Tankless vs Tank Water Heater: What Each Does Better

By Ray Bennett · Updated 2 October 2026 · 5 min read · Checked against the sources at the end

Tankless vs Tank Water Heater: What Each Does Better

Short answer

A tank keeps a store of water hot, so hot water comes at once, the upfront cost is low and upkeep is minimal. A tankless heats water only as it flows: DOE's guideline puts gas tankless savings at typically 30 percent or more, and A.O. Smith says it lasts 15 to 20 years against 8 to 12. The catches are a start up wait, a minimum flow, hard water upkeep, and sometimes a bigger gas line.

Tankless vs tank water heater is really a question of how you want your hot water delivered. A tank keeps a store of water hot all the time. A tankless heats water only while it flows, up to the most it can heat at once.

The U.S. Department of Energy’s Building America guideline on choosing a water heater compares the two side by side, and A.O. Smith and Rheem add their own guidance. This page lays out where each one wins, and the catches worth knowing before you buy.

Before you start

What to carry: a torch, a pen and a tape measure, for the old heater’s label, the space it sits in, and the size of its gas pipe. Twenty minutes.

Gas or electric? Both come in either. A.O. Smith gives gas tankless burners of 140,000 to 199,000 BTU an hour and electric tankless units of 14 to 32 kilowatts, so the supply to the house matters as much as the heater.

Count your busiest hour first. A tank is sized by its first hour rating and a tankless by gallons a minute: what size water heater you need.

What DOE and the makers are clear about. Endless has a limit. DOE says a tankless gives hot water indefinitely only up to its maximum flow, set by its heating capacity, its set point and how cold the incoming water is. In a cold climate it may not keep up.

It is not instant. DOE says tankless units have a start up delay, and 20 seconds or so is not uncommon. A.O. Smith says no water heater on its own delivers instant hot water.

Hard water means upkeep. DOE says tankless maintenance can be significant in hard water areas, and A.O. Smith calls hard water the biggest threat to a tankless unit’s life.

How they compare

The difference in one picture: a store of hot water kept ready, or water heated only as it runs.

DOE’s comparison, 2015	Gas tank	Gas tankless
Typical efficiency	0.58 to 0.62 EF	0.80 to 0.95 EF
Savings against a standard tank	None, it is the standard	Typically 30 percent or more
Installed cost, new home	Low	Moderate to high
Installed cost, replacing a tank	Low	High, if the gas line must be upsized
How hot water arrives	At once, good recovery	Start up delay, minimum flow, endless
Maintenance	Minimal	Can be significant with hard water
Lifespan, A.O. Smith	8 to 12 years	15 to 20 years

Where a tank wins

Check 1

Choose a tank for simplicity and a low price

The price. DOE rates the installed cost of a conventional gas or electric tank as low, new or as a replacement.

The delivery. DOE says a tank gives hot water immediately, and a gas tank has good recovery capacity.

The upkeep. DOE rates tank maintenance as minimal, though sediment still builds up: sediment in a tank.

The cost of keeping it hot. DOE says an idle standard gas tank burns about 40 therms a year just to stay hot, which is why tanks score lower on efficiency.

Where a tankless wins

Check 2

Choose a tankless for long runs of demand and a long life

Back to back showers. DOE says a tankless handles one high demand after another, an advantage for large households, as long as the flow stays within its rating.

Efficiency. DOE’s table gives gas tankless units 0.80 to 0.95 EF and savings of typically 30 percent or more against a standard tank.

Space and life. A.O. Smith says tankless units are small enough for a closet or an outside wall, and last 15 to 20 years with proper care, nearly double a tank.

Rheem’s list. Continuous hot water, a space saving design, potential energy savings and a longer service life, if it is sized for everything that runs at once.

The catches with a tankless

The three delivery quirks DOE describes, and the upkeep that comes with hard water.

Check 3Free to know

Know the quirks before you buy

The wait. DOE says the start up delay is longest when the heat exchanger has cooled from the last draw, and that some people give up waiting.

The minimum flow. DOE gives typical gas tankless minimums of 0.4 to 0.75 gallons a minute, so a trickle for shaving or rinsing dishes may not fire it: tankless water heater problems.

The gas line. DOE rates a tankless replacement cost as high when the gas line has to be upsized, and says real quotes vary with venting, electrics and gas line work.

The descaling. A.O. Smith says hard water deposits build in the heat exchanger and regular descaling resolves them.

Do people use more hot water with a tankless?

Check 4

Look at what the field studies found

The worry. DOE says endless hot water could lead to longer showers, which would eat into the savings.

Minnesota, 2010. DOE reports a study that switched ten homes from tanks to tankless and found no statistically significant change in hot water use.

California, 2011. Four of six homes used essentially the same hot water after the switch, and two used more. DOE says more study is needed.

Questions people ask

Is a tankless water heater worth it?

It depends on the house. DOE puts gas tankless savings at typically 30 percent or more and says it suits large households with back to back demand, but the installed cost is high when the gas line must be upsized.

How long does a tankless water heater last?

A.O. Smith says 15 to 20 years with proper care, against 8 to 12 years for a tank. Hard water is the biggest threat to that.

Why does a tankless take longer to get hot water?

DOE says it has a start up delay, longest when the heat exchanger has cooled, and 20 seconds or so is not uncommon.

Can a tankless water heater run out of hot water?

Not the way a tank does. DOE says it keeps going up to its maximum flow. Past that, or with very cold incoming water, the water runs cooler.

Do I need a bigger gas line for a tankless?

It depends on the pipe you have. DOE’s cost rating for a replacement assumes the gas line must be upsized, and A.O. Smith gives gas tankless burners of 140,000 to 199,000 BTU an hour.

Does a tankless need maintenance?

Yes, where the water is hard. DOE says upkeep can be significant there, and A.O. Smith says regular descaling clears the deposits in the heat exchanger.

Sources: U.S. Department of Energy Building America "Strategy Guideline: Proper Water Heater Selection" (revised April 2015), A.O. Smith "How Long Do Tankless Water Heaters Last?" and "What Size Water Heater Is Right for You?", and Rheem "What Size Gas Water Heater Do I Need for My Home?"