What is the payback period for a tankless water heater?

Author: Dr. Margaretta Macejkovic MD  |  Last update: Monday, June 30, 2025

Calculating your payback period with tankless hot water According to a study by Consumer Reports, the payback period for tankless water heaters can range from 12 years to 27.5 years, with electric models on the lower end of the spectrum and gas models on the upper end.

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.

How long does it take for a tankless hot water heater to pay for itself?

How long does it take for a On Demand or tankless water heater to pay for itself? The pay off time on a tankless water heater varies based on usage, utility rates and cost of installation. It can take from 7 to 10 years to pay for its self.

How much does your electric bill go up with a tankless water heater?

How Much Electricity Does a Tankless Water Heater Use? Many people wonder if tankless water heaters increase electric bills. The answer is no — tankless water heaters can save money on your monthly electric bill because they're 8%-34% more efficient than storage water heaters.

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

According to Energy.gov, “For homes that use 41 gallons or less of hot water daily, demand (or tankless) water heaters can be 24% to 34% more energy efficient than conventional storage tank water heaters.” Tankless water heaters (if gas-fired) will save homeowners over $100 annually the longer they remain in service.

3 Things They Don’t Tell You About Tankless

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

The federal tax credit for tankless water heaters can lead to significant savings for homeowners. Eligible tankless gas water heaters must have an ENERGY STAR certification and a UEF of greater than 0.95. Homeowners can claim up to $3,200 in tax credits for eligible home improvements in a single year.

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

Absolutely! In fact, tankless water heaters are becoming the standard for new home construction because of the energy efficiency.

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.

How much should I expect to pay for a tankless water heater?

The initial investment for a tankless water heater is typically higher, with prices ranging from $1,000 to $3,000 or even more, depending on brand, size, and specific features.

Do tankless water heaters really save money?

A tankless water heater can help you save a lot on your utility bills. In fact, a tankless unit can cost up to 50% less to operate than a traditional hot water heater. Opting for a high-end model can help you save even more by reducing your energy consumption by up to an additional 9%.

Why do people not like 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 payback period for tankless water heater?

Calculating your payback period with tankless hot water

According to a study by Consumer Reports, the payback period for tankless water heaters can range from 12 years to 27.5 years, with electric models on the lower end of the spectrum and gas models on the upper end.

How long does it take a plumber to install a tankless water heater?

Installing a tankless water heater typically takes four to five hours, depending on the type of system and a household's needs. The installation process duration also depends on your location and which professionals are available when you need an installation.

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.

Why not buy an electric tankless water heater?

In summary, while electric tankless water heaters offer advantages such as energy efficiency, space-saving design, and on-demand hot water, they also come with notable downsides. The initial cost of purchase and installation can be steep, and additional upgrades to plumbing and electrical systems may be required.

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.

Where should a tankless water heater not be installed?

Keep your water heater away from outside elements

If your tankless heater is exposed to extremes weather conditions, it will run a greater risk of premature failure. So, make sure your appliance is away from doors and windows, and never installed in the garage or basement.

How much money will I save by switching to a tankless water heater?

It's true: tankless water heaters will cut up to 40% off your monthly energy bill. By heating water instantaneously and only when you need it, you and your family members can enjoy continuous, uninterrupted hot water at the same time, along with savings over a conventional tank.

Does home insurance cover a water heater?

It's important to note that standard homeowners insurance policies typically only cover damage to the structure of your home and personal property. They do not include replacement cost coverage for the heater itself.

What are the downsides of tankless water heaters?

Tankless water heaters have several drawbacks and disadvantages, including a higher initial cost, limited flow rate, specialized venting requirements, potential need for additional equipment, limited hot water supply, delayed hot water delivery, mineral buildup and maintenance, complexity of installation, dependence on ...

Do tankless water heaters need to be flushed every year?

Over time, a tankless water heater may accumulate mineral build up which can erode the walls inside your tank's heating chamber. To properly maintain and clean your tankless water heater, it's important to flush those mineral deposits at least once a year.

Do you have to replumb your house for a tankless water heater?

Do I need to replace all my home's plumbing if I install a tankless water heater? Rarely is a complete overhaul necessary. However, you may need to upgrade certain sections of your plumbing, particularly those leading into and out of the tankless unit, to ensure proper water flow and volume.

Does Costco sell tankless water heaters?

And to keep the hot water flowing, we offer a variety of high-performance water heaters, including electric water heaters, energy-saving tankless water heaters, and the latest smart water heaters. Costco carries a variety of lighting that's perfect for your kitchen, bathroom, dining room, and outdoor living areas.

Who makes the best tankless water heater?

Top Tankless Water Heater Brands in 2025
  • Noritz.
  • Navien.
  • Rinnai.
  • Takagi.
  • Rheem.

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