Heat pump water heater installation cost (2026)

A heat pump water heater moves heat from the surrounding air into the water instead of generating heat directly. It costs more up front than a standard electric tank but uses much less electricity to run.

Figures are 2026 national estimates compiled from published cost guides such as Angi, HomeGuide and This Old House. Prices in high-cost metro areas often run above these ranges.

Typical costs

What adds to the cost

• Electrical work. Most models need a dedicated 240-volt circuit. Replacing a gas heater often means running a new circuit, and some homes need a panel upgrade. Newer 120-volt plug-in models can avoid this in many cases.
• Condensate drain. Heat pump models produce water that must drain to a floor drain or a condensate pump.
• Space and airflow. The unit needs enough surrounding air to work well. A small closet may need louvered doors or ducting.
• Code items such as an expansion tank, drain pan or relief valve discharge piping.
• Removing the old heater and capping a gas line when switching from gas.

Is it worth it?

Heat pump models use far less electricity than a standard electric tank, so they pay off fastest in homes that currently heat water with electric resistance. They also cool and dehumidify the space around them, which is welcome in a hot garage and less welcome in a cold basement.

Tax credits and rebates in 2026

The federal 25C tax credit that covered heat pump water heaters ended for equipment placed in service after December 31, 2025. Some older articles still describe it as available. State programs and utility rebates may still help, so check with your electric utility before you buy.

For other types, see our water heater replacement cost and tankless water heater installation cost guides.