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Tankless Water Heater vs Standard Tank: Which Is Best for You?
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From providing the soothing flow of a hot shower to delivering the heat necessary to sterilize dishes in your dishwasher, your hot water heater is an essential appliance for everyday living.
While you have plenty of options when choosing a new hot water heater, one of the biggest decisions you need to make is whether to go with a traditional tank heater or opt for a modern, efficient tankless water heater.
Key Differences
Tankless and tank water heaters perform the same function, but there can be a big difference in cost, performance, and efficiency.
How They Work
Tank water heaters store hot water in an insulated tank so it's ready when you need it, while tankless water heaters heat water on demand as it flows through the unit. You can get tank and tankless models in electric or gas versions:
Tank Water Heaters
Uses heating elements (like the ones in an electric oven) to warm water stored in the tank
Tankless Water Heaters
Gas Tankless (Condensing)
Burns gas and recaptures exhaust heat through a heat exchanger for maximum efficiency—like the ADAPT® series
Gas Tankless
Gas tankless water heaters use liquid propane or natural gas. Activating the water heater opens a valve that lets the gas enter a small chamber, where a spark ignites it to create a flame that then heats the water before it leaves the unit.
Burns gas to heat water through a heat exchanger with a simpler design that works well for many homes
Initial Cost
The initial cost of a tankless water heater is typically higher than that of a traditional tank water heater. Rebates and tax incentives may reduce the overall cost.
Tank Cost
Tank water heaters generally cost between $300 and $2,000, depending on the model and features.
Tankless Cost
Tankless water heaters generally cost between $1,000 and $3,000, depending on the model and features
Installation
Installation costs also run higher for tankless water heaters, especially if you plan to convert from one fuel source to another. The cost of installing a gas line or switching from gas to electric operation may be a consideration when comparing electric vs. gas tankless water heaters.
The smaller size of a tankless heater simplifies installation and placement in the home. You don't need a dedicated room for a hot water tank, and you may be able to have your tankless heater installed outside.
Tank Installation
Installing a traditional tank hot water heater requires finding a space to put the tank. This may be a separate room or a laundry room where the washer and dryer are also located. Installation of a tank water heater typically runs from $500 to $1,000, depending on placement and the complexity of the installation.
Tankless Installation
Installing a tankless water heater requires less space than a tank heater. Installation costs can run up to $1,500 for a complex system. Depending on the size of your home, you might need to pay for installing multiple tankless units.
Get in touch with one of our certified professionals in your area to discuss your specific installation needs.
Operating Costs & Efficiency
Tankless water heaters cost less to run than traditional tank models because they only heat water when you turn on a faucet or appliance, so you're not paying to keep a full tank hot all day. If you want the lowest possible energy bills, heat pump water heaters like the Voltex® series are your best bet. They use 70% less electricity than standard electric tank water heaters by pulling heat from the air around them. That can save you hundreds of dollars every year.
Tank Operating Cost
Tank heaters are designed to store hot water so it is ready for use when you need it. This means that the water in the tank is reheated whenever it starts to cool, and this continual reheating cycle uses energy.
Tankless Operating Cost
Tankless heaters don't store hot water at all, so they only use energy when you actually need hot water.
Performance
When it comes to tankless water heater performance vs. tank models, tankless models tend to deliver more consistent, quicker hot water where you need it.
Tank Performance
Tank heaters provide as much hot water as is currently in the tank, so once you use the stored water, you need to wait until more is heated. This can result in cold showers when multiple people use hot water within a short period.
Tankless Performance
Because tankless units heat water at the moment you need it, you never run out of hot water. You can run the dishwasher while you run a bath or handle a house full of guests who all need to take showers before work.
Lifespan
On average, tankless heaters last longer than tank heaters. This longer lifespan can save you money over time since you don't have to replace the unit as often.
