Quick Answer: Running a tankless water heater costs roughly $18–$30 a month for gas and $26–$38 a month for electric in a typical low-use household, rising to about $23–$37 (gas) and $34–$46 (electric) for a high-use household of four or more — using the Department of Energy’s published 24–34%/8–14% tankless efficiency advantage against 2026 tank water-heating baselines of $325–$475/year (gas) and $480–$600/year (electric). At 2026’s national average utility rates (~$1.50/therm gas, ~18¢/kWh electric, per EIA data), gas comes out cheaper to run in most of the country even though electric units cost less to buy and install.
This is a different number from the one most searches turn up. Our tankless water heater cost guide covers what you pay once — the unit, the labor, the venting. This one covers what shows up on the utility bill every month after that, by fuel type and by how much hot water your household actually uses.
Monthly cost by fuel type and usage
| Fuel type | Low-use household (≤41 gal/day) | High-use household (~86 gal/day) | DOE efficiency edge vs. tank |
|---|---|---|---|
| Gas (condensing/non-condensing) | $18–$30/mo | $23–$37/mo | 24–34% (low use), 8–14% (high use) |
| Electric | $26–$38/mo | $34–$46/mo | 24–34% (low use), 8–14% (high use) |
| Propane | $25–$40/mo | $32–$50/mo | Same DOE tier as gas; propane runs $0.50–$1.20/gal more than natural gas equivalent BTU |
These ranges come from applying the DOE’s published tankless efficiency percentages to typical 2026 tank water-heating costs — $325–$475 a year for gas, $480–$600 for electric, per current industry cost data — rather than a single flat number, because the real answer depends on both your fuel and how much hot water your household actually pulls.
Rheem RETEX-24 (24 kW Electric)
- Runs on the same ~100A service as most competing 24 kW units, but its element efficiency keeps monthly draw toward the lower end of the electric range above rather than the top.
- No standing pilot or continuous draw between uses — electric tankless only pulls power while water is actually flowing, unlike a tank that cycles its element all day to hold a setpoint.
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Rheem Performance Platinum ECOH200 (Gas Condensing)
- Condensing units like this one extract extra heat from the exhaust stream before venting, which is most of the gap between the low and high end of the gas cost range in the table.
- A non-condensing gas unit (~0.81–0.82 UEF) runs closer to the high end of the gas range even at the same usage level — condensing is where the real monthly savings live within gas, not just gas-vs-electric.
Why gas usually runs cheaper than electric
At 2026’s national average rates — about $1.50 per therm for natural gas and roughly 18 cents per kWh for electricity, per EIA data — the same BTU of heat costs less delivered as gas than as resistance electricity almost everywhere in the country. The exceptions are real: states with unusually cheap power (North Dakota and Utah both sit near 11¢/kWh) can close or reverse the gap, and propane — priced per gallon rather than per therm — usually lands $0.50–$1.20 more per BTU-equivalent gallon than piped natural gas, pushing propane tankless costs toward the top of the ranges above.
The per-shower math
Using the DOE’s standard water-heating formula — 8.34 BTU to raise one gallon of water 1°F — a typical 8-minute shower at a WaterSense-rated 2.1 GPM showerhead, with a 45°F rise from cold inlet to a comfortable delivery temperature, uses about 6,400 BTU. That works out to:
- Gas: ~0.064 therms, about $0.10 at the ~$1.50/therm national average.
- Electric: ~1.9 kWh, about $0.34 at the ~18¢/kWh national average.
Multiply by however many showers your household runs a day and you land close to the monthly ranges in the table above — the per-shower number is the same math, just zoomed in.
Why usage tier matters more than most buyers expect
The DOE doesn’t rate tankless efficiency as one fixed number — it’s tiered by daily hot water draw. A household using 41 gallons or less a day gets the full 24–34% efficiency advantage over a comparable storage tank. A high-use household near 86 gallons a day only gets 8–14%, because at that volume the burner or heating elements are firing nearly continuously anyway, closing most of the gap that makes tankless cheaper to run in a lighter-use home. A family of four or five doing back-to-back showers, laundry, and a dishwasher cycle in the same evening sits closer to that high-use tier — worth knowing before assuming tankless will cut a water-heating bill dramatically just because the spec sheet says “highly efficient.”
The bottom line
Budget $18–$46 a month to actually run a tankless water heater depending on fuel and household size — gas at the low end for light users, electric at the high end for heavy ones — using 2026’s national average utility rates and the DOE’s own usage-tiered efficiency ratings. That’s a separate number from the $1,400–$5,600 installed cost covered in our full cost guide, and a smaller one than most people expect once they see it broken down by shower instead of by year. For the unit picks that land at the cheaper end of these ranges, see our best electric tankless roundup and best gas tankless roundup, or start with our best tankless water heater picks overall.