THE SHORT VERSION
- At DOE’s 2025 national prices and a heavy-use household (84 gallons a day): electric tank about $919 a year, standard gas tank $384, condensing gas tankless $255, 240-volt heat pump $214.
- A lighter-use home (55 gallons a day) pays about two-thirds of that: roughly $601, $252, $167 and $140.
- A plain electric tank is the most expensive way to heat water in every state example below. A heat pump uses about a quarter of its electricity.
- Your local prices decide gas vs. heat pump. A heat pump beats a standard gas tank when your electricity price in cents per kWh is less than about 22 times your gas price in dollars per therm.
- To estimate your own cost: take the yearly kWh or therms from the yellow EnergyGuide label, scale it to your household’s hot water use and multiply by the per-unit price on your utility bill.
Yearly cost of each type at national prices
One method for every heater, so the rows compare fairly: the hot water use in the federal test, divided by each heater’s efficiency rating, priced at the national averages DOE published in March 2026 for 2025: 17.22¢ per kWh, $1.43 per therm of natural gas and $2.35 per gallon of propane.
| Water heater | Efficiency (UEF) used | Energy a year, 84 gal/day | Cost, 84 gal/day | Cost, 55 gal/day |
|---|---|---|---|---|
| Electric tank, 50 gal | 0.93 | 5,334 kWh | $919 | $601 |
| Electric tankless | 0.97 | 5,114 kWh | $881 | $577 |
| Propane tank, standard | 0.63 | 294 gallons | $690 | $452 |
| Gas tank, standard 50 gal | 0.63 | 269 therms | $384 | $252 |
| Gas tankless, non-condensing | 0.81 | 209 therms | $299 | $196 |
| Heat pump, 120 V plug-in | 3.0 | 1,654 kWh | $285 | $186 |
| Gas tankless, condensing | 0.95 | 178 therms | $255 | $167 |
| Heat pump, 240 V | about 4.0 | 1,240 kWh | $214 | $140 |
Ember & Tank estimate: DOE test procedure (10 CFR 430, Appendix E) and DOE’s 2025 unit costs (Federal Register 2026-05899). UEFs: federal minimum (standard gas tank, non-condensing tankless); Rheem Performance Plus (0.93); Rheem ProTerra plug-in (3.0); Stiebel Eltron Tempra Plus (0.97); ENERGY STAR medians for condensing gas tankless (0.95) and 240 V heat pumps (1,240 kWh). The 55 gal/day column scales by 55/84.
Electric resistance heating (a standard electric tank or electric tankless) costs the most: each kWh becomes one kWh of heat, and DOE’s figures put electricity at $50.47 per million Btu against $14.37 for gas. A heat pump moves heat from the air into the water instead; ENERGY STAR says it delivers 3 to 4 kWh of heat per kWh used, so it costs about a quarter as much as an electric tank.
ENERGY STAR says water heating is typically up to 20 percent of a home’s energy use. For the wider buying decision, see tank vs. tankless vs. heat pump and gas vs. electric.
How the estimate works, step by step
Every new water heater is rated with the same federal test: cold water arrives at 58°F and leaves at 125°F, and the heater follows one of four daily draw patterns. A heater with a first-hour rating of 75 gallons or more (a typical 50-gallon gas tank), or a tankless unit rated at 4 gallons a minute or more, gets the high-usage pattern: 84 gallons a day. The medium pattern is 55. We use 84 for the headline numbers.
Work out the heat the water needs
365 days × 84 gallons × 8.24 lb per gallon × 67°F = 16.93 million Btu a year (11.08 million at 55 gallons a day).
Divide by the heater’s efficiency
The Uniform Energy Factor (UEF) is the share of energy input that ends up in the hot water during the test. A gas tank at 0.63 needs 16.93 ÷ 0.63 = 26.87 million Btu of gas; an electric tank at 0.93 needs 18.20 million Btu.
Convert to the units on your bill
A therm is 100,000 Btu, so the gas tank uses 269 therms. A kWh is 3,412 Btu, so the electric tank uses 5,334 kWh.
