Quick answer
Choose a tank water heater if you want lower upfront cost, straightforward replacement, and you have average simultaneous hot water use. Choose a tankless water heater if you want continuous hot water, higher efficiency, and you are willing to invest in proper gas, venting, or electrical upgrades. For many homes, gas tankless makes sense where fuel and venting are available; for simpler swaps or limited budgets, a high-quality tank (or heat pump tank for electric) is a solid pick.
How they differ
- Delivery
- Tank: Stores 30–75 gallons, delivers hot water until the tank is depleted; then it recovers.
- Tankless: Heats on demand by flow rate (gallons per minute, GPM); no storage.
- Efficiency (UEF)
- Gas tank: about 0.60–0.70 UEF; high-efficiency tanks are higher.
- Heat pump tank (electric): about 2.5–3.5 UEF (very efficient).
- Gas tankless: about 0.82–0.98 UEF (condensing models are highest).
- Lifespan
- Tank: typically 8–12 years.
- Tankless: typically 15–20 years with maintenance.
- Upfront and operating cost (typical ranges)
- Tank: 500–2,000 USD for unit; 400–1,000 USD labor for like-for-like replacement.
- Tankless: 900–2,500 USD for unit; 1,000–3,000 USD labor if gas line, vent, or electrical upgrades are needed.
- Maintenance
- Tank: annual flush, anode check.
- Tankless: annual descaling and inlet screen cleaning; more sensitive to hard water.
Typical specs
- Gas tank input: 30k–50k BTU
- Gas tankless input: 150k–200k BTU (needs 3/4 in gas line, often upsized)
- Whole-home electric tankless: 240 V, 100–150 A total (often panel upgrade)
- Electric tank: 240 V, 20–30 A dedicated circuit
Step-by-step: choosing the right type and size
1) Estimate hot water demand
- Count simultaneous uses during peak times.
- Typical fixture flow rates:
- Shower: 1.8–2.5 GPM
- Bathroom sink: 0.5–1.2 GPM
- Kitchen faucet: 1.5–2.2 GPM
- Dishwasher: 1.0–1.5 GPM (intermittent)
- Washing machine: 2.0–3.0 GPM (intermittent)
2) Calculate temperature rise
- Incoming water temp varies by climate; in many places it is 40–60 F. Set water heater to 120 F.
- Temp rise = 120 minus incoming temp.
Example for tankless sizing:
Two showers (2.0 GPM each) + sink (1.0 GPM) = 5.0 GPM
Incoming water: 50 F; Rise = 70 F
Select a tankless that delivers at least 5.0 GPM at 70 F rise.
Example for tank sizing:
Family of 4; two back-to-back showers plus dishes in the morning.
Look for First Hour Rating (FHR) of 60–80 gallons for typical 40–50 gallon gas tanks.
Heat pump tanks list FHR too; choose similar FHR.
3) Check fuel and infrastructure
- Gas: Verify meter capacity and gas line size (many tankless units need 3/4 in or larger and 150k–200k BTU). Confirm venting route and termination clearances; condensing units need condensate drain and neutralizer.
- Electric: For whole-home electric tankless, many panels lack the 100–150 A capacity. A heat pump tank typically needs only a 30 A 240 V circuit.
4) Space and placement
- Tank: Needs floor space and a drain pan with drain line. Check height and clearance for flue and service.
- Tankless: Wall-mounts; needs vent penetrations and service clearances. Indoor models require proper combustion air; outdoor models must be allowed by local code.
5) Water quality and comfort features
- Hard water favors tanks or a water softener with tankless. Plan for annual descaling if hardness is above 7 gpg.
- Recirculation: If you want faster hot water at distant taps, pick a tankless with built-in recirc or add a recirc pump (timer or on-demand) to a tank.
6) Budget and payback
- If gas upgrades or panel upgrades are required, tankless payback lengthens. If your electric rates are high and gas is available, gas tankless or gas tank may reduce operating cost. Heat pump tanks often have rebates and the lowest operating cost for electric homes.
Tools and materials for planning or install
- Tape measure and notepad (space, clearances, vent route)
- Thermometer to check incoming cold water
- Water hardness test strips
- Gas leak detector or bubble solution (for gas-only work)
- Non-contact voltage tester and clamp meter (electric-only work)
- Pipe wrench, channel locks, adjustable wrench
- Tubing cutter (copper) or PEX cutter; PEX fittings or SharkBite-style fittings rated for hot water
- Pipe dope or PTFE tape rated for gas or water as applicable
- Drain pan, T and P discharge tubing, expansion tank (if home has a pressure-reducing valve)
- For tankless: vent kit, condensate tubing and neutralizer, isolation valves for descaling
Time estimates (pro installs):
- Tank like-for-like: 2–4 hours
- Tankless with upgrades: 6–10 hours
Safety considerations
- Turn off gas and power before work; verify with a leak detector or meter.
- Maintain clearances to combustibles and follow venting instructions precisely to avoid carbon monoxide hazards.
- Install a drain pan and run T and P relief to an approved drain. Test the valve.
- Set outlet temp to 120 F to reduce scald risk; consider a whole-home mixing valve if you need higher tank temps.
- Add expansion tank where required by code (closed systems with PRV). Pressurize it to match house pressure.
- Place CO detectors near sleeping areas for gas appliances.
Tips for best results
- Compare UEF and warranty side by side; longer heat exchanger warranties often signal better build.
- For tankless, use isolation valve kits to make annual descaling a 30–60 minute task.
- If space is tight and you need high efficiency on electric, a heat pump tank is a strong option; allow for condensate drain and airflow.
- If your longest hot water run is far, a recirc loop saves water and time regardless of heater type.
Common mistakes to avoid
- Undersizing a tankless by using the max GPM rating without accounting for temp rise.
- Assuming your existing 1/2 in gas line will feed a 199k BTU tankless.
- Skipping the expansion tank or drain pan on a tank install.
- Ignoring water hardness; scale can quickly reduce tankless performance.
- Forgetting permits and inspections; they protect you and future resale.
When to call a pro
- Any new gas line, venting, or flue relocation.
- Electrical panel upgrades, new 240 V circuits, or multiple breakers for electric tankless.
- Structural penetrations for venting and combustion air.
- If you are not confident pressure-testing gas or verifying combustion safety.
If you want quick, budget-friendly replacement with minimal changes, pick a properly sized tank. If you value continuous hot water and lower gas bills long term—and your home can support the fuel and venting—go tankless. For all-electric homes seeking low operating cost, a heat pump tank is often the winner.