Tank Lifespan
The tank in a traditional water heater typically lasts only around a decade, and gas water heaters may begin to fail as soon as 6 years after installation without maintenance. Typical signs that a replacement is needed include visible leaks, rusty valves, or a failed heating element.
Tankless Lifespan
Because they don't use a tank that could be prone to leaks or rusting, tankless heaters tend to last longer than tank heaters. Tankless models can last up to 20 years with proper maintenance. These models also experience less daily wear and tear because they don't need to be constantly switched on to reheat water throughout the day.
Reliability & Maintenance
When considering a tankless or tank water heater, the tankless variety tends to be more reliable and requires less maintenance.
Tank
Water heaters with a tank have more moving parts than tankless models, so they tend to need more frequent maintenance or repair. Sediment buildup in the tank can cause problems, so you may need to flush the tank periodically to remove accumulated debris.
Tankless
The compact design of a tankless water heater means fewer parts and less likelihood of breakage. While some tankless models may require periodic descaling, A. O. Smith's X3® Scale Prevention Technology eliminates that need entirely, with no annual maintenance and no extra costs.
Gas
Gas-powered water heaters may be more prone to breakage and have a shorter overall lifespan than electric models. These heaters have components to handle gas exhaust that aren't necessary for electric heaters, which means more potential points of breakage.
Electric
Electric water heaters tend to last longer than gas heaters. This is true for both tank and tankless models.
Common Myths About Tankless and Tank Water Heaters
Shopping for a water heater means wading through a mix of facts and myths. These are common misconceptions that can trip up homeowners:
Myth 1: Tankless Water Heaters Pay for Themselves Right Away
Tankless hot water heaters do cost less to run each month, but they're more expensive to buy and install upfront. Depending on how much hot water your family uses, it could take a few years to break even on the price tag. How quickly you save money depends on your household—families who use more hot water see faster payback.
Myth 2: Tank Water Heaters Are Outdated
Not true. Tank water heaters like the ProLine® series use less energy than those from 10 or 20 years ago. They have better insulation and smarter heating systems that cut down on waste. Plus, if you run multiple showers at the same time or fill a big bathtub regularly, a tank water heater might be a better fit for your household.
Myth 3: Tankless Means Instant Hot Water
Tankless water heaters start heating the moment you turn on the tap, but you still have to wait for the hot water to travel through your pipes to reach your faucet. The distance between the water heater and your shower or sink affects the wait time for all types of water heaters. Some tankless models, like the ADAPT® Premium, have built-in recirculation pumps that keep hot water moving through your pipes, helping it reach your taps faster.
Myth 4: Switching From Tank to Tankless Is a Simple Swap
It's usually not that simple without experienced contractors. Going from tank to tankless often means upgrading your gas line, changing your electrical setup, or redoing your venting. Having a professional installer look at your home first can save you from surprise costs down the road.
Trust A. O. Smith for Your Water Heating Needs
A. O. Smith runs the world's largest water heater factory in Tennessee, where we've been building water heating solutions for over 80 years. Our water heaters use commercial-grade parts designed for durability and long-term performance. We put our units through extensive testing to confirm they're built to withstand years of daily use.
We've built a network of certified installers across North America who can help you get your water heater sized correctly, installed properly, and ready to deliver reliable hot water for years to come. Connect with a local A. O. Smith professional to find a water heater for your home.
Frequently Asked Questions
Deciding between a tankless water heater vs tank water heater depends on what matters most to you. Tank water heaters cost less upfront and handle multiple appliances running simultaneously. Tankless water heaters cost more to buy and install, but they save money on energy bills each month and take up less space.
The downsides are the higher upfront cost and more complicated installation—especially if you need to upgrade your gas line or electrical system. Tankless models work best when you stagger hot water use throughout the day rather than running everything at once.
It can be, especially if you want to stop running out of hot water and lower your monthly energy bills. Tankless units last around 20 years compared to 6-10 years for traditional tank water heaters, so the higher upfront cost usually pays off over time.
