Gas vs electric water heaters: purchase, install, and running costs
Electric is cheaper to install, gas is usually cheaper to run, and heat pump units beat both on operating cost if you can swallow the upfront price.
2026 installed costs by fuel
| Fuel type | Installed cost | Notes |
|---|---|---|
| Electric tank | $600 – $3,500 | Simplest install, no venting |
| Natural gas tank | $700 – $2,700 | Venting required |
| Propane tank | $700 – $2,500 | Rural standard |
| Heat pump (hybrid) | $1,200 – $4,600 | Lowest running cost; HEAR rebate eligible |
Unit prices tell the same story: a 50-gallon electric Rheem runs $600–$750 against $750–$900 for its gas twin, and the gas unit adds venting labor.
Running cost is where gas earns it back
In most states natural gas heats water for roughly half the cost of standard electric resistance. A typical household spends a few hundred dollars a year on water heating, so the gap adds up to real money over a 10-year tank life. If you already have gas at the water heater location, staying gas is usually right.
Don't switch fuels casually
Converting electric-to-gas runs $400–$2,000+ (gas line, venting); gas-to-electric runs $250–$1,000+ (dedicated circuit, panel capacity). Conversions only pencil when the old setup was failing you anyway.
The heat pump wildcard
Heat pump water heaters use a third or less of the electricity of a resistance tank. At $1,200–$4,600 installed they're the most expensive box on this page, but they're the only type with live rebate money in 2026 — up to $1,750 through state HEAR programs for ENERGY STAR models, income-qualified. In a garage or basement with room to breathe, they're the long-game winner. Details on the rebate page.
Questions people ask
Are gas or electric water heaters cheaper to install in 2026?
Electric installs cheaper — no venting, simpler labor. Gas typically costs a few hundred more upfront but heats water for roughly half the operating cost in most states.
Is it worth switching from electric to gas water heating?
Only if a gas line is already close. The $400–$2,000+ conversion cost usually takes a decade to earn back; a heat pump water heater often beats the switch on total cost now.