Tankless costs more to install but lasts longer and uses less energy. A tank costs less and keeps stored hot water in a power outage. Tankless suits heavy hot water users; for average use, the savings often don’t justify the install cost.
This is going to depend on your hot water needs and your preferences. There are pros and cons to each system.
Tankless water heaters typically last longer: Rheem puts tankless life at 15 to 20 years or more with proper care, against 8 to 12 years for a tank. Their biggest benefit is their ability to heat water on demand.
Tankless systems only heat water when you need it, and they will not run out of hot water as long as you stay within the unit’s flow rate. This is great for large households and those who use a lot of hot water in their homes (showers, dishwashing, laundry). It also makes them more energy efficient than traditional tank-style water heaters since they don’t have to waste energy heating a tank of standing water. The U.S. Department of Energy estimates about 33% savings for a gas tankless heater, though real savings vary with how much hot water you use.
However, there are some drawbacks. Tankless systems can be expensive, and if you have hard water, you’ll probably need to invest in a water softener, too. This Old House’s cost guide, updated in June 2026 with Home Depot data, says basic tank models start at about $1,200 installed and tankless units average around $2,800. There is a bit of yearly maintenance with tankless designs that isn’t a factor with tank water heaters. Rinnai’s manual says hard water must be treated to prevent scale damage to the heat exchanger.
A tank water heater is cheaper to install and doesn’t require much maintenance at all. While they last about 8 to 12 years, they do have the benefit of having a storage tank of water in the event of a power outage. This can be important to some people who don’t have a backup generator for their home. They use more energy than a tankless design, but the gap is smaller for homes that use a lot of hot water. However, if you continuously run out of hot water in your home, a tankless system will probably be a better option for you.
We have a full video comparing the two below 👇
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Full list of Pros & Cons of Tankless and Tank Water Heater
The decision to install tank vs. tankless is likely going to come down to your hot water needs. Most households that use a lot of hot water find themselves happier with a tankless system. However, for households that use an average amount of hot water, the energy savings of the tankless heater often aren’t worth the steep installation costs.
Tankless Pros
- Hot water on demand, up to the unit’s flow limit
- Longer lifespan (15 to 20 years or more)
- More energy efficient (may qualify for local utility rebates)
- Takes up less space in home
Tankless Cons
- Expensive to install
- Needs yearly maintenance to prevent scale buildup
- No water storage in the event of a power outage
- May need to install a water softener
Tank Pros
- Inexpensive to install
- Very little maintenance involved
- Simpler to install than tankless, though gas and 240-volt work still call for a licensed plumber or electrician
- Hot water reservoir in the event of a power outage
Tank Cons
- Lasts about 8 to 12 years
- Less efficient
- Takes up more space in utility room
Whether a tankless water heater is right for your household will likely come down to your water usage. Homes that use a large amount of hot water will benefit more from a tankless water heater than smaller households with significantly less hot water needs.
FAQ
Do tankless water heaters still work when the power goes out?
No. Tankless water heaters heat water on-demand. Unlike traditional water heaters, there is no tank to store the hot water. Which means, during a power outage, they will be unable to provide hot water. However, there are battery packs that can be installed on tankless systems for this very problem. They work best for natural-gas systems since they draw less electricity. A fully electric tankless water heater would drain the battery rather quickly. In that situation, a backup generator would be a better option.
Are tankless water heaters energy efficient?
The biggest advantage of tankless water heaters is their ability to heat water “on demand.” This means you won’t run out of hot water like you can with a traditional water tank but it also means that you are only heating the water you need.
Traditional tank water heaters have to heat and maintain the temperature of the entire tank all the time. They never stop working. Tankless water heaters only have to run while you are asking for hot water, which tends to make them more energy efficient.
How much does it cost to install a water heater from Home Depot?
If you have all the necessary tools and are installing it yourself, the only thing you’ll have to pay is the price of the water heater itself.
However, you may need to purchase some additional connections and fittings for the new water heater.
For the price of the water heater, a call to your local Home Depot will give you a more accurate answer. Prices are always fluctuating, so the answer I write today could be wrong tomorrow.
Before you call, you will need to know:
– Is the water heater gas or electric?
– What size is the tank?
– Do you need tank connectors?
– Do you need a gas whip?
What is the average cost of the installation of a tankless water heater?
This is difficult to say since there are so many variables involved. For example, I do HVAC service work outside of a large Midwestern city. I see massive variations in prices charged by companies who mainly service the city vs companies who service more rural areas nearby. And that’s only about a 60-mile radius. The prices we typically charge may be significantly higher or lower depending on your location, so I can’t give an accurate estimate here. Plus, the price of equipment is constantly changing. If I were to give a price now as I write this, it could be wrong by next month.
Your best bet would be to contact a few different HVAC or plumbing companies in your area and have them stop by your home and give you an estimate. Most companies do not charge for estimates and will happily answer any other questions you may have.
You can click the link HERE for a list of companies in your area.
What is the best tankless water heater?
Honestly, there is very little difference between the big brands of water heaters. Choosing the best water heater for your home is going to come down to your hot water needs and the design of your house.
Your best bet is to call around to a few local HVAC companies or plumbers and have them come out and give you an estimate for a new install. Most companies do not charge for estimates and are happy to answer any questions you might have. I would recommend you try two or three different companies in your area just to give you an idea of what your options are.
Can a handyman replace a water heater?
Most handyman services can replace water heaters. If you can’t find a local handyman, try a plumbing or HVAC company. Water heaters aren’t difficult to replace but you need special tools and fittings to do it right.
HVAC tech and writer. Shelby has worked in the HVAC industry for 15+ years and still works part-time as an HVAC tech in Wisconsin.
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