How to Insulate a Water Heater

Water heating is the second-biggest energy user in most homes — behind only heating and cooling. It costs the average household $250–$600 a year. A $25–$40 water heater insulation kit reduces that by 5–9%, sometimes more if the tank is older or sits in a cold garage or basement.

The whole job takes about 90 minutes, requires no special tools beyond scissors and tape, and pays for itself in under a year. Here's how to do it safely and correctly.

Should you insulate? A 10-second test

Put your hand on the side of your water heater tank. If it feels warm, insulation will help. If it feels roughly room temperature, you probably already have good insulation (some newer tanks have built-in foam) and further insulation won't do much.

Also check the age. Tanks older than 10 years benefit the most. Tanks with an energy guide label that says "highly insulated" or "R-16" typically don't need additional insulation.

What you need

• Water heater insulation blanket — $20–$40 at any hardware store. Look for one with an R-value of 8 or higher. Fiberglass with foil facing is standard.
• Pipe insulation sleeves — $1–$2 per linear foot. Foam tubing, usually with a slit down the side.
• Foil tape — $5. For securing the blanket and sealing the pipe insulation seams.
• Scissors or utility knife — for cutting the blanket.
• Dust mask and gloves — the fiberglass is irritating to skin and lungs.

Step 1: Turn off the heat (optional)

You don't strictly need to turn off the water heater for this job, but doing so reduces the risk of minor burns if the tank is very hot. Turn the thermostat to "vacation" or off, then let the tank cool for 30 minutes before starting.

Step 2: Measure and cut the blanket

Roll the insulation blanket around the tank to see how much you'll need. Most kits are 48" × 75" and fit standard 40–50 gallon tanks with room to spare. Cut the blanket to a length that wraps the tank with a 2-inch overlap on each end.

Mark where the following items protrude from the tank, so you can cut openings for them:

• Pressure relief valve (top or side)
• Cold water inlet and hot water outlet (top)
• Temperature/pressure gauge (if present)
• Burner access panel (gas heaters, bottom)
• Flue (gas heaters, top center)

Step 3: Wrap the tank

Wrap the blanket around the tank with the foil side facing out (shiny side away from the tank). Overlap the ends by 2 inches and tape the seam with foil tape. Tape the top and bottom edges to keep the blanket snug.

Cut openings for any items you marked in Step 2. Do not cut through the blanket where you don't need to — every opening reduces the insulation value. Make the openings as small as practical while still allowing full access to controls.

Don't cover:

• The top of a gas water heater — the flue must exhaust freely
• The burner access panel on gas heaters
• The pressure relief valve or its discharge pipe
• The thermostat (on electric heaters, usually under a small access panel)

Step 4: Insulate the first 6 feet of pipe

Insulating pipes is where you get the best bang for the buck on this project. Slip foam pipe insulation over the first 6 feet of both the hot and cold water pipes coming out of the tank. The hot pipe is obvious — you're keeping heat in. The cold pipe also matters because in summer, cold pipe sweating is a source of humidity, and in winter, the cold pipe can freeze if it runs near an exterior wall.

The foam sleeves have a slit down one side. Open the slit, fit it around the pipe, and seal with foil tape every few feet. If your pipes are very close to a wall, use the thinner pipe wrap tape instead.

Don't insulate the flue pipe on a gas water heater — it needs to vent heat.

Step 5: Restore power or gas

If you turned off the water heater, turn it back on. Check for any leaks or odd smells after 24 hours. If you notice anything unusual near a gas water heater — especially a faint rotten egg smell — turn off the gas and call a plumber.

Bonus: Lower the tank temperature

While you're here, do the other half of the job. Most water heaters ship from the factory set to 140°F (60°C). The U.S. Department of Energy recommends 120°F (49°C) for most homes. This single adjustment saves 3–5% on water heating with zero comfort difference — and it's the fastest change on this whole page.

The exception: if your dishwasher doesn't have a built-in heating element (typically older or cheaper models), keep the tank at 130°F to ensure the dishwasher gets hot enough water for a proper wash.

What it saves

For a typical household with a 50-gallon tank:

• Blanket alone: 5–9% savings on water heating, $15–$45/year
• Pipe insulation alone: 2–4%, $10–$20/year
• Temperature reduction to 120°F: 3–5%, $15–$25/year
• Combined: $40–$90/year

Upfront cost: $25–$45 for the blanket and pipe sleeves. Payback: 6–18 months. After that, pure savings for the life of the tank.

Frequently Asked Questions