How to size a replacement water heater
A storage water heater is sized by its first-hour rating, the gallons of hot water it can deliver in an hour starting with a full tank; DOE says to look for a model whose first-hour rating at least matches your peak-hour demand. The rating is printed at the top left of the yellow EnergyGuide label as "Capacity (first hour rating)," which the FTC requires on conventional storage heaters but not on heat pump models.[1]
| Use | Gallons each | DOE example | Gallons in the hour |
|---|---|---|---|
| Shower | 20 | 3 showers | 60 |
| Shaving | 2 | 1 shave | 2 |
| Hand dishwashing or food prep | 3 | 1 time | 3 |
| Automatic dishwasher | 7 | — | — |
| Clothes washer, top-loading | 25 | — | — |
| Clothes washer, front-loading (H-axis) | 15 | — | — |
| Peak-hour demand | 65 |
The worksheet estimates your single busiest hour, not total daily use.[1] DOE's own example prints its total as 66 gallons, but its three lines add to 65; the calculator uses the arithmetic, and either way a tank rated in the high 60s covers that household. Matching the old tank's gallons is not the same test: two 50-gallon tanks can have different first-hour ratings, so compare the ratings on the labels. Put your own household's busiest hour in the calculator above.
Sizing a tankless water heater: flow and temperature rise
A tankless (demand) water heater is rated by the temperature rise it can deliver at a given flow, so you size it from the fixtures running at the same time and how much the water must be heated. DOE's example runs a 0.75 gallon-a-minute faucet and a 2.5 gallon-a-minute shower together, for 3.25 gallons a minute, with 50 °F water heated to 120 °F: a 70 °F rise.[2]
| Input | DOE figure | Notes |
|---|---|---|
| Faucet flow | 0.75 gal/min | Measure yours with a bucket for a minute |
| Shower flow | 2.5 gal/min | Low-flow fixtures cut the flow you need |
| Incoming water | 50 °F | Colder in winter in northern states |
| Output for most uses | 120 °F | 140 °F for a dishwasher without its own heater |
In cold-water regions the same unit delivers less flow at the larger temperature rise, so check the maker's flow-versus-rise chart against your winter inlet temperature.
Tank, tankless or heat pump?
Efficiency differs a lot between the three, and so does what you pay up front. DOE puts the gains this way:
| Type | Efficiency | Things to check |
|---|---|---|
| Storage tank (gas or electric) | Baseline | First-hour rating on the EnergyGuide label |
| Tankless (demand) | 24%–34% more efficient than a tank for homes using 41 gallons a day or less; 8%–14% for about 86 gallons a day | Flow at your winter temperature rise; gas line or electrical capacity |
| Heat pump (with tank) | Two to three times as efficient as electric resistance | A space that stays 40–90 °F with about 1,000 cubic feet of air around it |
Those figures come from DOE's Energy Saver guidance on tankless and heat pump models[2][3] and ENERGY STAR's installation advice for heat pump water heaters.[4] Federal efficiency rules already favor heat pumps in large electric tanks: an electric storage heater over 55 gallons must reach a uniform energy factor of about 2.05 at 65 gallons, against 0.92 for a 50-gallon tank (medium draw), a level only heat pump models can reach.[5]
What water heater replacement cost includes
The bill is the unit plus the labor to drain and remove the old one, connect the new one and haul the old tank away; switching type or fuel adds work. Ask for each of these as a separate line so quotes can be compared:
- Unit: type, gallons, first-hour rating or flow at your temperature rise, warranty years.
- Installation: removal and disposal of the old heater, new connections and valves.
- Conversions: a new vent, gas line, condensate drain or electrical circuit when you change type.
- Permit: many localities require one for a water heater replacement; the quote should say who pulls it.
For scale, the Census Bureau's 2023 American Housing Survey counted 16.4 million owner jobs in two years in a combined category of water heaters, dishwashers and garbage disposals, with a median of $800 and an average of $1,148.[6] Because the category mixes cheaper appliances with water heaters, it understates a typical water heater job; use it only as context next to your quotes.
Plumber or electrician too?A gas-to-heat-pump switch can need both trades. The plumber cost and electrician cost calculators break a labor quote into hours, rate and fees.
Worked example
A household's busiest hour is three showers, a shave and a sink of dishes: 3 × 20 + 2 + 3 = 65 gallons, so a tank needs a first-hour rating of 65 gallons or more. If they choose tankless instead and expect one shower and one faucet at once, the unit must deliver 3.25 gallons a minute at a 70 °F rise. Their water heater replacement cost is then the unit + installation + any venting or wiring from the written quote, entered in the last three fields.
Tax credits and paying for it
The federal energy efficient home improvement credit paid 30% of the cost of a qualifying heat pump water heater, up to $2,000 a year, for property placed in service from 2023 through 2025;[7] it does not apply to equipment placed in service after December 31, 2025.[8] Utility and state rebates may still exist, so check with your utility before buying. Most water heater jobs are paid from savings; if one is part of a larger renovation financed with home equity, the interest is deductible only when the borrowed money buys, builds or substantially improves the home,[9] and a HELOC lets you draw only what the work needs.[10] Compare the payment with the home improvement loan calculator, and see HVAC replacement cost if the furnace or air conditioner is due as well. Buying a house? A home inspection reports the water heater's age and condition before you close.
Frequently asked questions
How much does water heater replacement cost?
It is the unit plus installation from your quote. The closest Census figure combines water heaters with dishwashers and disposals: a median of $800 and an average of $1,148 per job in 2021–2023,[6] which understates a water heater alone.
What size water heater do I need?
For a tank, one whose first-hour rating is at least your peak-hour demand. DOE's example household needs 65 gallons: three 20-gallon showers, a 2-gallon shave and a 3-gallon sink.[1]
Is a tankless water heater worth it?
It saves the most in homes that use little hot water: DOE puts the gain at 24%–34% over a tank for 41 gallons a day or less, falling to 8%–14% around 86 gallons a day.[2] Compare that with the extra installed cost in your quotes.
Sources
- Sizing a New Water Heater (Energy Saver), with the peak-hour demand worksheet
- Tankless or Demand-Type Water Heaters (Energy Saver)
- Heat Pump Water Heaters (Energy Saver)
- Heat Pump Water Heaters (ENERGY STAR certified products)
- 10 CFR 430.32, Energy and water conservation standards: (c) central air conditioners and heat pumps, (d) water heaters
- American Housing Survey 2023, Table C-16-OO: Home Improvement Costs, Owner-Occupied Units
- Energy Efficient Home Improvement Credit
- FAQs for modification of sections 25C, 25D … under Public Law 119-21 (FS-2025-05)
- Publication 936 (2025), Home Mortgage Interest Deduction
- What is the difference between a home equity loan and a home equity line of credit (HELOC)?