How Much Does a Tankless Water Heater Cost? (Unit + Installation, 2026 Guide)

The price of a tankless water heater is mostly installation, not the unit. Swapping a tank for a tankless heater can mean a bigger gas line, new venting, a condensate drain, or for electric models, several new circuits and sometimes a new panel. Those extras decide whether the job lands near the bottom or the top of the range.

Installed, a whole-house gas tankless heater typically runs about $1,550 to $2,400^[4] non-condensing (UEF 0.82) and about $2,100 to $3,050^[4] condensing (UEF 0.95), and a whole-house electric one about $1,200 to $1,700^[4] (UEF 0.98), before any electrical service upgrade. A small point-of-use unit for a single fixture costs less, though REMDB does not price it separately. These are installed-cost estimates from REMDB, the National Laboratory of the Rockies (formerly NREL) cost database, in 2023 dollars, not quotes; get at least three itemized bids.

Typical costs by type

Condensing gas models cost more but extract more heat from the exhaust, and vent through PVC instead of stainless steel. An outdoor model skips indoor venting but needs freeze protection in cold climates, and a small point-of-use unit for a single fixture costs less; REMDB does not price those two configurations separately, so they are not listed above. The electric figure does not include any electrical service upgrade.

How tankless compares to other water heaters

Installed cost alone does not decide which water heater to choose, since energy use and lifespan matter too. These are REMDB installed-cost estimates in 2023 dollars, with a 50-gallon size where a storage tank applies.

The installed-cost figures come from the National Residential Efficiency Measures Database (REMDB), version 4.0.0 (April 2025), published by the National Laboratory of the Rockies, which models a retrofit replacement in 2023 dollars and gives a low, mid and high estimate. REMDB's figures are the full cost of the job in an existing home, in 2023 dollars, before any rebates or tax credits, and REMDB says they aren't an estimate for a specific project, so get itemized bids.^[9] Work REMDB does not price, such as point-of-use units, a gas-line or venting conversion, a condensate drain, new electrical circuits and permits, has no figure here and is described as a cost driver instead.

What drives the installation price

The REMDB figure above covers a basic replacement install. The items below are separate cost drivers that come on top when the job calls for them.

Whole-house electric units are the ones that surprise people. A 27 kW model draws about 112 amps at 240 volts, more than a whole 100-amp service and most of a 125-amp one; see our panel upgrade cost guide and tankless sizing guide.

Replacing a tank with a tankless heater

A like-for-like tank swap is mostly disconnect and reconnect: the water lines, the fuel source, and the venting already exist and are sized for a tank. That is why pulling an old tank and setting a new one sits at the cheap end of a water-heater job.

Going from a tank to a tankless unit usually adds work on top of that. A gas unit fires a much larger burner on demand, so the existing gas line and meter may not supply the full input, and the venting has to match the model: PVC for condensing units, stainless steel for most non-condensing ones. Condensing models also need a drain for their acidic condensate.

Electric is the opposite problem. A whole-house electric unit needs several large dedicated circuits and often more service than an older panel can spare, as the installation table above shows. Those added items, not the heater itself, are what stretch the installed price across such a wide range.

Labor rates also vary by region, so the same scope of work costs more in high-cost metros than in rural areas. Treat any single range as a starting point and get itemized local bids.

How flow and capacity move the unit price

Tankless units are rated by how much hot water they can deliver, and a bigger burner or a higher-kilowatt heating block costs more to build. A small point-of-use electric unit sized for one sink or shower is the cheapest tier, while a whole-house gas unit sized for two showers at once is the most expensive.

The flow a unit can deliver depends on fixtures and incoming water temperature. The heat needed is gallons per minute times the temperature rise times 500, in BTU per hour, so colder incoming water or more open taps take more power.

A gas unit just under the 200,000 BTU per hour consumer limit,^[7] taking REMDB's 0.95 UEF for a condensing unit^[4] as its efficiency, puts out about 190,000 BTU per hour (200,000 × 0.95). That covers about 9.5 gpm at a mild 40°F rise and about 4.8 gpm at a cold 80°F rise (190,000 ÷ 500 ÷ 40, then ÷ 80).

A 27 kW electric unit draws about 112 amps at 240 volts (27,000 ÷ 240) and puts out about 92,000 BTU per hour (27 × 3,412). That covers roughly 4.6 gpm down to 2.3 gpm across the same range (92,000 ÷ 500 ÷ 40, then ÷ 80).

For sizing your own flow and rise, see what size tankless water heater you need. The larger the unit you need, the higher its tier within the fuel ranges above.

Can you install it yourself?

A small point-of-use electric unit on a modest circuit is the one case a competent do-it-yourselfer sometimes handles, within local code and permit rules.

