Gas vs electric water heater in the USA: monthly cost

Against a basic electric tank, yes, in all 51 states: a gas tank costs $52 to $753 a year less to run, least in Arkansas and most in California.

Against a heat pump water heater, no: the heat pump costs less to run than the gas tank in 51 of 51 states at the average gas price, and in 42 for a home that already has gas.

Of the four machines in the table, a heat pump is the cheapest to run in 28 states and a gas tankless heater in 23.

The federal test rates water heaters at three levels of use. The table above is the middle one, 55 gallons of hot water a day. Here is the same gas tank at all three, at US average prices.

Your rates are not the state average. Take the per-kWh line of the electricity bill and the per-therm line of the gas bill, multiply by the yearly energy of each machine, and divide by twelve.

Take the yearly saving between two machines in your state: the last column of the table for an electric tank against a gas tank, or the difference of two yearly figures. Take the extra cost from your quotes. The grid gives the years to get it back.

Away from the gas main, "gas" means propane, and the comparison changes. In the 38 states with a published propane price, a heat pump water heater is the cheapest of the four in all of them. The propane heaters are priced with the efficiency of the natural gas machines, which is our assumption.

Federal rules change what can be made. Electric tank water heaters of 20 to 55 gallons manufactured from 6 May 2029 must reach a uniform energy factor of 2.30. The minimum for the 50-gallon tank in this page's table is 0.92 today, and the typical certified heat pump water heater is at 3.52: only heat pump designs reach the new figure. The rule keeps a separate class for small electric tanks. Gas tanks get a higher minimum too, 0.64 for a 40-gallon tank against 0.58 today.

So a new electric tank of that size made after that date will be a heat pump model. If you are comparing a gas tank with a plain electric tank, look at the heat pump column as well. Source: 10 CFR 430.32(d), read 13 Oct 2026; the link is in the sources.

A gas tankless heater is the fourth column of the table: $15 a month at US average prices against $25 for a gas tank. It is the cheapest of the four in 23 states at the average gas price, and in 34 for a home that already has gas.

Two limits. The figure leaves out the electricity a tankless heater uses for its ignition and fan, which no open data gives. And this page compares running cost only: whether a tankless heater repays its higher price is a different sum, with your own quotes, and is not worked out here.

Look at the top and the bottom of the tank. A gas water heater has a flue, a metal pipe leaving the top, and a gas line with a valve running to a burner door near the floor. An electric one has a cable entering the top, two screwed-on panels on its side and no flue. The yellow EnergyGuide label, if it is still on the tank, names the fuel.

The trap in this comparison is which machines are compared. ENERGY STAR lists only models good enough to certify: it has no plain electric tank and no ordinary gas tank. So the two tanks here are the basic model, a 40-gallon gas tank and a 50-gallon electric tank at the federal minimum efficiency (0.5803 and 0.9207), and the other two are the typical certified model: the median of 460 gas tankless heaters (0.95) and of 268 heat pump water heaters rated at this level of use (902 kWh a year; models range from 769 to 1,550).

All four deliver the same hot water: 55 gallons a day heated by 67°F, the middle level of the federal test, which is 11,083,006 BTU or 3,248 kWh of heat a year. A tank's energy is that heat divided by its efficiency.

Gas is priced at the EIA average for the 12 months to Jul 2026, weighted by volume, never a single month: a water heater runs all year. The monthly figure is the yearly one divided by twelve. Left out: purchase and installation, the fixed gas charge as a separate item and time-of-use rates.

How the state prices are worked out: how the prices are calculated.