Do tankless water heaters increase water bill?

Author: Dr. Marc O'Hara II  |  Last update: Friday, February 28, 2025

Because tankless water heaters only consume energy when you need hot water, they're more energy efficient, saving you money on water and energy bills.

Do you really save money with a tankless water heater?

Electric tankless water heaters still save homeowners around $44 per year according to the US Department of Energy. Longer useful lives than storage tank water heaters. Tankless water heaters typically last 20 to 30 years, double the forecasted useful life of a storage tank water heater.

What is the downside of a tankless water heater?

Before you commit to buying a tankless water heater, the primary drawbacks to know include: Higher upfront costs. Tankless water heaters are, on average, quite a bit more expensive to buy and install than tank water heaters. Access to fuel.

Does it cost more to run a tankless water heater?

The initial cost of a tankless water heater is greater than that of a conventional storage water heater, but tankless water heaters will typically last longer and have lower operating and energy costs, which could offset their higher purchase price.

Can I replace my 40 gallon water heater with a tankless water heater?

You can go with a small tank and a small tankless water heater at the same time. You install this as a single device (1.5 gal per minute) tankless water heater with the output going to the tank and the tank feeding your household. If you need a lot of hot water quickly both water heaters run at the same time.

3 Things They Don’t Tell You About Tankless

Is it worth switching to a tankless water heater?

Switching to a tankless water heater can help you save on your energy costs, with potential savings of up to 50%, according to the U.S. Department of Energy. Additionally, tankless water heaters are reported to be 24% to 34% more energy efficient than storage tank water heaters by the same source.

Is there an IRS tax credit for a tankless water heater?

The federal tax credit for tankless water heaters in 2024 is an excellent opportunity for homeowners to save money while investing in energy-efficient water heating solutions. This tax credit is effective from January 1, 2023, to December 31, 2032.

Do tankless water heaters increase the electric bill?

Because tankless water heaters only consume energy when you need hot water, they're more energy efficient, saving you money on water and energy bills.

Why don't more people use tankless water heaters?

Some people hesitate to decide on a tankless water heater because they can be a slightly higher cost; however, you get significantly more life out of one. A standard water heater tank lasts about 8-12 years. A tankless water heater can last as long as 25 years!

What is the life expectancy of a tankless water heater?

One of the most common questions asked by consumers about tankless water heaters is how long they will last. A tankless water heater can last anywhere from 15 to 20 years with proper maintenance and operation. In comparison, a standard tank water heater normally has a working life of 10 years or less.

When not to get a tankless water heater?

Electric Tankless Water Heaters

They're less expensive than gas-powered ones but aren't efficient if you run multiple hot water devices. They may struggle to keep up with multiple appliances at the same time.

Can you take a long hot shower with a tankless water heater?

While a tankless water heater will deliver an unlimited stream of hot water, they struggle to deliver a lot of hot water at one time. So while you might be able to take 100 showers in a row if you have the dishwasher, washing machine, and shower going at the same time you might have problems.

Does a tankless water heater save on water bill?

The fact that the tankless water heaters instantly heat the water as it is used also cuts down on water usage. By not having to wait for your water to run hot you are able to not wastewater. So not only are you saving on your power bill but also on your water bill.

What is not a benefit of a tankless water heater?

A tankless water heater cannot provide hot water faster than its ability to heat the water. While a tank unit can provide hot water for multiple uses at once, a tankless unit might not be able to support simultaneous usage, such as washing dishes, taking a shower and running a washing machine all at once.

Do you waste more water with a tankless water heater?

Misconception: Tankless water heaters waste water and take a long time to get hot water to fixtures. Reality: False. Water travels from your water heater to the fixture at the same rate regardless of your water heater!

Do tankless water heaters increase home value?

If you are looking to increase the value of your home, adding a tankless water heater to your features is a great place to start. According to a study conducted by Zillow, homes with tankless water heaters sold for 4% more than their expected value. On average, these homes also sold 43 days faster than expected.

Is there a downside to a tankless water heater?

Cons: The upfront cost is higher than tank storage— but tankless water heaters last much longer, so you even out in the long run. They require more maintenance than tank storage— but this is typically just an annual flush to remove any built-up sediment. Areas with hard water can lessen their lifespan.

Can multiple people shower at the same time with a tankless water heater?

A: Yes, but depending on the wattage of your unit, and the temperature you set, the pressure may go down.

Should I replace my water heater with a tankless?

Tankless water heaters are more efficient and don't experience standby heat loss. This can be especially cost effective if you travel a lot. Some tankless water heater units come with a federal tax rebate. You can get up to $300 off installation!

How much money a month does a tankless water heater save?

The U.S. Department of Energy estimates gas-fired tankless heaters save an average of $108 in energy costs per year over their traditional tank counterparts, while electric tankless heaters save $44 per year.

Is it better to have a tank or tankless water heater?

Operating Costs & Efficiency

Because tankless water heaters are more efficient, they cost less money to operate. This can save you money in the long run since utility bills are lower than with a tank water heater.

What size tankless water heater to replace a 50 gallon?

A 50-gallon water heater should be replaced with a tankless system with a 10 GPM flow rate just to be safe. Selecting the right flow rate ensures you won't experience cold showers or excessive energy costs. Proper sizing optimizes performance, providing hot water on demand without unnecessary waste.

What water heaters qualify for the Inflation Reduction Act?

Tax Credits for Water Heaters

Rebates are available for high efficiency gas fired tankless, gas-fired storage and for heat pump water heaters. Gas-fired tankless with UEF ≥ . 95 are eligible for up to $600 in rebates.

What category appliance is a tankless water heater?

Tankless water heaters don't always fit into one category. Many of these appliances are Category IV, condensing with induced draft. Some fall into Category III, induced draft with higher temperature non-condensing flue gases.

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