The headline number
Fixr cites the US Department of Energy: about 18% of a household's total 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.
That is an all-fuel average. What you actually pay depends mostly on which fuel you use, and secondarily on how big the tank is.
By fuel and tank size
Annual figures from Fixr's size-specific guides, converted to monthly by us (divide by 12):
| Tank | Electric | Gas | Heat pump | Solar |
|---|---|---|---|---|
| 40 gallons, per year | $550 to $700 | $300 to $450 | $200 to $300 | $100 to $200 |
| 40 gallons, per month | $46 to $58 | $25 to $38 | $17 to $25 | $8 to $17 |
| 50 gallons, per year | $600 to $750 | $325 to $475 | $225 to $350 | $100 to $250 |
| 50 gallons, per month | $50 to $63 | $27 to $40 | $19 to $29 | $8 to $21 |
| 75 gallons, per year | $700 to $1,100 | $400 to $600 | $200 to $400 | $100 to $250 |
| 75 gallons, per month | $58 to $92 | $33 to $50 | $17 to $33 | $8 to $21 |
The monthly figures are our division of Fixr's annual numbers; Fixr publishes only the annual ones.
Fixr's own general figure for an electric water heater is about $60 a month, or $720 a year, and it states the ratio plainly: running an electric water heater is around twice as expensive as running a gas one.
Tankless costs less to run than a tank
| Type | Per year | Per month, our division | Source |
|---|---|---|---|
| Tank, conventional | $440 to $580 | $37 to $48 | This Old House |
| Tankless, electric | $300 to $540 | $25 to $45 | This Old House |
| Tankless, gas | $192 to $264 | $16 to $22 | This Old House |
| Tankless, natural gas | about $250 | about $21 | Fixr |
| Tankless, propane | about $350 | about $29 | Fixr |
| Tankless, electric | about $600 | about $50 | Fixr |
The two sources disagree on electric tankless by roughly a factor of two, and we report both rather than averaging. What they agree on is the direction: a gas tankless unit is the cheapest conventional option to run, because it has no tank losing heat to the room while nobody is using hot water.
Energy Star, cited by This Old House, puts the tankless saving at 24% to 34% less energy for households using up to 41 gallons a day.
What an electric tank actually draws
Fixr gives the figure in kilowatt hours, which is the number that connects to your own utility rate: a 50-gallon electric tank uses 300 to 400 kWh a month, or 3,600 to 4,800 kWh a year.
For scale, Fixr notes a modern refrigerator uses 300 to 800 kWh a year. The water heater uses that much in a month.
Work out your own figure. Take 3,600 to 4,800 kWh and multiply by your rate per kWh. At $0.15 that is $540 to $720 a year; at $0.25 it is $900 to $1,200. That calculation is ours, and it is the only way to get a number that reflects your market rather than a national average.
The cheapest to run, and what it costs to get there
Energy Star figures cited by This Old House put a 40-gallon electric tank at $400 a year against a 40-gallon hybrid heat pump at $104 a year, a saving of over $800 in three years.
Fixr's field estimates for hybrids are higher, at $200 to $350 a year, and we use those as the conservative case. Either way the heat pump is the cheapest electric option by a wide margin, and Fixr reports that an Energy Star electric unit rated EF 3.30 or higher saves an average of $600 a year against a standard electric model for a family of four.
Getting there costs $2,750 to $3,500 installed (This Old House) against around $850 for a standard electric tank. See heat pump water heater cost.
What moves your bill, in order
- Fuel. The gap between electric and gas is roughly $275 a year on a 50-gallon tank. Nothing else on this list comes close. See gas or electric.
- Tank size. Going from 50 to 75 gallons adds $100 to $350 a year on Fixr's electric figures, whether or not you use the extra capacity. A tank kept hot loses heat to the room all day.
- Temperature setting. This Old House: for every 10 degrees you lower the setting, expect to save up to 5% in energy costs. The recommended setting is 120 degrees Fahrenheit.
- Sediment. A layer of sediment on the bottom of a gas tank sits between the burner and the water. Both sources recommend an annual flush. See maintenance cost.
- Your local utility rate, which neither source can tell you and which varies by more across US states than the difference between two fuels.
Why this matters more than the purchase price
A 50-gallon electric tank costs $700 to $1,900 installed (Fixr) and $600 to $750 a year to run. Over a 10-year life that is $6,000 to $7,500 in energy against $700 to $1,900 in purchase price: the running cost is three to ten times what the appliance cost.
That arithmetic is ours. It is the reason the fuel question and the efficiency rating deserve more attention than the sticker price, and the reason a cheap unit is rarely the cheap option.
Related: gas or electric, heat pump water heater cost, efficiency ratings explained.
Sources
- Fixr, How Much Does a Gas Water Heater Cost in 2026?, updated January 30, 2026
- Fixr, Electric Water Heater Installation Cost in 2026, updated January 27, 2026
- This Old House, How Much Does Tankless Water Heater Installation Cost?, updated June 12, 2026
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.