How much does it cost to run a water heater per month?

A standard electric tank costs about $55/month for a household drawing 55 gallons of hot water a day — DOE’s medium-use draw pattern — at the US average rate of 18.44¢/kWh. That is roughly 3,570 kWh a year. A gas tank costs about $21/month for the same hot water at $1.44/therm. Both figures are the annual cost divided by 12.

What is the cheapest water heater to run?

A heat pump water heater. At the same 55 gallons a day it costs about $14/month against about $55/month for a standard electric tank — roughly 74% less, because it moves heat rather than generating it. Gas is second at about $21/month where a gas line is available.

Is a tankless water heater cheaper to run than a tank?

Yes for gas, and the saving depends on how much hot water you use. DOE puts it at 24–34% for homes using 41 gallons a day or less, and 8–14% for homes using around 86 gallons a day. The saving comes from eliminating standby loss, which is why it matters most to light users: a gas storage tank rates a UEF of only 0.58–0.70 because it reheats a standing tank all day, while a non-condensing gas tankless rates 0.81–0.87 and a condensing one 0.93–0.97. Electric tankless saves very little, because an electric tank is already about 92% efficient.

How much does a heat pump water heater save per year?

About $485 a year against a standard electric tank at DOE’s medium draw pattern of 55 gallons a day and the US average rate of 18.44¢/kWh. ENERGY STAR’s published figure for a family of four is 3,760 kWh a year, which it values at $550 using 14.6¢/kWh — about $693 at the current US average. There is no federal tax credit on top of that any more: the §25C credit ended for property placed in service after 31 December 2025.

Updated August 22, 2026

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Calculate Your Water Heater Running Cost

Water Heater Type

Tank Size

Tank size sets how much hot water you can draw at once, not your running cost — that is set by how much you use.

Household Size

Uses the DOE draw patterns: 38 / 55 / 84 gallons of hot water a day.

Electricity Rate ($/kWh)US average 18.44¢/kWh — EIA, May 2026.

Water Heater Monthly Cost Comparison

Type	1–2 People (38 gal/day)	3–4 People (55 gal/day)	5+ People (84 gal/day)
Electric Tank (UEF 0.92)	~$38/mo	~$55/mo	~$84/mo
Gas Tank (UEF 0.64)	~$15/mo	~$21/mo	~$32/mo
Heat Pump WH (UEF 3.5)	~$10/mo	~$14/mo	~$22/mo
Tankless Electric (UEF 0.99)	~$35/mo	~$51/mo	~$78/mo
Tankless Gas (UEF 0.84)	~$11/mo	~$16/mo	~$24/mo

Electricity 18.44¢/kWh (EIA Electric Power Monthly, Table 5.6.A, May 2026 — a single month, not an annual average). Natural gas $1.44/therm (EIA, winter average, November 2025 - March 2026 (US); December 2025 - February 2026 (by state)). Hot water volumes are the DOE UEF draw patterns (low 38, medium 55, high 84 gal/day), heated from 58°F to 125°F. UEF ratings already include tank standby loss, which is why a gas tank rates 0.64 while its burner is about 80% efficient. Monthly figures are annual cost divided by 12. The heat pump figure of UEF 3.5 is our modelling assumption for a current ENERGY STAR unit in a warm space.

Which Water Heater Is Cheapest to Run?

Heat pump water heaters are the cheapest to run in most US climates — about 74% less than a standard electric tank at rated efficiency. For a household drawing DOE’s medium pattern of 55 gallons of hot water a day, that is roughly $173 a year against $658 for the electric tank, a saving of about $485 a year. ENERGY STAR puts the saving for a family of four at 3,760 kWh a year — $550 at the 14.6¢/kWh it assumes, or about $693 at the current US average of 18.44¢/kWh.

Gas tank heaters are the second cheapest option where natural gas is available, at roughly $252 a year for the same hot water. Tankless gas costs less again — but the reason is standby loss, not burner efficiency. A gas storage tank rates a UEF of only 0.58–0.70 because it reheats a standing tank around the clock, while a non-condensing gas tankless rates 0.81–0.87 and a condensing one 0.93–0.97. DOE puts the tankless saving at 24–34% for homes using 41 gallons a day or less, falling to 8–14% for homes using around 86 gallons a day, because the more hot water you draw the smaller a share standby loss becomes. See the full gas vs electric heating cost breakdown for a detailed comparison.

Electric tank heaters have the highest running cost of the mainstream options and the lowest purchase price. Low-rate states narrow the gap against gas without closing it: nationally an electric tank costs about 2.6x what a gas tank costs to run, falling to about 1.9x in Washington (14.95¢/kWh) and about 2.0x in Louisiana (14.15¢/kWh). If you are on electricity and staying in the house, the comparison that matters is not gas versus electric tank but heat pump versus electric tank. Use the heat pump cost calculator to compare options for your location.

Rates: electricity 18.44¢/kWh (EIA Electric Power Monthly, Table 5.6.A, May 2026); natural gas $1.44/therm (EIA, winter average, November 2025 - March 2026 (US); December 2025 - February 2026 (by state)). Hot water heated from 58°F to 125°F, the DOE UEF test conditions.

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Water Heater Cost — FAQs

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