Tank, tankless or heat pump, and which rebates still exist
Updated October 2026
If the old tank is leaking right now, replace it with the same kind and read this later. Changing the type of heater means new venting, wiring or piping, and that is not a decision to make with water on the floor.
If you have a few weeks, these are the three choices.
The three kinds
| Standard tank | Tankless gas | Heat pump | |
|---|---|---|---|
| Installed in Massachusetts | $1,800 to $5,500 | $3,800 to $8,500 | $3,000 to $7,500 |
| Expected life | 8 to 12 years | 15 to 20 years | 10 to 15 years |
| Runs on | Gas, electric or oil | Gas | Electricity |
| Catch | Loses heat standing by | Limited flow, bigger gas line | Needs space and a 240-volt circuit |
The prices are ranges that Massachusetts installers published in 2026. They overlap because houses differ more than heaters do.
A standard tank
It costs the least to buy and it drops into the space the old one left. It keeps 40 or 50 gallons hot around the clock, and that standby heat is where the waste is.
Tankless
A tankless unit heats water as it passes through, so there is no tank to leak and nothing kept hot. The Department of Energy puts the efficiency gain at 8 to 34 percent over a tank.
The limit is flow. A unit delivers about two to five gallons a minute, so a house that runs several showers at once can outrun it. It often needs a larger gas line and new venting through the wall, and that is most of the price difference.
Heat pump
A heat pump water heater is an electric tank with a small heat pump on top that pulls heat out of the surrounding air. It uses a half to a third of the electricity of a plain electric tank.
It needs the right room. ENERGY STAR's installation guide asks for roughly 700 cubic feet of air around most models, which is a ten-by-ten room with a seven-foot ceiling. The unit is taller than a standard tank. Most run on a 240-volt, 30-amp circuit, and they drip condensate that has to go to a drain. They make about as much noise as a dehumidifier and they cool the space they sit in.
An unfinished basement is the usual fit. A closet is not.
Rebates in 2026
Mass Save pays $750 toward a qualifying heat pump water heater that replaces a gas, oil, propane or electric one. The heater has to be installed by a licensed plumber between January 1 and December 31, 2026, in a home with one to four units, and the form is due by February 28, 2027. It applies to customers of the Mass Save sponsors, which on the South Shore means National Grid and Eversource.
Mass Save lists no rebate for a standard gas tank.
Two towns here have their own electric companies and their own rebates. Braintree Electric Light pays $250 for an ENERGY STAR heat pump water heater. Hingham Municipal Lighting Plant pays half the cost up to $500. Hingham sends customers who heat water with gas to Mass Save, and Braintree's gas-heated homes may qualify there as well.
Mass Save's zero-interest HEAT Loan covers heat pump water heaters, up to a lifetime limit of $25,000 across all your upgrades.
The federal credit is gone
The federal tax credit that used to cover 30 percent of a heat pump water heater ended with 2025. The IRS says the credit is not allowed for anything placed in service after December 31, 2025. Quotes and websites that still mention it are out of date.
Sizing
Ignore the gallons and look at the first hour rating on the yellow EnergyGuide label. That is how much hot water the heater can deliver in an hour starting full. Add up your busiest hour, at about 20 gallons a shower, and buy a heater whose first hour rating meets it.