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Tankless water heaters heat water as it passes through the unit instead of storing heated water in the tank. Their ability to produce hot water on an as-needed basis makes them more efficient. However, they are generally more expensive than traditional units. Is a tankless water heater worth it? Most homeowners will save money with a tankless unit in the long run by using less energy.

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.

You can and should vent the gas from your hot water heater to the outside of your home. Traditionally, these gases were vented back to other gas appliances, like stoves or furnaces, but many jurisdictions have outlawed this practice due to the risks it provides. 

Most water heaters today use atmospheric venting that exhausts the gas out of the home through a pipe.

You don’t have to replace expansion tanks at the same time as your hot water heater. You may be able to go six to 12 years or more before needing to replace your expansion tank. At $150 to $450, hot water heater expansion tanks are usually much more affordable than the cost of hot water tanks themselves, which average about $1,190.