Water Heater Cost Calculator
Understand your water heating bill and estimate savings from lowering the tank temperature.
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For electric tanks, use your $/kWh rate. The U.S. average in 2025 was about $0.17/kWh.
Why water heating deserves your attention
Water heating is the second-biggest energy user in most homes — behind only heating and cooling. It costs the average U.S. household $250–$600 a year, and in homes with electric tanks it can be significantly more. The frustrating part is that it's almost invisible: you don't see the tank working, you don't hear it, and the cost is baked into your bill without any obvious line item.
Three things drive the cost: how much hot water you use, how hot the tank is set, and how well it's insulated. You can't easily change the first, but the second and third are free or cheap to fix — and they can cut your water heating bill by 10–20%.
How we calculate this
Estimate basis: about 3 kWh per person per day for electric, or 0.1 therms per person per day for gas. Savings from lowering the tank depend on the current temperature.
Example: 3-person household, 140°F tank, $0.14 per kWh.
- Daily usage: 3 people × 3 kWh = 9 kWh per day
- Monthly usage: 9 × 30 = 270 kWh per month
- Monthly cost: 270 × $0.14 = $37.80 per month
- Annual cost: $37.80 × 12 = $453.60 per year
- Savings from lowering 140°F → 120°F: about 10% = $45 per year
That 10% figure comes from the U.S. Department of Energy's estimate that lowering the tank temperature by 20°F saves 5–9% of water heating energy. The exact percentage varies with tank insulation and household habits.
Recommended settings
- Most homes: 120°F (49°C) — the DOE recommendation
- Homes with older dishwashers without heating elements: 130°F (54°C)
- Homes with a person with a weakened immune system: 140°F (60°C) for safety
Note: whatever setting you choose, install anti-scald valves at taps if the tank is set above 120°F. Hot water at 140°F can cause burns in seconds.
How to lower the temperature (5 minutes)
- Turn off power to the water heater at the breaker (electric) or set the gas valve to "pilot" (gas).
- Find the thermostat dial — on electric tanks it's under an access panel; on gas tanks it's on the front of the gas valve.
- Turn it down to 120°F. Use a flathead screwdriver if there's a lock.
- Restore power or gas after 30 seconds.
- Wait 2 hours, then check the water at a tap with a thermometer. Adjust if needed.
Full safety notes: How to Insulate a Water Heater.
Sources and methodology
The 3 kWh per person per day estimate is based on U.S. Department of Energy water heating data (Energy.gov) and the EIA's 2024 Residential Energy Consumption Survey. The 5–9% savings figure for lowering tank temperature comes from the DOE's Energy Saver program. Electricity rates use the EIA 2024 U.S. average of about $0.17/kWh. Our calculator uses a conservative model and rounds toward the lower end of the savings range.
We don't store the numbers you enter. Everything runs in your browser.
Frequently Asked Questions
Is 120°F hot enough for showers?
Yes. Most people shower at 105–110°F, and 120°F at the tank gives enough margin for mixing at the tap. The exception is if you have a very long pipe run from the tank — in that case you might want 125°F to compensate for heat loss.
Does this calculator work for gas water heaters?
Partially. The calculator assumes electric (kWh). For gas, the formula is different (therms instead of kWh), and gas rates vary widely. Use this tool as a rough estimate for gas, or check your gas bill for the water heating line item.
Why is my water heating bill higher than this estimate?
Several factors: a tank that's poorly insulated, an old unit with a failing heating element, a leaking faucet, or long pipe runs. If your actual bill is much higher than the estimate, it may be worth getting the tank inspected.
Should I install a tankless water heater?
Tankless units use 20–30% less energy than tank units, but they cost $1,500–$3,000 installed. The payback is 5–10 years in most homes, and it only makes sense if you're already replacing an old tank. For a lower-cost option, insulate the tank and pipes and lower the temperature — that gives you 10–20% of the savings for under $50.