typically covered. Plans vary, so check with your insurer.

Key Takeaways

  • The cost to replace a water heater runs $700-$1,400 installed for a like 40-gallon standard tank model.
  • Tankless heaters cost more upfront, $1,500-$5,000, but provide energy savings over their lifespan.
  • Expect to pay $1,600-$5,000 to replace with a highly efficient heat pump water heater.
  • Solar water heating systems reduce environmental impact but carry high installed costs of $3,000-$10,000.
  • Many factors like system type, size, features, installation difficulty, and more determine the total replacement cost.
  • Replacing a water heater is a complex job best left to qualified plumbers, not DIYers.


Replacing an aging or faulty water heater is a major home improvement project, but one that’s worth considering for the energy savings and reliability of a new model. With standard tanks starting around $700 installed and more advanced systems costing up to $10,000, compare the lifetime costs and efficiencies to choose the best replacement for your home and budget. With some planning and smart shopping, you can find a modern water heater replacement that meets your family’s needs and provides reliable hot water for years to come.