When choosing a new water heater, one of the biggest decisions homeowners face is whether to install a tankless water heater or stick with a traditional tank water heater. Both systems provide hot water, but they differ in efficiency, performance, and cost. Understanding the pros and cons of each will help you decide which is the best water heater for your home and budget.
How Each Water Heater Works
A tank water heater, also known as a storage water heater, stores 30–80 gallons of hot water in a large insulated tank. It keeps that water heated constantly, so hot water is always ready when you turn on the faucet. However, once the tank empties, you’ll need to wait for it to refill and reheat—something every busy household knows too well.
A tankless water heater, sometimes called an on-demand water heater, takes a different approach. It heats water instantly as it flows through the system. A gas burner or electric element quickly raises the temperature, delivering a continuous supply of hot water—no storage tank and no waiting.
Energy Efficiency and Cost Savings
A tankless water heater offers a major edge in energy efficiency. Traditional tanks lose energy through “standby heat loss,” as they continuously maintain the stored water’s temperature. Tankless units eliminate this waste by heating water only when needed.
According to the U.S. Department of Energy, tankless water heaters can be 20–40% more energy-efficient than traditional models, depending on usage. Over time, that translates into lower energy bills and reduced environmental impact.
However, the installation cost of a tankless system can be higher—sometimes two to three times the price of a standard water heater. You may also need to upgrade your home’s gas or electrical systems, depending on the unit you choose.
Hot Water Capacity and Performance
A tank water heater has a limited supply—once you use up the hot water, you’re left waiting for it to reheat.
In contrast, a tankless system provides endless hot water, ideal for long showers or large households. The only limitation is the flow rate; if multiple faucets or appliances run at once, water pressure or temperature may dip slightly. Larger families can solve this by installing multiple tankless units or choosing a high-capacity model.
Lifespan and Maintenance
A traditional tank water heater usually lasts 8–12 years, while a tankless water heater can last 20 years or more with regular maintenance.
Tank models need periodic flushing to remove sediment, while tankless systems require descaling to prevent mineral buildup. Although tankless maintenance may seem more technical, the long lifespan often offsets these minor upkeep tasks.
Space Requirements and Installation
If space is limited, a tankless water heater is a clear winner. It’s compact, wall-mounted, and ideal for smaller homes, condos, or apartments. In contrast, a tank water heater takes up more room and usually needs a dedicated closet or basement area.
Environmental Impact
Tankless water heaters are more eco-friendly because they reduce energy waste and carbon emissions. By heating water on demand, they consume less energy overall—making them a smart choice for environmentally conscious homeowners.
Which Water Heater Is Right for You?
- Tank water heater: Lower upfront cost, simple installation, and proven reliability.
- Tankless water heater: Energy savings, endless hot water, and long-term efficiency.
Final Thoughts
Both tankless and tank water heaters can meet your home’s hot water needs—it’s just a matter of priorities. If short-term affordability and simplicity are key, stick with a traditional model. But if you’re planning for the future and want an energy-efficient water heater that saves space and money over time, a tankless system is well worth the investment.