The average US household with an electric water heater spends $468 per year ($39/month) on water heating, consuming approximately 2,785 kWh annually. But your actual cost depends heavily on where you live — a family in Idaho pays roughly $294/year while the same family in Hawaii pays $1,170/year for the same hot water.
Water heating is the third-largest energy expense in most homes (14% of total energy use), trailing only space heating and cooling. Switching from a standard electric tank to a heat pump water heater cuts this cost by 60–70%, making it one of the highest-ROI energy upgrades available.
Electric Water Heating Costs: All 50 States
The cost to heat water electrically depends on two variables: your electricity rate and your household's hot water consumption. We've calculated annual costs using each state's average residential electricity rate and the national average consumption of 2,785 kWh/year for a standard electric tank water heater.
Complete State-by-State Cost Table (2026)
| State | Rate (¢/kWh) | Annual Cost (Standard Tank) | Monthly Cost | Annual Cost (Heat Pump WH) |
|---|---|---|---|---|
| Alabama | 14.7 | $409 | $34 | $117 |
| Alaska | 24.2 | $674 | $56 | $192 |
| Arizona | 14.3 | $398 | $33 | $114 |
| Arkansas | 12.5 | $348 | $29 | $99 |
| California | 27.6 | $769 | $64 | $219 |
| Colorado | 14.1 | $393 | $33 | $112 |
| Connecticut | 29.9 | $833 | $69 | $238 |
| Delaware | 15.2 | $423 | $35 | $121 |
| Florida | 15.5 | $432 | $36 | $123 |
| Georgia | 14.2 | $395 | $33 | $113 |
| Hawaii | 42.1 | $1,173 | $98 | $335 |
| Idaho | 10.5 | $292 | $24 | $84 |
| Illinois | 15.4 | $429 | $36 | $122 |
| Indiana | 14.8 | $412 | $34 | $118 |
| Iowa | 14.0 | $390 | $33 | $111 |
| Kansas | 13.8 | $384 | $32 | $110 |
| Kentucky | 12.3 | $343 | $29 | $98 |
| Louisiana | 12.1 | $337 | $28 | $96 |
| Maine | 24.8 | $691 | $58 | $197 |
| Maryland | 16.2 | $451 | $38 | $129 |
| Massachusetts | 28.6 | $796 | $66 | $227 |
| Michigan | 18.4 | $512 | $43 | $146 |
| Minnesota | 14.5 | $404 | $34 | $115 |
| Mississippi | 13.8 | $384 | $32 | $110 |
| Missouri | 12.7 | $354 | $30 | $101 |
| Montana | 12.2 | $340 | $28 | $97 |
| Nebraska | 12.0 | $334 | $28 | $95 |
| Nevada | 13.1 | $365 | $30 | $104 |
| New Hampshire | 27.1 | $755 | $63 | $215 |
| New Jersey | 18.8 | $524 | $44 | $149 |
| New Mexico | 14.3 | $398 | $33 | $114 |
| New York | 22.5 | $627 | $52 | $179 |
| North Carolina | 13.1 | $365 | $30 | $104 |
| North Dakota | 11.6 | $323 | $27 | $92 |
| Ohio | 14.6 | $407 | $34 | $116 |
| Oklahoma | 12.4 | $345 | $29 | $99 |
| Oregon | 12.0 | $334 | $28 | $95 |
| Pennsylvania | 17.5 | $487 | $41 | $139 |
| Rhode Island | 27.8 | $774 | $65 | $221 |
| South Carolina | 14.5 | $404 | $34 | $115 |
| South Dakota | 12.8 | $356 | $30 | $102 |
| Tennessee | 12.8 | $356 | $30 | $102 |
| Texas | 14.2 | $395 | $33 | $113 |
| Utah | 11.2 | $312 | $26 | $89 |
| Vermont | 21.4 | $596 | $50 | $170 |
| Virginia | 14.0 | $390 | $33 | $111 |
| Washington | 10.8 | $301 | $25 | $86 |
| West Virginia | 12.9 | $359 | $30 | $103 |
| Wisconsin | 16.1 | $448 | $37 | $128 |
| Wyoming | 11.5 | $320 | $27 | $92 |
The "Heat Pump WH" column shows costs for a heat pump water heater with a UEF of 3.5, consuming approximately 795 kWh/year for the same hot water output. The savings range from $208/year in Idaho to $838/year in Hawaii.