Multiply by your price
269 × $1.43 = $384. 5,334 × 17.22¢ = $919. Swap in your own rates for your own number.
Your local prices can change the ranking
EIA’s state averages for residential electricity (January–July 2026) run from 12.36¢ per kWh in North Dakota to 46.28¢ in Hawaii; the US average is 18.19¢. Residential gas averaged about $1.48 a therm in 2025, from $0.74 in Idaho to over $5 in Hawaii.
A quick break-even rule
Every heater in the method uses the same hot water, so one ratio compares any two: your electricity price in cents per kWh divided by your gas price in dollars per therm.
- Heat pump vs. standard gas tank: the heat pump costs less below a ratio of about 22 (269 therms ÷ 1,240 kWh × 100). Every state average is below 22 except Alaska, where they tie at about $336.
- Heat pump vs. condensing gas tankless: the heat pump costs less below about 14. About 19 state averages are above it, mostly in the Northeast, Midwest and Mountain West, including Idaho (17.5) and California (15.7).
- Electric tank vs. standard gas tank: the electric tank wins only below about 5. No state average is that low (Florida is lowest, about 6).
- Propane: at $2.35 a gallon, a propane tank ($690) costs more than a heat pump at any electricity price under about 56¢.
Work out your own number in five minutes
Find your per-unit prices
Add up every charge billed per kWh on your electric bill (energy, delivery, riders), ignoring the fixed monthly charge. Do the same per therm for gas. If gas is billed in Ccf, divide by 1.037 to get dollars per therm (EIA’s conversion).
Find the heater’s yearly energy use
Use “Estimated yearly energy use” on the yellow EnergyGuide label, or the spec sheet. Skip the label’s dollar figure: it uses the FTC’s national prices (14¢ per kWh, $1.21 per therm). Our EnergyGuide label guide shows where each number sits.
Scale for your household
The label assumes its test bin’s daily use: 84 gallons for a first-hour rating of 75 or more, 55 for 51 to 74.9. For lighter use, scale down: 269 therms × 55 ÷ 84 = 176 therms.
Multiply
176 therms × your price. At, say, $1.80 a therm: about $317 a year. Repeat for each heater you are considering, with the same daily use.
EIA’s 2020 Residential Energy Consumption Survey put the average home at 14.1 million Btu a year for water heating, between our 55- and 84-gallon gas tank figures (17.6 and 26.9 million Btu), so many homes use less than the high-use pattern.
Why your real cost will differ from the estimate
- How much hot water you use. Cost scales almost one for one with gallons.
- How cold your water arrives. The test assumes 58°F; colder winter water in the north means more heat per gallon.
- Your thermostat setting. The test delivers 125°F; a hotter tank loses more heat while it waits. See what temperature to set.
- Where a heat pump sits. Ratings use 67.5°F air. ENERGY STAR says heat pump water heaters work best where the air stays at or above 40°F; colder, and the backup elements run more.
- Standby loss. DOE notes an oversized tank costs more to run because of higher standby losses, one reason right-sizing matters.
- A recirculation pump adds pipe heat loss and pump electricity; see recirculation pumps.
Running cost vs. purchase price
A heater that is cheaper to run usually costs more to buy. Home Depot publishes installed ranges of $1,600–$2,400 for a gas or electric tank (average $1,950), $2,500–$5,000 for a heat pump and $2,400–$5,400 for tankless (average $4,300).
| Switch | Yearly saving | Extra upfront cost (Home Depot figures) | Simple payback |
|---|---|---|---|
| Electric tank → 240 V heat pump | $705 | about $1,800 (heat pump midpoint $3,750 vs. tank average $1,950) | about 2.6 years |
| Gas tank → 240 V heat pump | $170 | about $1,800, plus any new circuit | about 11 years |
| Gas tank → condensing gas tankless | $129 | about $2,350 (tankless average $4,300 vs. $1,950) | about 18 years |
Home Depot’s published installed ranges, checked September 2026; heat pump midpoint used because no average is published. At 55 gallons a day, paybacks are about 1.5 times as long. Excludes rebates and maintenance.
