Gas vs Electric Water Heater: Which Is Cheaper to Run?
At current U.S. energy prices, a gas water heater costs about $19 a month to run and a standard electric water heater about $45, for a 3–4 person home. That makes gas cheaper to operate by about $26 a month. A heat pump electric water heater is cheaper than both, at about $12.
Monthly cost to run a gas vs electric water heater, by household size
More people means more hot water, so the gap between the three grows with the household. Gas beats a standard electric tank at every size; a heat pump beats both.
| Household | Gas | Standard electric | Heat pump electric |
|---|---|---|---|
| 1–2 people | $14/mo ($162/yr) | $33/mo ($396/yr) | $9/mo ($104/yr) |
| 3–4 people | $19/mo ($224/yr) | $45/mo ($544/yr) | $12/mo ($143/yr) |
| 5 or more people | $29/mo ($346/yr) | $70/mo ($840/yr) | $20/mo ($240/yr) |
How we worked these out: the energy it takes to heat a household's water from 55°F to a 125°F thermostat setting, priced at the U.S. average residential rates from the Energy Information Administration: 18.2¢ per kWh (2026 through July) and $1.48 per therm (2025). Your bill will differ with your local rates and how much hot water you use.
Is gas cheaper than electric where you live?
Averages hide big local differences, so check two numbers from your own bills: what you pay per kWh of electricity and per therm of gas. Divide each bill's total by the amount used, so delivery charges are included. If your gas is billed in CCF, one CCF is about one therm.
Gas vs a standard electric tank
Electric only wins if your price per kWh is below about 1/20 of your price per therm: under 7.5¢ per kWh at $1.48 per therm. That is well below the U.S. average of 18.2¢, so gas almost always costs less to run.
Gas vs a heat pump
A heat pump wins if your price per kWh is below about 1/5 of your price per therm: under about 28¢ per kWh at $1.48 per therm. Only homes with expensive electricity and cheap gas come out the other way.
What each costs to install
Running cost is only half of it. Gas and heat pump models cost more up front, which is why the cheapest to run is not automatically the cheapest to own.
| Type | Typical installed cost | Why |
|---|---|---|
| Standard electric tank | about $1,300 | Simplest swap: water lines and a 240V circuit |
| Gas tank | about $1,600 | A few hundred more for the gas connection and flue |
| Heat pump electric | about $2,450 | $800–$1,500 more than a standard electric tank |
A same-fuel, same-spot swap of a 50-gallon tank runs $1,100 to $2,200 installed; switching fuel adds $600 to $1,900 of labor. There is no federal tax credit for a 2026 install: the 25C credit ended on December 31, 2025, though some utilities still offer rebates. Full breakdown: how much it costs to replace a water heater.
Total cost over 10 years
Install cost plus ten years of running cost, about the life of a tank:
| Household | Gas | Standard electric | Heat pump electric |
|---|---|---|---|
| 1–2 people | $3,220 | $5,260 | $3,490 |
| 3–4 people | $3,840 | $6,740 | $3,880 |
| 5 or more people | $5,060 | $9,700 | $4,850 |
- A standard electric tank costs the most over time at every household size, by $2,040 to $4,640 against gas.
- Gas and a heat pump end up within a few hundred dollars of each other: gas slightly ahead for 1–2 people, the heat pump ahead for 5 or more.
- Gas's extra install cost over electric pays for itself in less than a year for a 3–4 person home.
A tank lasts 8 to 15 years either way; see how long a water heater lasts.
Heat pump water heaters: cheapest to run, if you have the room
A heat pump water heater is electric, but instead of heating water with an element it moves heat from the surrounding air into the tank. ENERGY STAR estimates a certified model saves a household of four about $550 a year against a standard electric tank and pays back its higher price in about three years.
It needs the right spot. Per ENERGY STAR:
- About 700 cubic feet of air around it, roughly a 10 x 10 foot room with a 7-foot ceiling
- Surrounding air that stays at 40°F or warmer
- Clearance around the unit for air to enter and exit
- Usually a dedicated 240V outlet, though some models plug into 120V
Heat pump models we'd look at
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Other differences besides cost
| Gas | Standard electric | Heat pump electric | |
|---|---|---|---|
| Reheating after heavy use | Fastest | Slower | Slowest in heat pump mode; most switch to their backup element when demand is high |
| During a power outage | Standing-pilot models keep working; power-vent and electronic-ignition models don't | No hot water | No hot water |
| Venting and safety | Needs a flue; keep a carbon monoxide alarm nearby | No venting | No venting; needs open air around it |
| Where it can go | Near a gas line and vent route | Almost anywhere, including closets | A room with about 700 cu ft of air, 40°F or warmer |
Whichever you pick, checking the anode rod helps a tank reach the long end of its life.
So which should you choose?
You have a room with space around the tank: heat pump
Lowest monthly cost of the three, about even with gas over 10 years, and $1,770 to $4,850 cheaper than a standard electric tank.
You have a gas line but not the space: gas
About $26 a month cheaper to run than a standard electric tank for 3–4 people, and it recovers its higher install cost in less than a year.
No gas line and no space: standard electric
Cheapest to install and fits almost anywhere. Adding a gas line and vent just to save on running cost rarely pays back.
Next steps
Frequently asked questions
Is it cheaper to run a gas or electric water heater?
Gas is cheaper to run than a standard electric tank: about $19 a month against $45 for a 3–4 person home at current U.S. prices. A heat pump electric water heater is cheaper than both, at about $12 a month.
How much does an electric water heater cost per month to run?
A standard electric tank costs about $33 a month for 1–2 people, $45 for 3–4 people and $70 for 5 or more, at 18.2¢ per kWh. A heat pump model costs about $9, $12 and $20.
How much does a gas water heater cost per month to run?
About $14 a month for 1–2 people, $19 for 3–4 people and $29 for 5 or more, at $1.48 per therm.
Is a heat pump water heater cheaper to run than gas?
Yes, unless your electricity is expensive relative to your gas. A heat pump beats gas whenever your all-in electricity price per kWh is less than about a fifth of your gas price per therm: under about 28¢ per kWh at $1.48 per therm.
Is there still a tax credit for a heat pump water heater?
Not a federal one. The 25C Energy Efficient Home Improvement Credit, which covered 30% up to $2,000, ended for equipment installed after December 31, 2025. Some utilities and states still offer rebates, so check with yours before you buy.
Is it worth switching from an electric to a gas water heater?
Usually not if you have no gas line. Gas saves about $26 a month for a 3–4 person home, but a fuel switch adds $600 to $1,900 of labor before any new gas line or venting, so it takes years to pay back. A heat pump water heater cuts an electric bill further without a gas line.
Sources
- U.S. Energy Information Administration, Electric Power Monthly, Table 5.6.B (average residential electricity price, 2026 year to date through July)
- U.S. Energy Information Administration, Natural Gas Prices (average residential price, 2025, converted to therms)
- ENERGY STAR, Heat Pump Water Heaters: Benefits and Savings
- ENERGY STAR, Is a Heat Pump Water Heater Right for Your Home?
- IRS, Energy Efficient Home Improvement Credit
- Installed costs: TidyBoss water heater replacement cost (and its sources). How we check our facts.
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