How Water Heating Costs Break Down
Consumption Factors
The amount of hot water your household uses is the biggest variable you can control. Here's how consumption scales:
| Household Size | Gallons/Day | kWh/Year (Standard Tank) | Annual Cost (Avg Rate) |
|---|---|---|---|
| 1 person | 20–30 | 1,500 | $252 |
| 2 people | 35–50 | 2,400 | $403 |
| 3 people | 50–70 | 3,200 | $538 |
| 4 people | 60–80 | 3,800 | $638 |
| 5+ people | 80–100+ | 4,500 | $756 |
Where Hot Water Goes
| Use | Gallons/Day (2-person household) | % of Total |
|---|---|---|
| Showers | 16–20 | 37% |
| Clothes Washer | 10–15 | 25% |
| Dishwasher | 4–6 | 10% |
| Faucets (kitchen + bathroom) | 8–12 | 20% |
| Bathtubs | 2–4 | 8% |
Showers dominate hot water consumption. A standard showerhead flows at 2.5 GPM; a low-flow model flows at 1.5–2.0 GPM. Switching saves 15–25% of total hot water use, translating to $55–$115/year for a two-person household.
Electric Water Heater Types Compared
Cost and Efficiency Comparison
| Type | Purchase Price | Installation | UEF Range | Annual kWh | Annual Cost* | 10-Year TCO |
|---|---|---|---|---|---|---|
| Standard Electric Tank (50 gal) | $400–$700 | $300–$600 | 0.89–0.95 | 2,785 | $468 | $5,680–$6,080 |
| High-Efficiency Tank (50 gal) | $500–$900 | $300–$600 | 0.93–0.95 | 2,650 | $445 | $5,350–$5,750 |
| Heat Pump Water Heater (50 gal) | $1,200–$2,000 | $400–$800 | 3.3–4.0 | 750–850 | $126–$143 | $2,860–$4,230 |
| Tankless Electric (whole home) | $500–$1,000 | $800–$1,500 | 0.96–0.99 | 2,100 | $353 | $5,030–$6,030 |
| Tankless Electric (point of use) | $150–$350 | $100–$300 | 0.96–0.99 | 800–1,500** | $134–$252 | $1,790–$3,770 |
*At national average rate of $0.168/kWh. **Depends on number of units and usage.
The clear winner for most homeowners is the heat pump water heater. Despite a higher purchase price, its 10-year total cost of ownership is $1,500–$3,000 less than a standard tank. With the 30% federal tax credit (up to $2,000), the upfront premium is essentially free — you pay less from day one.
Heat Pump Water Heater Savings by State
The states where heat pump water heaters save the most are those with the highest electricity rates. Here are the top 10 states where upgrading makes the biggest financial impact:
| Rank | State | Annual Savings (vs. Standard Tank) | Payback Period* | 10-Year Net Savings |
|---|---|---|---|---|
| 1 | Hawaii | $838 | 1.4 years | $7,180 |
| 2 | Connecticut | $595 | 2.0 years | $4,750 |
| 3 | Massachusetts | $569 | 2.1 years | $4,490 |
| 4 | Rhode Island | $553 | 2.2 years | $4,330 |
| 5 | New Hampshire | $540 | 2.2 years | $4,200 |
| 6 | California | $550 | 2.2 years | $4,300 |
| 7 | Maine | $494 | 2.4 years | $3,740 |
| 8 | New York | $448 | 2.7 years | $3,280 |
| 9 | Vermont | $426 | 2.8 years | $3,060 |
| 10 | Alaska | $482 | 2.5 years | $3,620 |
*After 30% federal tax credit on a $2,000 installed heat pump water heater.
Real-World Examples
Example 1: Family of Four in Florida
Current setup: 50-gallon standard electric tank (EF 0.90), built in 2014, set to 140°F. Rate: $0.155/kWh. Monthly water heating cost: $52.31 ($628/year).
Actions taken: Lowered thermostat to 120°F (saves ~$50/year), installed low-flow showerheads ($30 investment, saves ~$70/year), wrapped tank with insulation blanket ($25, saves ~$25/year).
New monthly cost: $40.24 ($483/year). Savings: $145/year with $55 invested. Payback: 4.6 months.
Example 2: Couple in Massachusetts Upgrading to Heat Pump
Current setup: 40-gallon standard electric tank (EF 0.88), rate: $0.286/kWh. Annual cost: $905.
Upgrade: Rheem ProTerra 50-gallon heat pump water heater (UEF 3.55). Installed cost: $2,600. Federal tax credit: $780. Net cost: $1,820.
New annual cost: $227/year. Annual savings: $678. Payback: 2.7 years. Over 12 years (typical lifespan): net savings of $6,316.
Example 3: Retiree in Idaho — When NOT to Upgrade
Current setup: Newer 50-gallon electric tank (UEF 0.93), installed 2022, rate: $0.105/kWh. Annual cost: $315.
A heat pump water heater would reduce annual costs to approximately $90, saving $225/year. At a net installed cost of $1,400 (after tax credit), payback is 6.2 years. Since the current tank has 8+ years of life left, it makes sense to wait and upgrade to a heat pump when the current tank needs replacement rather than replacing a functioning unit.
