Choosing a water heater comes down to four questions, best asked in this order: how old is the one you have, how much hot water does your household use in its busiest hour (or at once, for tankless), which type and fuel fits your home, and what will it cost to run. Rebates and the federal rules come last. The guides below take each question in turn, with every figure tied to its federal text, agency page or maker’s document and the date we read it.
General information, not professional advice. Gas, 240-volt power, scalding water and a pressurised tank can hurt you. Follow the label and manual on your own heater; where they say to stop and call a qualified technician, stop. Codes and licensing rules are set locally.
Water Heater Handbook sells, installs and recommends nothing, and gives no purchase or installation prices: they vary by home and region, so get written quotes.
Start with the heater you have
Its age is in the serial number on the rating plate, the label that also gives the model number, fuel and gallons. Reading it means looking, not opening anything. Each maker writes the date its own way. Rheem puts the month and year in the first four digits, so a serial starting 1209 was made in December 2009 (Rheem serial number page, read 9 November 2026). On 9 November 2026 we found no serial key on A. O. Smith’s own site, so for that brand the answer is to ask the maker with the model and serial numbers. Our water heater age lookup decodes the formats the makers publish and shows every date that fits when a code is ambiguous.
Bradford White needs the most care. The first letter is the year and the second the month, and the year letters repeat every 20 years, so since 2024 one letter can stand for three different years. Bradford White says the production number after the letters has seven digits before December 2007 and eight after, which settles most cases (Bradford White For The Pro, updated 19 July 2024). Our guide to reading a Bradford White serial number has both letter tables, worked examples and what the date means for the warranty.
Then put the age in context. The Department of Energy’s consumer page said storage water heaters last 10 to 15 years and most tankless heaters more than 20 (Internet Archive copy, 30 June 2026; the live page is gone). DOE’s 2024 efficiency rule, built on national survey data, put the average tank at about 15 years, and ENERGY STAR’s heat pump savings figures assume 13. These are averages and assumptions, not a forecast for your heater. How long a water heater lasts sets each source side by side, explains why warranty years aren’t a life expectancy, and lists what the makers say shortens a tank’s life. Age is a planning number, not a diagnosis: A. O. Smith’s manual says almost all leaks occur at connections and are not a tank leak.
Size it by your busiest hour, not by the old tank
A tank or heat pump water heater is sized by its first hour rating: how much hot water it can deliver in an hour starting full. Two “50-gallon” heaters can deliver quite different hours. The EnergyGuide label shows it as “Capacity (first hour rating)” (16 CFR 305.17, read 9 November 2026).
DOE’s method adds up the hot water used in your busiest single hour. In its own example, three showers at 20 gallons, a shave at 2 and a sink of dishes at 3 come to 65 gallons; DOE’s page prints 66, but the sum is 65. That household looks for a first hour rating of 65 or more. Our first hour rating calculator runs the sum with your own uses, lets you edit every per-use figure, and places the result in the label’s comparison group.
A tankless heater has no store to draw down, so it is sized by the flow running at once and the temperature rise, the hot temperature you want minus the incoming water temperature. DOE’s rule of thumb was about 5 gallons a minute through a gas unit and about 2 through an electric one at a 70°F rise (DOE sizing page, archived 2 July 2026). The tankless size calculator does that sum.
Tank or tankless
On gas, tankless usually wins on efficiency. The federal minimum uniform energy factor (UEF, the efficiency rating from the federal test; higher means less energy for the same hot water) is 0.81 for a gas tankless heater against 0.5633 for a 50-gallon gas tank in the medium draw pattern, for heaters made before 6 May 2029 (10 CFR 430.32(d), tank figure computed from the regulation’s formula, read 9 November 2026). On electric the two are nearly level, 0.91 against 0.9207, so the bigger electric step is a heat pump, not tankless.
What decides it in most homes is how much hot water runs at once, and whether the gas line, venting or electrical panel can feed a tankless unit. The makers’ manuals put installation in the hands of qualified installers. Our tank vs tankless comparison covers flow limits, what a switch involves, each maker’s upkeep, and which homes each type suits.
What each one costs to run
Worked with the federal test method for a household using 55 gallons of hot water a day, at 2025 US average prices from EIA, our estimates come to about $291 a year in energy for a 50-gallon gas tank at the federal minimum, $608 for a minimum electric tank, $203 for a minimum gas tankless heater and $170 for a heat pump water heater at ENERGY STAR’s lowest level. Energy only; your own prices can reorder the list. The yearly water heater energy cost calculator takes your state’s averages or your own bill.
A heat pump estimate assumes the room suits it. ENERGY STAR’s guidance is an indoor space that stays between 40°F and 90°F all year with 1,000 cubic feet of air, and it says these heaters can cool the space they are in (ENERGY STAR, read 9 November 2026). The heat pump water heater fit check tests a room against that guidance; the model’s own installation manual sets its exact requirements.
Rebates and the federal rules
There is no federal tax credit for a water heater installed in 2026. The 25C credit doesn’t apply to any property placed in service after 31 December 2025, and installed, not bought, is the date that counts (IRS, last reviewed 28 April 2026). What remains is federally funded rebates run by the states, up to $1,750 for an ENERGY STAR heat pump water heater, only for households under 150% of their area’s median income, and since a DOE notice effective 29 May 2026 generally only when replacing an electric heater or in new construction; and utility and local rebates, the source of nearly all gas tankless rebates. Water heater rebates and the end of the tax credit has each launched state’s status as of 9 November 2026 and what to check before you buy.
Two claims you may see aren’t so. Electric water heaters are not banned from 2029: from 6 May 2029, newly made electric tanks of 20 to 55 gallons need a UEF of 2.30 and those over 55 up to 120 gallons 2.50, a heat pump level, with a small electric class of 20 to 35 gallons kept at resistance levels (10 CFR 430.32(d)(2)). And gas tankless heaters are not being banned: Congress voided DOE’s December 2024 gas tankless rule (Public Law 119-6, 9 May 2025). Federal standards apply to heaters when they are made; the one in your home isn’t affected.
What can’t wait for a decision
Whatever the age or the plan, these come first: a gas smell (leave the building, then call 911 or the gas utility from outside), a carbon monoxide alarm (get everyone into fresh air, then call 911), a relief valve that keeps running, a tank leaking from its body, and any heater that has been under water, which the makers say not to use or relight. Our page on a gas smell or carbon monoxide near a water heater has the full steps, and the leak guide sorts water by where it is coming from.
Your next step
- Photograph the rating plate on your current heater, without opening any panel: brand, model, serial number, fuel, gallons and input.
- Date it with the age lookup, or ask the maker with the model and serial numbers.
- Count your busiest hour and run the first hour rating calculator; for tankless, count the taps that run at once.
- Compare yearly energy cost with your own prices, and check the room if a heat pump is on the list.
- Check your state program and your utilities for rebates, and get any approval in writing before you buy.
- Ask your building department about permits, read the manual for any model you’re offered on the maker’s own site, and get written quotes from licensed installers.
Sources checked on 9 November 2026.