A whole-house gas unit is not a safe DIY job for most people. It involves sizing and connecting a gas line, matching and sloping the venting, providing combustion air, and running a condensate drain on condensing models, any of which is dangerous if done wrong. High-amp electric units add large-circuit and panel work that an electrician should size and permit.

Most jurisdictions require a permit and inspection for gas and major electrical work, which is listed in the installation table above.

Running cost and payback

Using our water heater sizing calculator's default four-person household, at an assumed $1.35 per therm and 18 cents per kWh, with REMDB's efficiency ratings:

A gas tankless heater saves about $152 a year over a gas tank ($467 − $315). At the mid estimates above a condensing gas tankless unit costs about $400 more to install than a gas tank (about $2,450 versus $2,050^[4]), so the energy saving alone pays that back in about 2.6 years ($400 ÷ $152); any gas-line or venting conversion work comes on top and stretches it out. Electric tankless saves only about $64 a year over an electric tank ($1,257 − $1,193), while a heat pump water heater saves about $945 ($1,257 − $312), which is why the heat pump is usually the better electric upgrade.

If your gas supply is propane rather than natural gas, see how much propane a tankless water heater uses for the fuel use and running cost on that fuel.

Maintenance and descaling over time

Hard water carries dissolved minerals that drop out as scale when the water is heated. In a tankless unit that scale coats the heat exchanger and narrows its passages, which cuts output and efficiency over time.

Manufacturers call for periodic flushing with a descaling solution and cleaning the inlet screen, following the schedule in the unit's manual and more often where water is hard. A water softener upstream slows the buildup. This is an ongoing ownership cost a tank mostly avoids, so fold it into any long-run comparison.

Total cost over 15 to 20 years

REMDB lists a 20-year lifetime for gas and electric tankless heaters, against 14 years for a gas tank and about 15 for an electric or heat pump tank.^[4] Over that span a gas tank would typically be replaced once, while the tankless unit keeps running, which narrows the lifetime gap the sticker price suggests.

Carry the running-cost numbers out over the unit's life. At the gas tankless saving of about $152 a year, 20 years returns roughly $3,040 (152 × 20), more than the roughly $400 mid-estimate premium above, before counting the avoided tank replacement.

Descaling works the other way, adding a maintenance cost the tank does not have. The full long-run picture is unit plus installation, plus energy, plus maintenance, minus the replacement you skip; for gas the energy savings and longer life usually win, while for electric a heat pump water heater still beats both.

Tax credits and rebates in 2026

• The federal 25C credit ended for water heaters placed in service after December 31, 2025. See HVAC tax credits 2026.
• HEEHR rebates cover heat pump water heaters that replace an existing electric water heater (up to $1,750^[6] for eligible households), not gas or electric tankless heaters.^[8]
• Utility rebates vary. Some gas utilities pay for high-efficiency tankless units; the DSIRE database lists programs by state and utility.

Frequently asked questions

How much does it cost to install a tankless water heater?

For a whole-house gas unit, about $1,550 to $2,400^[4] installed non-condensing and about $2,100 to $3,050^[4] condensing, depending on venting and gas line work. Whole-house electric runs about $1,200 to $1,700^[4] before any panel upgrade or other electrical service work.

Is a tankless water heater worth the cost?

A gas tankless heater saves about $152 a year over a gas tank for a typical four-person household, so the roughly $400 mid-estimate premium over a tank takes about 2.6 years ($400 ÷ $152) to recover on energy alone, longer once any gas-line or venting conversion is added. It makes sense mainly if you value endless hot water or need the space.

Why is electric tankless installation so expensive?

Whole-house units need very large circuits, often more than an older panel can supply. The panel upgrade, not the heater, is usually the big cost.

Is there a tax credit for tankless water heaters in 2026?

No. The federal credit ended after 2025, and HEEHR rebates cover heat pump water heaters, not tankless units. Check your utility for local rebates.

Can I install a tankless water heater myself?

Only a small point-of-use electric unit on a modest circuit is a realistic DIY job, and only within local code and permit rules. Whole-house gas units involve gas, venting and condensate work, and high-amp electric units need panel and large-circuit work, so both call for a licensed pro.

How often do you have to descale a tankless water heater?

Flush it periodically with a descaling solution and clean the inlet screen on the schedule in your unit's manual, more often where water is hard. Scale coats the heat exchanger and cuts output and efficiency if it is left to build.

Do tankless water heaters last longer than tank water heaters?

Yes. REMDB lists about 20 years for a tankless heater against 14 to 15 for a tank, so over a tankless unit's life a tank is typically replaced once.^[4]