Example 4: Large Family in Texas Switching to Tankless
Current setup: 50-gallon standard electric tank frequently running out of hot water for a family of six. Rate: $0.142/kWh. Annual cost: $508 (plus the frustration of cold showers).
Upgrade: Whole-home tankless electric system (two units). Installed cost: $3,200. No federal tax credit (standard tankless doesn't qualify).
New annual cost: $390/year. Annual savings: $118. Payback: 27 years — financially poor, but the family gained unlimited hot water. A heat pump water heater with a larger 80-gallon tank ($3,000 after tax credit, $145/year operating cost) would have been a better financial choice.
Factors That Affect Your Water Heating Cost
Water Temperature Setting
| Thermostat Setting | Relative Energy Use | Annual Cost* | Risk Level |
|---|---|---|---|
| 110°F | 85% | $398 | Legionella risk |
| 120°F (recommended) | 100% | $468 | Minimal risk |
| 130°F | 110% | $515 | Low burn risk |
| 140°F (factory default) | 120% | $562 | Moderate burn risk |
| 150°F | 135% | $632 | High burn risk |
*Based on national average for standard electric tank.
The DOE recommends setting your water heater to 120°F. This temperature is hot enough to prevent Legionella bacteria growth while reducing scalding risk and saving 8–12% compared to the common 140°F factory setting. If you have a dishwasher without a booster heater, check the owner's manual — most modern dishwashers heat water internally.
Standby Heat Loss
Tank water heaters lose heat 24/7 through the tank walls, even when you're not using hot water. This "standby loss" accounts for 15–25% of total water heating energy.
| Factor | Impact on Standby Loss |
|---|---|
| Tank insulation (R-value) | Higher R-value = less loss. Modern tanks: R-16+. Older tanks: R-6–R-12. |
| Tank location | Unheated garage or basement = more loss than conditioned space |
| Ambient temperature | Cooler surroundings = faster heat loss |
| Tank size | Larger tanks have more surface area = more standby loss |
| Insulation blanket | Adding a blanket to an older tank saves 7–16% of standby loss |
Inlet Water Temperature
Your water heater has to raise incoming cold water to the set temperature. Colder inlet water = more energy needed.
| Region | Avg Inlet Water Temp | Energy to Reach 120°F | Relative Cost |
|---|---|---|---|
| Southern states (FL, TX, AZ) | 72–78°F | Low (42–48°F rise) | 85% of avg |
| Mid-Atlantic & Midwest | 55–65°F | Moderate (55–65°F rise) | 100% of avg |
| Northern states (MN, WI, ME) | 42–52°F | High (68–78°F rise) | 115% of avg |
| Mountain states (CO, MT) | 45–55°F | Moderate-High (65–75°F rise) | 110% of avg |
How to Reduce Electric Water Heating Costs
Quick Wins (Under $100)
| Action | Cost | Annual Savings | Notes |
|---|---|---|---|
| Lower thermostat to 120°F | $0 | $50–$95 | Immediate |
| Install low-flow showerheads | $10–$30 | $50–$120 | 1.5–2.0 GPM models |
| Fix dripping hot water faucets | $5–$20 | $15–$50 | One drip/sec = 1,661 gal/year |
| Insulate first 6 ft of hot water pipes | $10–$20 | $15–$30 | Especially for tank in garage/basement |
| Add insulation blanket (older tanks) | $20–$30 | $20–$45 | Not needed if tank R-value is R-16+ |
| Wash clothes in cold water | $0 | $50–$100 | Modern detergents work well in cold |
| Run dishwasher only when full | $0 | $15–$25 | Use eco/light cycle when possible |
Major Upgrades ($1,000+)
| Upgrade | Installed Cost | Annual Savings | Payback | Best For |
|---|---|---|---|---|
| Heat pump water heater | $1,800–$3,500 | $300–$550 | 2–5 years | Most homeowners |
| Drain-water heat recovery | $500–$1,000 | $75–$150 | 4–8 years | High-shower households |
| Solar thermal pre-heat | $3,000–$6,000 | $200–$350 | 9–18 years | Sunbelt states |
| Timer for electric tank | $30–$60 | $25–$50 | 1 year | TOU rate plans |
Key Takeaways:
- Electric water heating costs $468/year nationally ($39/month) with a standard tank
- Costs range from $294/year (Idaho) to $1,170/year (Hawaii) depending on electricity rates
- Heat pump water heaters cut costs by 60–70%, with payback of 2–5 years after tax credits
- Lowering the thermostat from 140°F to 120°F saves $50–$95/year immediately
- Low-flow showerheads ($10–$30) save $50–$120/year on water heating
- The 30% federal tax credit makes heat pump water heaters a no-brainer upgrade in high-rate states
Frequently Asked Questions
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