Tankless water heater installation cost 2024

Pricing

• Tankless water installation costs typically range from $2,400 to $5,400.

• Size, fuel type, availability, energy efficiency, space requirements and labor can impact the overall cost of tankless water heater installation.

• Tankless water heaters are either electric models or gas-powered.

The cost of a tankless water heater is typically around $120 to $2,760. Prices vary based on brand, fuel source (liquid propane or natural gas), warranty type and additional features, such as heat pump technology and energy efficiency.

Tankless water heater installation will typically range from $2,400 to $5,400 — including the appliance, labor costs and other fees — according to estimates from Home Depot.

A recent informal survey found that labor and material estimates for water heater installation range from $1,000 to $3,000, according to Energy Star. Some installers charge a flat rate for installation, but most use the hourly rate plus materials model.

The general rule is that installation cost could be roughly equivalent to the cost of the water heater itself, so keep that in mind when budgeting for the total cost.

Is a tank or tankless water heater more expensive?

Choosing whether to go with a tank or a tankless hot water heater is an important prerequisite of the installation process. A tankless water heater will be more expensive, but cost may not be your determining factor. A water heater with a storage tank holds the hot water until it is ready for use. A tankless water heater doesn’t store any water and only provides hot water on demand. 

Tankless water heaters come in two primary types: condensing and non-condensing. Condensing tankless water heaters use the high-temperature exhaust as an additional way to heat water. These models are typically more heat-efficient and can use cheaper materials such as PVC in the venting pipes. However, these tend to be more expensive overall. 

A non-condensing water heater uses heat exchangers to create hot water and vents the exhaust outdoors. These units require stainless steel flue pipes to handle the heat from the exhaust, which can be more expensive than the condensing type of tankless water heater. They generally have lower installation costs and fewer opportunities to malfunction. 

Which water heater type you install should depend on the needs of those living in your house, according to Mark Collins, CEO of 1-800-Plumber + Air.

“If you want to never run out of hot water, then a tankless could be a good option,” Collins said. “If you never use all of the hot water currently with your tank-type heater, then going back with something similar may be a good option.”

Budget also plays a significant role in choosing the unit type for your home. Our research shows tankless units can be notably more expensive than tank heaters. However, tankless units typically last longer and use less energy, which can positively impact your utility bills.

The chart below breaks down the minimum and maximum average costs for tankless and tank water heaters.

In addition to available space and budget, your region can impact the right water heater type for your home.

“A tankless heater takes up much less space, as it hangs on the wall, compared to a tank-type heater,” said Collins. “In certain markets, primarily in the south, water heaters are installed in attics instead of the garage or basement. This can become a potential flood concern for these homes if they have 50 gallons of water stored in their attic. Oftentimes, these homeowners will elect to go with a tankless water heater to help remove some of this liability from their home.”

Pat Cronin, co-founder of Cronin Plumbing and Heating in Hoboken, New Jersey, agreed tankless systems are gaining popularity in the southern U.S., noting that the model might not fit all climates best.

“In areas with colder winters, electric tankless water heaters are not often an option, as these types of heaters require significant amperage to heat adequate amounts of water to adequate temperatures in cold months when incoming ground water temperatures are low,” Cronin said. “This amperage is not always available without costly modification of an existing home's electrical service.”

Should you hire a professional or DIY for tankless water heater installation?

In an effort to save money, the idea of installing a water heater yourself can be tempting. While homeowners can technically install a new water heater system themselves, it’s not always advised.

“Hiring a professional offers a lot of protection for a homeowner,” said Tom Diciolla, owner of Restore Plumbing and Drain in Elgin, Illinois. “Professional plumbers will be able to help determine and recommend the proper water heater for your home and have been trained to install the product in a professional and safe manner. They will be able to ensure the installation is done to code and is safety compliant and will also carry proper licensing and insurance.”

Diciolla advises homeowners who are considering handling the job themselves to be realistic.

“Homeowners can surely perform some installations themselves, (but) keep in mind that you will need proper tools, knowledge of gas and electrical work, plumbing skills, the physical ability to lift and carry a water heater, and of course, the time to do it,” he said. “Keep in mind, too, that starting an installation you cannot finish will often cost more time, frustration and energy than it would have to hire a professional.”

Professional plumbers will be able to help determine and recommend the proper water heater for your home and have been trained to install the product in a professional and safe manner.

Tom Diciolla

Depending on your location, plumbing and electrical permits may be required. Check with your local government about the costs and requirements of any permits. Cost factors and requirements can vary by municipality.

You’ll also need to consider any tools or materials you’ll have to purchase if you do the job on your own. The job requires some common tools you may already have on hand.

Here are some of the materials and tools you’ll need for a DIY water heater replacement:

Are rebates and incentives available for tankless water heaters?

Taking advantage of incentives and rebates is a smart way to save on water heater installation costs. The federal government offers a tax credit on purchasing and installing heat pump water heaters that earned the Energy Star label. The tax credit is 30% of the cost up to $2,000. It began on January 1, 2023, and lasts through December 31, 2032.

You can also use the Energy Star Rebate Finder to check for additional promotions.

What’s next?

While tankless water heater installations typically have more upfront costs than tank water heater installations, you can save money in the long run thanks to the energy cost savings. Tankless water heaters often have a longer life span than traditional tank models, which can also lead to additional savings over time.

Besides offering energy savings and durability, tankless water heaters are a popular choice for homes with space restrictions and for those needing a constant hot water supply.

Finally, we recommend hiring a professional to handle your new tankless water heater installation. Hiring out the work will help you avoid potential safety risks, additional costs, poor craftsmanship and the huge headache that comes with taking on a home improvement project bigger than you can handle.