Compare paybacks with the heater’s life: ENERGY STAR cites 13–15 years for heat pump water heaters and 10–12 for standard tanks; DOE says most tankless units last more than 20. The federal 25C tax credit covered only improvements made through December 31, 2025. See water heater rebates for what is left.
Common questions
How much does it cost to run a gas water heater per month?
A standard 50-gallon gas tank uses about 269 therms a year in a heavy-use home: $384 at DOE’s $1.43 a therm, about $32 a month. A lighter-use home pays about $21 a month.
How much does it cost to run an electric water heater per month?
A standard 50-gallon electric tank uses about 5,334 kWh a year at 84 gallons a day: $919 at 17.22¢, about $77 a month, or about $50 a month at 55 gallons a day. A heat pump does the same job with roughly a quarter of the electricity.
Is it cheaper to heat water with gas or electricity?
Gas beats a standard electric tank in every state average we checked. A heat pump beats a standard gas tank wherever your electricity price in cents per kWh is under about 22 times your gas price per therm, which covers every state average except Alaska.
Why doesn’t the EnergyGuide label match my bill?
The label uses the FTC’s fixed national prices (14¢ per kWh, $1.21 per therm) and the daily hot water use of the heater’s test bin. Use the label’s kWh or therms, scale for your use and multiply by your own rates.
How much does a heat pump water heater cost to run in a cold basement?
More than its rating suggests. Ratings use 67.5°F air, and ENERGY STAR says heat pump water heaters work best where the air stays at or above 40°F. In colder spaces the backup elements run more often.
Sources
Sources checked October 5, 2026. Prices, codes and rebates change. Check current details with your installer and local permit office.
- 10 CFR 430 Subpart B, Appendix E: water heater test procedure (draw patterns, 58°F/125°F, 8.24 lb/gal) ↗ · Code of Federal Regulations, via Cornell LII
- Representative average unit costs of energy (2025 prices, notice 2026-05899) ↗ · U.S. Department of Energy, Federal Register
- 10 CFR 430.32(d): energy conservation standards for water heaters ↗ · Code of Federal Regulations, via Cornell LII
- Average price of electricity to ultimate customers by state (Electric Power Monthly Table 5.6.B) ↗ · U.S. Energy Information Administration
- Natural gas prices, residential, annual by state ↗ · U.S. Energy Information Administration
- What are Ccf, Mcf, Btu and therms? (conversion FAQ) ↗ · U.S. Energy Information Administration
- Residential Energy Consumption Survey 2020, Table CE3.1: end-use consumption ↗ · U.S. Energy Information Administration
- Certified heat pump water heaters (data set) ↗ · ENERGY STAR
- Certified gas storage and tankless water heaters (data set) ↗ · ENERGY STAR
- What is Uniform Energy Factor and why does it matter? ↗ · ENERGY STAR
- Do heat pump water heaters work in cold climates? ↗ · ENERGY STAR
- Busting myths about heat pump water heaters ↗ · ENERGY STAR
- What goes into the cost of installing a heat pump water heater? (lifespans) ↗ · ENERGY STAR
- Estimating costs and efficiency of storage, demand and heat pump water heaters (archived copy, May 2026) ↗ · U.S. Department of Energy, Energy Saver
- Storage water heaters (archived copy, May 2026) ↗ · U.S. Department of Energy, Energy Saver
- Tankless or demand-type water heaters (archived copy, June 2026) ↗ · U.S. Department of Energy, Energy Saver
- 16 CFR Part 305, Appendix K1: unit energy costs for EnergyGuide labels ↗ · Federal Trade Commission, via Cornell LII
- Performance Plus electric water heater spec sheet ↗ · Rheem, hosted by Home Depot
- ProTerra plug-in heat pump water heater spec sheet ↗ · Rheem
- Tempra Trend and Tempra Plus technical specifications ↗ · Stiebel Eltron
- Cost to install a water heater (national installation price ranges) ↗ · Home Depot
- Energy Efficient Home Improvement Credit (25C) ↗ · IRS