How Much Does A Tankless Water Heater Cost In 2023? (2023)

Tankless water heaters can use a variety of fuel sources and can come as two systems. You can choose several single point tankless water heaters or opt for a whole house tankless water heater. Tankless water heaters can also run off gas, electricity, propane or solar power.

Single Point

Single point tankless water heaters, also known as point of service tankless water heaters, typically come in packs of three. Each until has a cost between $145 and $250 at a big box retailer. The packs cost between $435 and $775. Single point hot water heaters work well in homes where the plumbing covers a wide area. Point of service tankless water heaters can provide a closer path for water and use less energy.

Whole House

Whole house tankless water heaters will typically range in cost between $200 and $2,300 for electric and gas-powered types. Electric tankless water heaters usually cost less than gas types.

Electric tankless water heaters cost between $170 and $800. Some electric tankless water heaters can use solar power for operation. Gas-powered hot water tankless heaters cost between $230 and $2,300 while propane-powered tankless water heaters cost between $195 and $2,200.

There are oil-fueled tankless water heaters on the market. Oil-fueled tankless water heaters range in price from $1,000 to $3,000. Oil heating has started to get banned in some areas, like Quebec, and other areas have considered a ban.

Labor costs to install a tankless water heater vary based on the type of system and type of power it uses. It usually costs between $500 and $3,000 to install a tankless water heater. Point of service water heater installation can be on the lower end for one unit but there might be additional plumbing work needed or electrical work for electric tankless water heaters. Gas-powered tankless water heaters might require additional pipe work, especially if you’re converting from electric to gas.

Basic Installation

Installing a tankless water heater can cost between $1,000 and $3,500 typically. Most homes install a whole-house tankless water heater system though the heating source can vary. Homes will usually continue to use the same heating source for a tankless water heater as they did with a storage-tank water heater.

Heating Source Change

If you want to switch from using gas to heat your water with a tankless water heater or want to switch from a gas-powered storage tank hot water heater to an electric-powered tankless system, you’ll need to pay for an electrician and plumber.

A local plumber will charge between $45 and $150 an hour. If you need additional electrical work, like a new outlet, circuit or wiring, a local electrician can charge $50 to $100 an hour. Expect the conversion to take at least a couple of hours.

Switching from an electric-powered system to a gas-powered system will require additional work, especially if you have to run a new gas line to the house or need to route one to the tankless water heater. Labor costs will vary based on the amount of time it takes to complete the job and the amount of work needed.

Tankless water heaters get measured by their gallons per minute output and the amount of temperature rise. Temperature rise represents the increase in temperature needed to heat incoming water to the desired temperature for hot water. Incoming water can typically have a temperature of 50° F and need to rise to around 120° F.

Whether the water heater runs off electricity or gas can impact how fast the water gets heated.

Gallons Per Minute (GPM)

Before deciding on a tankless water heater, you need to assess the gallon per minute flow rate needed for your home. Since tankless water heaters operate by heating water on demand, you need a rate sufficient to heat as many appliances and faucets at one time you think you need. An average home needs a GPM rate between 5.5 and 7.5 to provide ample hot water at one time.

Average flow rates for common appliances are:

• Showerhead 2 to 3 GPM
• Faucet 1 to 2 GPM
• Kitchen sink 1.5 GPM
• Dishwasher 1.5 to 2 GPM
• Washing machine 2 to 2.5 GPM

Temperature Rise

Temperature rise impacts tankless water heater size or at least the capability of the tankless water heater. A tankless water heater should reach a set temperature you desire and cover the temperature rise needed to get there. Ground water temperatures vary based on geography and some can dip as low as 40° F. The amount of temperature rise needed in your area can influence the type of tankless water heater you need.

Several things can affect the total cost of a tankless water heater. The type of tankless water heater system, BTUs, GPM rate, available tax credits, condensing vs. non-condensing units and installation will dictate the price of a tankless water heater. Some will add to the cost and others will reduce the cost.

Type of System

Tankless water heaters can operate as whole-house systems or point of service units. A whole-house tankless water heater will cost more than one or a pack of point of service units, however, installing single point units can incur additional installation costs. It’s best to evaluate your home’s hot water needs before deciding which type of system to use.

BTUs

Gas-powered tankless water heaters can vary in cost based on the amount of British Thermal Units (BTU) they can put out. Units with 199,000 BTU capability will cost more than those with lower numbers. Units with higher BTUs can heat water quicker than those with fewer BTUs.

GPM

Gallons per minute or flow rate affects the price of a tankless hot water heater. More capacity means you can operate more items that need hot water at one time. So if you have a bigger house or a big household, you’ll need a unit with a high flow rate. Flow rates range from 2 GPM to nearly 10 GPM for home models.

Tax Credits

There can be tax credits available for purchasing tankless hot water heaters. Under the Inflation Reduction Act of 2022, if you purchase a gas-powered Energy Star-certified tankless water heater you can claim 30% of your project cost or $600. That can offset some of the initial investment if you’re trying to reduce your utility bills.

Condensing vs. Non-Condensing

Condensing tankless water heaters use a second heat exchanger to transfer more heat to the water. Condensing units lower the exhaust gas temperature to a point where it condenses, which can help increase the flow rate. Since the exhaust gas temperature has decreased, it can also mean the ability to use different venting equipment.

Condensing units tend to cost more than non-condensing units but also run more efficiently than non-condensing units. The additional heat exchanger adds to the cost of a condensing tankless water heater. Non-condensing units need proper venting to handle higher temperatures.

Installation

Installation costs vary for tankless water heaters but typically it costs between $1,000 and $3,500. Conversions will cost more, as will any piping installation and electrical work. Where you decide to install a tankless water heater can affect costs, especially if you move it away from a previous storage tank spot.

(Note: All detailsand prices are accurate as of publication and are subject to change.)

More people have turned to tankless water heaters as a way to go green or limit their carbon footprint. Tankless water heaters have advantages for the environment and your pocketbook. But you might notice a lighter pocketbook after purchasing a tankless hot water heater. The higher cost versus a tank-style water heater turns people off from making the switch.

Pros

• Use less energy and water
• Smaller size than tank-style water heaters
• Longer lifespan

Cons

• Higher initial costs
• Electric models won’t work in power outages
• May not have hot water at one time when using multiple appliances

It’s best to have a professional install a tankless hot water heater. Tankless water heaters can have a higher price and it’s best not to risk installing it improperly and ruining a unit. Depending on the heating source, you might need a professional to install it and obtain permits so it meets code.

To arrive at the average costs in this article, editorial team members surveyed a range of providers on national and local levels. All averaged figures were correct at the time of publication and may be subject to change.