Gas vs Electric Water Heaters (2026): Tank, Tankless and What It Costs to Run

Most US homes heat water with either a gas burner under a storage tank or electric elements inside one. Tankless units, condensing burners and the UEF rating have changed the picture enough that the old rules of thumb do not always hold.

The quick answer: A gas water heater usually costs less to operate and recovers hot water about twice as fast as an electric tank of the same size, so it suits larger households and homes that already have gas. An electric tank costs less to buy and install, needs no venting or combustion air, and turns almost all of its energy into hot water, but it recovers slowly and electricity usually costs more per BTU than gas. Gas tankless units save space and standby loss and last longest, but cost more to install, especially when converting from a tank. Electric tankless works best at the point of use, because whole-house models need very large electrical service.

Gas tank water heaters: atmospheric, power-vent and direct-vent

A gas storage heater burns natural gas or propane under a 30 to 75 gallon tank; 40 and 50 gallon models with a 36,000 to 50,000 BTU/h burner are the common residential sizes. Models differ mainly in how they exhaust and where they draw combustion air.

• Atmospheric (natural draft): Exhaust rises on its own through a metal B-vent flue or lined chimney. Standing-pilot models need no electricity, so they work in a blackout. They are the least expensive gas tanks and the simplest like-for-like replacement where a vertical metal vent exists. The burner uses room air, so the space needs ventilation and the flue must draft properly.
• Power-vent: A blower on top pushes exhaust through PVC or CPVC pipe, which can run horizontally out a side wall, so they are the usual choice when there is no chimney. They need a 120V outlet, cost more, make some fan noise, and stop during a power outage. Efficiency is slightly higher.
• Direct-vent: Sealed combustion. A coaxial pipe draws outdoor air in and sends exhaust out through a wall, so the unit uses no indoor air. Common in tight houses and mobile homes; many need no electricity.

Typical gas tanks carry a UEF (Uniform Energy Factor, the DOE efficiency rating since 2017) of roughly 0.60 to 0.70, because some heat leaves through the flue.

Electric tank water heaters

An electric storage heater uses two immersion elements, usually 4,500 watts each at 240V, with two thermostats. Only one element runs at a time (the upper heats first, then hands off to the lower), so the tank draws about 19 amps on a 30 amp double-pole breaker with 10 AWG wire. No flue, no combustion air and no gas line, which is why electric tanks fit almost anywhere and are the cheapest to install.

The trade-off is recovery. A 4,500 watt element produces about 15,000 BTU/h, while a basic 40,000 BTU/h gas burner puts roughly 30,000 BTU/h into the water after flue losses. A 50 gallon electric tank therefore reheats around 20 gallons per hour at a 90°F rise, versus about 40 gallons per hour for a 40 gallon gas tank, which is why electric tanks are sized one step larger.

UEF for standard electric tanks is around 0.90 to 0.95, since nearly all the electricity ends up in the water. When one stops heating, the fix is often an element or thermostat rather than a new tank; see our heating element testing and replacement guide.

Gas tankless water heaters

A gas tankless heater fires only when a hot tap opens and heats water as it passes through a heat exchanger. Whole-house units are typically rated 150,000 to 199,900 BTU/h input, four to five times a tank's burner.

• Condensing vs non-condensing: A condensing unit adds a secondary heat exchanger that recovers extra heat from the exhaust until the water vapor in it condenses. UEF runs about 0.90 to 0.96, the exhaust is cool enough for PVC venting, and the unit needs a condensate drain (the condensate is mildly acidic, and some local codes require a neutralizer). Non-condensing units run about 0.80 to 0.82 UEF, cost less, and need stainless steel Category III venting for their hotter exhaust.
• Flow and temperature rise: A 199,900 BTU/h condensing unit delivers roughly 10 to 11 GPM at a 35°F rise but closer to 5 GPM at a 70°F rise, which is what a northern home sees in winter with 50°F groundwater and a 120°F setpoint. Size by your coldest-month rise, not the headline GPM.
• Gas line and electrical: A 199,900 BTU/h unit needs about 200 cubic feet of natural gas per hour. The 1/2 inch branch that fed a 40,000 BTU/h tank is rarely adequate; most conversions need a 3/4 inch line, sometimes 1 inch for long runs, and occasionally a larger meter, sized from the fuel gas code tables for total connected load and run length. All tankless units also need a 120V outlet for the control board and fan.

HVAC MORE carries the Noritz EZ98DV and EZ111DV condensing units (180,000 and 199,900 BTU/h, up to 9.8 and 11.1 GPM). The EZ series is designed as a tank replacement, with top-mounted water connections and PVC direct venting that keep conversion labor down; find them in our water heaters collection.

Electric tankless: point-of-use vs whole-house

Electric tankless heaters are compact and vent-free, but heating water on demand with resistance elements takes a lot of power at once.

