Gas vs Electric Water Heater: Which Costs Less to Run?
Gas vs electric water heater running costs compared state by state with 2026 EIA prices: standard tanks, condensing gas, tankless and heat pump models.
By the GableMath team · Published · 4 min read
If you have natural gas, a gas water heater costs less to run than a standard electric tank in every state we checked — often half as much. But a heat pump water heater beats both: at 2026 prices it costs about $170–$390 a year to run versus $280–$630 for a standard gas tank. If you're replacing an electric tank, go heat pump; if you're replacing a gas tank, stay with gas unless the space suits a heat pump.
- Replacing an electric tank
- Heat pump water heater
- Replacing a gas tank, tight utility closet
- Gas (condensing or tankless)
- No gas line at the house
- Heat pump water heater
- Cheapest upfront, short stay
- Like-for-like standard tank
Short answer: gas beats a standard electric tank on running cost, and a heat pump water heater beats them both. Electric resistance tanks are efficient on paper — almost all the electricity becomes heat — but electricity costs more than three times as much per unit of heat as natural gas at 2026 average prices. A heat pump water heater flips that by moving heat from the surrounding air instead of making it, using roughly a quarter of the electricity.
Gas vs electric water heater: running cost
The Department of Energy's cost method uses a typical household's daily hot water — 64.3 gallons heated from 58°F to 135°F, which takes 0.41 therms of gas or 12.03 kWh of electricity — divided by the heater's efficiency rating (UEF):
| Water heater | Efficiency (UEF) | Energy per year | Cost per year (U.S. average) |
|---|---|---|---|
| Standard electric tank | ~0.92 | 4,773 kWh | ~$868 |
| Heat pump water heater | ~3.68 (ENERGY STAR avg) | 1,193 kWh | ~$217 |
| Standard gas tank | ~0.58–0.64 | 234–258 therms | ~$350–$380 |
| Condensing gas tank | ~0.89 (ENERGY STAR avg) | 167 therms | ~$248 |
| Condensing gas tankless | ~0.95 (ENERGY STAR avg) | 157 therms | ~$233 |
At 18.19¢ per kWh (EIA average, Jan–Aug 2026) and $1.48 per therm (EIA 2025 average residential gas price). Use your own rates for your own answer.
Electric vs gas water heater cost by state
Prices vary a lot by state, so we ran the same numbers with each state's own electricity and gas prices:
| State | Electricity | Gas per therm | Electric tank | Heat pump | Gas tank | Gas tankless |
|---|---|---|---|---|---|---|
| Florida | 15.32¢ | $2.46 | $731 | $183 | $634 | $386 |
| Texas | 16.03¢ | $1.88 | $765 | $191 | $484 | $294 |
| Georgia | 15.48¢ | $1.97 | $739 | $185 | $509 | $310 |
| Arizona | 15.36¢ | $1.79 | $733 | $183 | $463 | $282 |
| Washington | 14.42¢ | $1.70 | $688 | $172 | $439 | $267 |
| Ohio | 18.81¢ | $1.34 | $898 | $224 | $345 | $210 |
| Illinois | 19.23¢ | $1.09 | $918 | $229 | $280 | $171 |
| New York | 29.26¢ | $1.70 | $1,397 | $349 | $438 | $266 |
| Massachusetts | 30.19¢ | $2.42 | $1,441 | $360 | $624 | $380 |
| California | 32.58¢ | $2.13 | $1,555 | $389 | $548 | $334 |
Electricity: EIA average residential price, Jan–Aug 2026. Gas: EIA 2025 average residential price. Standard gas tank at UEF 0.58.
Three patterns stand out. A standard electric tank is the most expensive option everywhere. A heat pump water heater is the cheapest option in every state in the table — even in New York and California, where electricity is expensive. And where gas is cheap (Illinois, Ohio), a gas tankless unit comes close to a heat pump.
Which water heater is more efficient?
On efficiency ratings alone, electric wins: a resistance tank turns about 92% of its energy into hot water, a heat pump about 368%, and a standard gas tank only about 58–64% because heat escapes up the flue and through the tank walls. But efficiency isn't cost. A therm of gas delivers 100,000 Btu for about $1.48; the same heat from electricity is 29.3 kWh — about $5.33 at the U.S. average. That's why a less efficient gas tank still costs less to run than an efficient electric one.
