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The average cost to replace a water heater is around $1,325, with a typical range of $900 to $1,800 for a standard replacement. The final price depends on the type of heater (tank vs. tankless), its size, fuel source (gas or electric), and the complexity of the installation. A simple one-to-one replacement will be on the lower end of the cost spectrum. However, if you are switching from one type of heater or energy source to another, you can expect labor costs to be significantly higher due to the extra work involved. It's also worth considering that while gas and electric heaters may have similar upfront costs, their long-term operating costs can differ based on local utility prices.

If you're replacing a broken water heater, now is a great time to make sure you're selecting a unit that has the right capacity for your household. According to the U.S. Department of Energy, a small 50-gallon to 60-gallon tank is sufficient for households with one to three people. A medium-sized 80-gallon tank is considered ideal for three to four people. A larger tank may be needed if your household has four to six people.

Yes, you can replace a current tank water heater with a tankless model or vice versa. If you’re maintaining the same fuel source—gas or electricity—the switchover should be smooth. A conventional tank requires open floor space, while a tankless model can be wall-mounted. If you’re switching to a tank water heater, you might need to clear space for it. Gas-powered tankless water heaters need a large volume of gas when they start running to heat the water instantly. You might need to increase the size of the gas line when going from a tank to a tankless model.

Every city and state will have its own set of installation codes and laws. Some won’t require you to obtain a permit before replacing your water heater, though we recommend you do, regardless of the local codes. On the other hand, some cities and states might require secondary permits for plumbing and electrical work related to the installation. Check with a local water heater installation company and local building codes to confirm which permits are required and what the specific laws are.