Tank or tankless: which water heater to buy
A decision from simultaneous flow, vent and gas-line cost, and maintenance, using the Department of Energy’s own limits.
Buy a storage tank when several fixtures must run hot at once and you want that capacity from water already heated. Buy a tankless heater when the real overlap is one or two fixtures, you will descale it, and the quote includes the vent and the gas line rather than only the box.
The Department of Energy’s comparison puts tankless life near 20 years and efficiency about 8 to 34 percent higher than storage, with output limited to roughly 2 to 5 gallons per minute unless you install more than one.
Storage heaters last about 10 to 15 years and can serve several draws together because the tank is already hot. Neither sentence survives a bad installation. This page is the choice. Anatomy is in how a storage tank works and how a tankless heater works.
The number that decides it
A tank is sized by first-hour rating, not by the gallon count in the model name. The Department of Energy worksheet and the 36-gallon example are in how to size a tank. A tankless unit is sized by overlapping gallons per minute and by temperature rise.
The Department of Energy’s example is a 0.75 gallon-per-minute faucet plus a 2.5 gallon-per-minute shower, which is 3.25 gallons per minute, at a 70°F rise if incoming water is 50°F and the set point is 120°F. In a northern January the rise is larger and the same unit delivers less flow. Do that arithmetic in how to size a tankless heater before you believe a brochure flow rate measured at a 35°F rise.
If the household’s real overlap is two showers and a dishwasher, add those flows. If the sum is past what one gas tankless chart can do at your winter rise, the honest options are a storage heater with a high first-hour rating, two tankless units, or a household that staggers the showers. “It never runs out” is true only inside the chart.
| Constraint | Lean toward a tank | Lean toward tankless |
|---|---|---|
| Two showers overlap every morning | First-hour rating that covers that hour | Only if the chart covers both flows at winter rise |
| One bathroom, long waits, sound gas line | Fine, with standby loss | Often the simpler comfort upgrade |
| Electric only, panel already full | A resistance or heat pump tank on the existing circuit, if the nameplate fits | A whole-house electric tankless unit usually needs a service upgrade |
| Hard well water and no plan to descale | Flush the tank yearly | The heat exchanger will scale shut |
| Outages, and you want hot water with no power | Standing-pilot atmospheric gas, if you can still buy and vent one | Needs power for the fan and the board |
| Tight interior closet | Electric or heat pump, or sealed combustion | Sealed combustion only, with listed vent length |
What the price tag hides
Published installed ranges, labeled by source and year, are in what water heaters cost. HomeAdvisor’s 2025 type table put a tank job around $600 to $2,500 and a tankless job around $1,400 to $3,900. Angi’s 2026 tankless article put a typical installed span near $1,404 to $3,902.
Those are national estimator bands, not bids. The tankless number jumps when the old gas line was sized for a 40,000 Btu/h tank and the new heater wants close to 199,000, or when an atmospheric metal vent cannot be reused by a condensing unit.
Condensing gas heaters is why the plastic vent is a different project. A quote that lists only the heater is unfinished. The line items to demand are in how to read a replacement quote.
Operating cost follows the same split. Tankless equipment avoids heating a tank all night. It does not avoid heating the water you actually use, and a recirculation loop spent all night brings standby loss back.
Compare EnergyGuide energy use, not two unlike efficiency numbers. Uniform energy factor explains why a gas UEF and an electric UEF are not one ladder.
Maintenance is part of the purchase
A tank wants a flush, an anode, and a relief valve that is not capped. Those jobs are in the maintenance section. Skip them and the Department of Energy’s 10-to-15-year band gets shorter.
A tankless heater wants isolation valves and a descale on the manufacturer’s interval, shorter on hard water.
Without the valves, the first service call is to add them.
Hard water and scale is the reason a softener is sometimes part of the tankless quote rather than an upsell. How long they last puts the 20-year tankless figure next to that maintenance condition.
A short way to choose
Write down the overlapping fixtures and their flows, the winter inlet temperature if you know it, and whether gas and a legal vent already exist. If the overlap fits one tankless chart at that rise and the quote shows the gas line and the vent, tankless is a rational buy.
If the overlap does not fit, or nobody will own the descale, buy the tank whose first-hour rating matches the Department of Energy worksheet. If the house is electric and the room can host a heat pump, that comparison is electric tank or heat pump, not this page. If you are choosing between a gas tankless unit and a heat pump, use tankless or heat pump.
Do not convert the fuel, the vent, or the circuit as a weekend project. When to call a pro is the boundary, and permits, pans, and straps is what the install still has to include after the type is chosen.
One house, worked out
A household of four, two morning showers that truly overlap, plus someone filling the kitchen sink. Call the showers 2.0 gallons per minute each and the sink 1.0.
Overlap is 5.0 gallons per minute. Incoming water in January is 42°F and the set point is 120°F, so the rise is 78°F. A tankless chart that advertises 5 gallons per minute at a 35°F rise and 3.2 at an 80°F rise does not cover this house.
A storage heater whose first-hour rating is in the 60s or 70s might, if the Department of Energy worksheet for their actual uses lands there. The worksheet’s stock shower line is 10 gallons of hot water, which is a short shower, not two rainfall heads at once.
Adjust the line. Then compare an installed tank quote with an installed tankless quote that includes a second unit or a lower set of expectations. What water heaters cost is the range check, not the answer.
If those two showers never actually overlap, the 5 gallon figure was a fantasy and a single gas tankless unit at a 78°F rise may be plenty. The discipline is watching a real morning, not designing for a parade.
Sources
U.S. Department of Energy, Energy Saver, “Which Water Heater Is Right for You?” (energy.gov), for the 8 to 34 percent efficiency range, the about-20-year tankless life, the 10-to-15-year storage life, and the roughly 2-to-5 gallon-per-minute output limit. U.S. Department of Energy, Energy Saver, “Sizing a New Water Heater,” for the 0.75 plus 2.5 gallon-per-minute example and the 50°F incoming-water assumption. HomeAdvisor’s 2025 replacement cost guide and Angi’s 2026 tankless cost article, as typical installed ranges cited in the cost guide, not as bids.