Your tank is dripping onto the floor, the store has both kinds standing in a row, and every page you have opened says the same thing: gas costs more to buy and less to run. That was sound advice for about thirty years. It is now wrong across a large part of the country, and not because gas got expensive. It is because the gas vs electric water heater question stopped being a two-way question.
“Electric” now covers two appliances that share a shape and nothing else. A resistance tank turns one unit of electricity into one unit of heat. A heat pump moves three to four. That gap is wider than the gap between either of them and gas, so the honest comparison is three-way, and which of the three wins is decided by one number you can read off two bills you already have. If you have the tank-versus-tankless decision open in another tab, park it. Fuel first. Format second.
The short answer
- Gas at the meter, dead tank, Saturday afternoon: another gas tank. Simplest swap on the list and the fastest way back to hot water. Cheapest decade too? Only when your ratio runs high, and at the prices modelled here it does not.
- All-electric house, no gas service: heat pump, and it is not close. A resistance tank of the same capacity costs roughly four times as much to run.
- Your ratio comes out under 18: the heat pump beats a gas tank on running cost even with gas already at the house. The ratio is defined further down.
- Your ratio comes out over 18: gas keeps its old crown, and the higher the number climbs the wider the margin gets.
- Low draw, one or two people, lowest possible sticker: the plain electric tank finally makes sense. It is the only case where it does.
- Unheated garage in a cold climate: a heat pump derates as the air cools and hands the work to its backup elements, turning an expensive appliance into an ordinary one.
Why the word “electric” hides the whole argument
Every water heater carries a Uniform Energy Factor, and the AHRI directory publishes it for certified models. Read it as a multiplier on the energy you buy. A gas storage tank runs 0.60 to 0.70, because a flame under a steel tank sends part of its heat up the flue. A resistance element sits in the water, so almost nothing escapes and the number lands at 0.90 to 0.95. That is why the electric label looks better than the gas label, and why people misread both.
A heat pump water heater is rated 3.0 to 4.0, which looks like a typo until you understand that it is not making heat. It is running a small refrigeration circuit backwards, pulling warmth out of the room air and dumping it into the tank. One kilowatt-hour in, three and a half kilowatt-hours of heat out. No fuel produces that, because no fuel can do better than the energy it contains. This is the reason the old rule broke: the comparison used to be a flame against an element, and now it is a flame against a pump. I go through that gap in detail in heat pump versus plain electric, and the short version is that it is the widest efficiency spread available in any household appliance.
Side by side
| 50 gallon, same household | GAS TANKflame under steel | ELECTRIC RESISTANCEelement in the water | HEAT PUMPcompressor on top |
|---|---|---|---|
| Typical UEF | 0.60–0.70rest goes up the flue | 0.90–0.95almost nothing escapes | 3.0–4.0moves heat, does not make it5x the gas number |
| Energy bought per year | 209 therms136 delivered ÷ 0.65 | 4,348 kWh4,000 delivered ÷ 0.92 | 1,143 kWh4,000 delivered ÷ 3.5least in |
| Energy cost, 10 years | $3,140at $1.50 a therm | $7,390at $0.17 a kWh | $1,940at $0.17 a kWhcheapest to run |
| Cost per delivered therm | $2.31the number to compare | $5.41worst on the page | $1.42beats the flameunder gas |
| Equipment price | $700–$1,30050 gallon | $550–$90050 gallonlowest sticker | $1,500–$2,40050 to 65 gallon |
| Expected life | 8–12 yranode and water chemistry | 8–12 yrsame tank, same clock | 10–15 yrtank plus a compressorlongest |
| What the house must already have | Gas line and fluestraight swap if both existeasiest replacement | 240 V supplyan electric tank already sits on one | Air volume and a drainplus panel capacity to check |
Gas at the meter and a tight budget? Gas tank, and hot water by tonight. All-electric house? Heat pump, by a mile. Both fuels available? Work the ratio below, because that is the only thing that settles it.
The ratio that decides it
Comparing a therm to a kilowatt-hour is comparing nothing to nothing. Both have to be converted into the same currency first, and the currency is delivered heat. Our reference household draws 64 gallons a day at a 70 °F rise, which needs about 4,000 kWh of heat in the water each year. A therm carries 29.3 kWh, so that is roughly 136 therms of delivered heat. Divide by the UEF and you get the energy you actually pay for.
The gas tank at 0.65: 136 ÷ 0.65 = 209 therms bought, at $1.50 each, $314 a year. The resistance tank at 0.92: 4,000 ÷ 0.92 = 4,348 kWh, at $0.17 each, $739 a year. The heat pump at 3.5: 4,000 ÷ 3.5 = 1,143 kWh, $194 a year. Turn each of those into a price per delivered therm and the comparison becomes readable. Gas costs $1.50 ÷ 0.65, which is $2.31. The heat pump costs $0.17 ÷ 3.5 = $0.049 per delivered kWh, times 29.3, which is $1.42. Resistance costs $5.41. The pump wins by 38 percent over the flame, and the element loses to both by a margin that should end the argument.