• Point-of-use (3.5 to 12 kW): Mounted under a sink or at a remote bathroom to serve one or two fixtures on a single 120V or 240V circuit, or to shorten the wait at a distant tap.
• Whole-house (18 to 36 kW): A 27 kW unit draws about 112 amps at 240V and typically needs three 40 amp double-pole breakers; a 36 kW unit draws 150 amps across four. Many 200 amp panels cannot carry that alongside a range, dryer and air conditioner, and a 100 or 150 amp service almost never can. Even at 36 kW, output is only around 4 to 5 GPM at a 50°F rise, so these suit the South, where groundwater is warm, far better than cold climates.

Recovery rate, first-hour rating, UEF and operating cost

• Recovery rate is gallons per hour the heater can raise by a stated temperature, usually 90°F. Gas tanks recover about twice as fast as electric tanks of similar size.
• First-hour rating (FHR) is how much hot water a full tank delivers in one hour of steady use, combining stored volume and recovery. A 40 gallon gas tank often carries an FHR in the mid-60s to low-70s; a 50 gallon electric is usually in the high-50s to mid-60s. Match FHR to your busiest hour.
• UEF is measured on one of four draw patterns (very small, low, medium, high); compare only within the same pattern. It tells you how much of the energy you buy becomes hot water, not what that energy costs.

Energy prices vary by state, but across most of the US natural gas costs less per BTU than electricity, so a 0.65 UEF gas tank usually costs less to run than a 0.93 UEF electric tank. As a rough 2026 guide for a household of three or four, a standard electric tank costs several hundred dollars a year to run, a gas tank somewhat less, and a condensing gas tankless less again because it has no standby loss. Propane typically costs more per BTU than natural gas. A heat pump water heater uses roughly a quarter to a third of the electricity of a resistance tank; we do not sell them today, but our heat pump water heater guide covers them.

Lifespans are typical, not guaranteed; hard water shortens all of them, and yearly descaling is what gets a tankless to 20 years. A leaking tank cannot be repaired, but burners, thermocouples, gas valves, elements, thermostats and anode rods can be replaced from our water heater parts collection.

Sizing and which type to pick

For storage tanks, size by first-hour rating. Common starting points: 1 to 2 people, a 30 to 40 gallon gas or 40 gallon electric; 2 to 3 people, 40 gallon gas or 50 gallon electric; 3 to 4 people, 40 to 50 gallon gas or 50 to 65 gallon electric; 5 or more, 50 to 75 gallon gas, 80 gallon electric, or a gas tankless.

For tankless, add up the fixtures you expect to run at once (a showerhead is about 2 to 2.5 GPM, a kitchen faucet 1 to 1.5 GPM, a washing machine 1.5 to 2 GPM), then check the unit's output at your winter temperature rise. Two showers at once in a northern state calls for a 199,000 BTU/h class unit; the same load in Florida can be met by a smaller one.

• Gas tank: you have gas and a working vent, want the lowest replacement cost with good recovery, or need hot water during outages (atmospheric models).
• Power-vent gas tank: you have gas but no chimney, or are replacing an existing power-vent unit.
• Electric tank: no gas, a tight budget, or a location a flue cannot reach. Consider a heat pump water heater if you want electric with lower running cost and have the space.
• Gas tankless: large or variable demand, freed-up floor space, and a long enough stay for the lifespan to pay back. Our installation cost guide explains what a conversion involves.
• Electric tankless: a point-of-use job, or a whole house only in a warm climate with ample electrical capacity.

FAQ

Is a gas or electric water heater cheaper to run?

In most of the US, gas. Natural gas typically costs less per unit of heat than electricity, which outweighs the electric tank's higher UEF. Propane and high-gas-price regions can flip that, and a heat pump water heater beats both.

Can I replace an electric water heater with a gas one?

Yes, if gas is available at the location and you can add a vent. You will need a gas line, a flue (metal for atmospheric, PVC for power-vent) and usually a permit, so expect it to cost more than a like-for-like swap.

Does a tankless water heater give instant hot water?

No. It gives endless hot water, but the water still has to travel from the heater to the tap, and the unit takes a few seconds to fire. A recirculation loop or a point-of-use electric unit at the far bathroom solves the wait.

Does a gas water heater work in a power outage?

An atmospheric tank with a standing pilot does. Power-vent tanks, tankless units and electric heaters do not, because they need electricity for the blower, control board or elements.

Shop at HVAC MORE

We stock 40 and 50 gallon atmospheric and power-vent gas tanks, electric tanks, and Noritz EZ98DV and EZ111DV condensing tankless units in our water heaters collection, plus elements, thermostats, gas valves, thermocouples and anode rods under water heater parts. Equipment ships freight from US warehouses; see shipping options. Not sure which type fits your home? Contact us with your household size, fuel and current vent setup.