What else should decide it
- What's there now. Switching fuels is where the cost hides. Going from electric to gas means running a gas line and a vent; going from gas to a heat pump usually means a 240-volt circuit and a condensate drain. Like-for-like is cheapest to install.
- Space for a heat pump. DOE notes heat pump water heaters need a spot that stays between 40°F and 90°F year-round with at least 1,000 cubic feet of air around them — a basement or garage, not a small closet. They also cool and dehumidify the space they're in.
- Recovery. Gas tanks reheat faster than electric or heat pump tanks. Big families who run several showers back to back may want a larger heat pump tank or a hybrid mode setting.
- Safety and venting. Gas appliances need proper venting and a working carbon monoxide alarm nearby.
- Lifespan. Gas and electric tanks both typically last 10–15 years; tankless units more than 20, per DOE.
Cut water-heating cost with any heater
The cheapest gallon of hot water is the one you don't heat. These apply whatever fuel you choose:
- Set the thermostat to about 120°F. Many tanks ship set higher, and every degree costs standby losses.
- Use WaterSense showerheads. The federal maximum is 2.5 gallons per minute; WaterSense models use 2.0 or less — 20% less hot water for every shower.
- Insulate the first few feet of hot pipe from the tank, and fix dripping hot taps.
- Wash clothes in cold water. Most of a washer's energy goes into heating water.
- Drain a few gallons from a tank yearly to clear sediment, which insulates the water from a gas burner and shortens tank life.
Each of these lowers the 64.3-gallon-a-day baseline the cost table assumes, so your real bill can come in well under the figures above.
Our recommendation
Replacing an electric tank? Buy a heat pump water heater if you have the space — saving roughly $500–$1,200 a year against an electric tank in the states above, it usually pays back its higher price within a few years. Replacing a gas tank? A like-for-like gas tank is the low-cost route; a condensing tankless unit cuts the bill further if you'll stay long enough (see our tankless vs tank comparison). Check your state's current rate in electricity rates by state, and if you're adding solar, a heat pump water heater is one of the best uses for the extra midday power — the solar panel calculator sizes the system.
Questions people ask
Which water heater is more efficient, gas or electric?
By efficiency rating, electric wins: a standard electric tank has a UEF around 0.92 and a heat pump water heater averages 3.68 among ENERGY STAR models, against about 0.58–0.64 for a standard gas tank. But gas is cheaper per unit of heat in most places, so a standard gas tank still costs less to run than a standard electric one. A heat pump water heater costs the least of all.
How long do gas water heaters last?
Storage water heaters, gas or electric, typically last 10–15 years according to the Department of Energy. Tankless gas units commonly last more than 20 years.
What size hot water tank do I need for my home?
Size by first-hour rating — the gallons of hot water a tank delivers in an hour starting full — rather than tank volume alone. Add up your busiest hour (showers at about 2 gallons a minute, a dishwasher, a washer) and choose a first-hour rating at or above it. Most households of two to four people land on a 40–50 gallon tank.
How does a gas water heater work?
A burner under the tank heats water through the tank bottom and a central flue that carries combustion gases out through a vent. A thermostat cycles the burner to hold the set temperature, which is why tanks lose some heat between uses.
Where these numbers come from
- U.S. Department of Energy, Building Science Education Solution Center — water heater cost calculation — Annual cost = 365 × 0.41 therm (or 12.03 kWh) ÷ UEF × price; example standard gas tank UEF 0.58 · checked October 2026
- ENERGY STAR certified water heaters (data.energystar.gov) — Heat pump average UEF 3.68; gas tankless 0.95; condensing gas storage 0.86–0.90 · checked October 2026
- U.S. Energy Information Administration — residential natural gas prices by state — 2025 annual averages, ÷ 10.36 therms per Mcf · checked October 2026
- U.S. Energy Information Administration — Electric Power Monthly, Table 5.6.B — Average residential electricity price by state, Jan–Aug 2026 · checked October 2026
- U.S. Department of Energy, Energy Saver — Heat pump water heaters (archived June 2026) — Needs a space that stays 40–90°F with at least 1,000 cubic feet of air · checked October 2026