Those are national-ish prices, and your prices are not national. So generalize it. Take your electricity price in cents per kilowatt-hour, divide it by your gas price in dollars per therm, and you get a single ratio. Set the two costs per delivered therm equal and the break-even falls out at 18.4. Below that, a heat pump is cheaper to run than a gas tank. Above it, gas is. At the site constants the ratio is 17 ÷ 1.50 = 11.3, comfortably on the heat pump’s side, which is exactly why the old rule of thumb has stopped working for so many people.
Two worked examples, because the spread is enormous. Electricity at 31 cents and gas at $1.10 gives 28.2, well over the line, and gas wins on running cost by a wide margin. Electricity at 13 cents and gas at $2.00 gives 6.5, and the heat pump wins so heavily that its extra $800 of sticker is repaid in about three years: 209 therms at $2.00 is $418 a year of gas, against 1,143 kWh at 13 cents, which is $149. Run the same test on a plain electric tank and the break-even ratio is 4.8, meaning electricity would have to sit near seven cents against $1.50 gas for an element to compete. That is close to nowhere. The same crossover, worked against a gas unit specifically, is in heat pump versus gas.
What you pay before the first shower
Sticker prices are the part everybody knows. A 50 gallon electric tank runs $550 to $900, a gas tank of the same capacity $700 to $1,300, a 50 to 65 gallon heat pump $1,500 to $2,400. Installation is a separate and local conversation, so no number from me beyond the obvious: swapping like for like is the cheap path, changing fuel is not.
Price the heat pump without a federal credit. The 25C credit that used to take up to $2,000 off one expired on 31 December 2025, and any page still quoting it is stale. Utility and state incentives, where offered, are a different matter and worth ten minutes on your provider’s site before you buy, because they are often administered as an instant rebate at the till. The other quiet advantage is lifespan. A heat pump is rated 10 to 15 years against 8 to 12 for either tank, so over a twenty-year window you may buy two of them instead of two and a half of something else.
One thing about capacity before you commit to a fuel: a heat pump recovers slowly on the compressor, which is why hybrid models carry backup elements at all, and an undersized one spends its winter running as an expensive resistance tank. Work out the first-hour rating you need before you pick the technology, not after. The sizing worksheet takes five minutes and it changes which column of that table you should be reading.
Where I would ignore my own answer
If there is no gas line at the house, this comparison is academic and you should stop reading it as a three-way choice. Bringing gas service to a property that lacks it is a utility and trade job whose price is entirely local, and I will not pretend to know what it costs where you live. What I will say is that the running-cost saving from gas rarely repays a new service line inside the life of one appliance. You are choosing between two electric appliances, and the answer is the heat pump unless the space cannot take one.
The space is the real veto. A heat pump wants a decent volume of air around it, it makes compressor noise where a gas tank makes almost none, it produces condensate that has to drain somewhere, and it chills the room it stands in. In a Houston garage that is a small gift. In a Minneapolis basement in February it is a tax you pay through your furnace, and as ambient air drops the compressor derates and the backup elements start doing the work you paid $1,800 to avoid. That failure mode is the subject of the hybrid pros and cons piece, and it is the single most common way these units disappoint people.
The other thing I cannot give you is durability. There is no public model-level failure database for water heaters in the United States. Not from the DOE, not from AHRI, not from anyone. Every “this brand lasts longer” claim you will read is somebody’s local sample or an affiliate page, and the closest thing to published reliability data is the warranty tier, which is the manufacturer betting its own money on the anode. I keep meeting people who spent two weeks reading brand forums and forty seconds deciding fuel. It is the wrong way round by a factor of about a thousand dollars.
Sources
- AHRI Directory of Certified Product Performance, for UEF and first-hour rating by model.
- ENERGY STAR certified water heater product finder, for the heat pump models that carry the label and their rated efficiency.
- FTC EnergyGuide label, for the estimated yearly energy cost printed on the unit.
- DOE Energy Saver, for the water heater types overview and the definition of Uniform Energy Factor.
- US Energy Information Administration residential price tables, for state-level electricity and gas prices. Use yours, not the averages here.
- Manufacturer specification sheets and warranty documents, for capacity, recovery and warranty tier.
Work the ratio before anything else. One division, two numbers already printed on bills in your kitchen drawer, and it settles a question most of the internet still answers with a rule of thumb from 1995. If it lands near 18, the options are close enough that noise, space and sticker price should decide instead. Every figure above comes from one published model, laid out on our method page.