A water heater quote can look very different from one company to the next, and the difference is usually in what is included, not in the unit. This guide explains what drives the cost so you can compare quotes fairly. It does not give prices. Prices depend on the exact installation, and a number in a guide would be a guess.
The unit itself
Type. Most homes have a storage tank water heater, gas or electric. A heat pump water heater, sometimes called a hybrid electric water heater, costs more up front and uses less energy to run. ENERGY STAR calls these units "ultra-efficient" but publishes no savings percentage, so treat any savings number you are given as a claim to check.
Size. A larger tank or a unit with a faster recovery rate costs more. The right size depends on how many people live in the house, how many bathrooms you have, and when you use hot water.
Fuel. Replacing gas with gas or electric with electric is the simplest case. Changing fuel means new piping, wiring or venting, and that work adds to the quote.
The installation
This is where quotes differ most. Ask whether each of these is included:
- Venting. A gas unit needs a safe vent. If the old vent is undersized, corroded, or does not meet current code, it has to be fixed.
- Gas piping and shutoff. Older connections often need replacing.
- Expansion tank. Many homes need one, particularly if a pressure reducing valve is on the water line.
- Temperature and pressure relief valve and discharge pipe. These are safety parts and the discharge pipe has to be run correctly.
- Drain pan and drain. Required in many installations, especially above a finished floor.
- New shutoff valves and flexible connectors. Old valves often fail when they are turned.
- Permit and inspection. Required in most jurisdictions.
- Haul-away of the old unit.
Then there are the physical conditions: stairs, a tight closet, an attic installation, or a unit that has to be moved, all of which take more labor.
Heat pump models need the right space
ENERGY STAR says a heat pump water heater should be installed in an interior space that stays between 40 and 90 degrees Fahrenheit year-round, with at least 1,000 cubic feet of air space around the unit. Colder spaces reduce efficiency, and the unit can cool the room it is in. A basement with plenty of open space is a good candidate. A small closet is not. In colder climates where incoming water is cooler, the unit may switch to its electric backup mode and use more energy in those months. Installation can take longer than a standard water heater, and the model may have to be ordered. Heat pump units may need annual maintenance, including changing air filters.
The federal tax credit is gone
The federal Energy Efficient Home Improvement Credit, section 25C, paid 30 percent up to $2,000 for heat pump water heaters. Under Public Law 119-21 it ended for property placed in service after December 31, 2025. A unit installed in 2025 can still be claimed on the 2025 tax return. If anyone quotes you a federal tax credit for a 2026 installation, ask them to show you the IRS source.
Local and utility rebates
Rebates change often, and the amounts quoted by third-party websites do not always match the utility's own page. As of our last check:
- Maryland, BGE: the Smart Energy Savers program covers heat pump water heaters. Sources conflicted on the amount, so check BGE.
- Virginia, Dominion Energy: a rebate exists for ENERGY STAR heat pump water heaters. Amounts in the sources we found conflicted. Check Dominion.
- DC, DC Sustainable Energy Utility: a heat pump water heater rebate existed. The program's fiscal-year 2026 deadline was September 30, 2026, and reopening for fiscal year 2027 was unconfirmed.
- Federal and state home energy rebate programs for Maryland and Virginia were still pending, with no launch found.
ENERGY STAR's own page points readers to a rebate finder by ZIP code. Our rebates page lists each program with the official link and the date we checked it.
How to compare quotes
1. Ask for a written quote that lists the unit make and model, the capacity, and each item above. 2. Ask what the warranty covers, for how long, and whether it includes labor. 3. Ask who pulls the permit. 4. Ask what happens if they find something unexpected when the old unit comes out, such as a corroded vent or a failed shutoff. 5. Check your rebate eligibility with your utility before you buy, because some programs need pre-approval.
Do it yourself or call a pro
Replacing a water heater is not a typical DIY job. It involves gas or high-voltage electric, venting, a permit, and a pressure vessel full of hot water. Maintenance like flushing the tank is a reasonable DIY task on a newer unit.
Sources, rebates and rules change. This guide was last reviewed on October 15, 2026.