Gas or electric water heater: which is cheaper?

Q: Gas or electric water heater: which is cheaper?

An electric water heater costs less to install, at $800 to $1,500 against $1,000 to $2,700 for gas (Fixr, January 2026). It costs about twice as much to run, at roughly $720 a year against $300 to $450 for a comparable gas unit. Over a 10-year life the running-cost gap is $2,500 to $4,000, which is several times the purchase price difference. On published figures gas wins on cost wherever a gas line already exists.

Purchase and installation

	Electric	Gas	Source
Installed range	$800 to $1,500	$1,000 to $2,700	Fixr
Installed average	$1,000	$1,900	Fixr
Unit price, approximate	about $850	from $800 plus venting	This Old House
Installed range, all sizes	$500 to $3,500	$700 to $2,700	Fixr, general guide

Gas costs $200 to $900 more to install on Fixr's averages. The reason is not the appliance. This Old House prices gas units from about $800 and electric at about $850, so the units themselves are close. The difference is venting: gas needs it, electric does not. Basic gas venting runs $300 to $500, direct venting $500 to $1,000, and a power vent $300 to $600 plus $300 to $500 of electrical work (This Old House).

Fixr states it directly for both its size guides: electric and hybrid water heaters do not require venting.

Running cost, where the decision is actually made

Fuel	Per year	Source
Electric, general	about $720 (about $60 a month)	Fixr
Electric, 40-gallon tank	$550 to $700	Fixr
Electric, 50-gallon tank	$600 to $750	Fixr
Electric, 75-gallon tank	$700 to $1,100	Fixr
Gas, 40-gallon tank	$300 to $450	Fixr
Gas, 50-gallon tank	$325 to $475	Fixr
Gas, 75-gallon tank	$400 to $600	Fixr

Fixr states the ratio plainly: running an electric water heater is "around twice as expensive as it is to run a gas water heater."

The 10-year arithmetic, ours, built from the table above. Take a 50-gallon tank. Electric costs $600 to $750 a year, gas $325 to $475. The annual gap is $275 at the low end and $275 at the high end, so call it about $275 a year, or about $2,750 over a 10-year life. Against that, gas costs $200 to $900 more to install. Even at the widest purchase gap, gas is ahead by roughly $1,850 over the life of the unit. Neither source performs this calculation; the inputs are theirs, the addition is ours.

Two figures worth knowing

How much of your bill this is. Fixr cites the US Department of Energy: about 18% of a household's utility cost goes to heating water. Against an average US utility bill of $266 a month, that is $47.88 a month or $574.56 a year across all fuel types.

What an electric tank actually draws. A 50-gallon electric tank uses 300 to 400 kWh a month, or 3,600 to 4,800 kWh a year (Fixr). For comparison, Fixr notes a modern refrigerator uses 300 to 800 kWh a year. The water heater is close to an order of magnitude larger.

When electric still wins

No gas line. This is the common case and it settles the question. This Old House prices converting from electric to gas at an extra $1,500 to $2,300 for the new gas lines, on top of the unit and install. Fixr's general guide puts fuel-type conversion in the same territory. Adding $1,500 to $2,300 to a $1,900 gas job to save $275 a year takes five to eight years just to reach break-even on the conversion itself, before the unit's own cost.

A high-efficiency electric unit changes the sums. Fixr reports that Energy Star electric water heaters carry an EF rating of 3.30 or higher and save an average of $600 a year against a standard electric unit for a family of four. An EF above 3.0 means a heat pump, not a resistance element. At that saving, a hybrid unit runs cheaper than gas. See heat pump water heater cost.

Safety and simplicity. Fixr notes electric units have no combustion, so no risk of a gas leak, no carbon monoxide and no venting to maintain. It also reports lower maintenance costs. These are not cost savings you can put a number on, and we are not going to invent one.

What this page does not tell you

Every figure above is a US national range. Electricity and natural gas prices vary by state by more than the difference between the two fuels in some markets. Fixr's own numbers are national averages, and both sources say so. If your state has unusually cheap electricity or unusually expensive gas, run the arithmetic above with your own utility rates: the method holds even where the national numbers do not.

Sources

Price figures are national US ranges from the sources above as of the date shown. Your local price depends on labor rates, permits and site conditions. Read how we get our numbers.