Tank vs tankless water heater in Phoenix

A tank water heater keeps 40 to 50 gallons or more hot at all times. A tankless (on-demand) unit heats water only when a tap opens. ENERGY STAR's gas tankless page says that by heating water only when it is needed, certified gas tankless models cut water heating expenses while providing continuous hot water. The trade-off is a higher purchase and installation cost and a limit on how much hot water you can draw at once.

HomeGuide's 2026 water heater installation guide gives these national figures:

The operating cost ranges overlap, especially for gas, so savings depend on your household's usage. The longer lifespan is the stronger argument for tankless: over 20 years you may buy one tankless unit instead of two tanks. These are national numbers; get written local quotes.

Hard water. The City of Phoenix 2025 Water Quality Report lists hardness of 10 to 17.6 grains per gallon. Scale forms in both types: it settles at the bottom of a tank and builds up in a tankless unit's heat exchanger. HomeGuide recommends flushing a tank every 6 to 12 months and routine flushing and descaling for tankless units. If you go tankless here without a softener, plan on regular descaling. Our hard water guide covers softeners.

Warm incoming water. The same Phoenix report lists distribution water temperatures of 47 to 92 degrees Fahrenheit across the year. A tankless unit is sized by how much it must raise the incoming temperature at a given flow, so ask the installer to size it for the coldest winter water, not summer water.

Tankless heaters are rated in gallons per minute (GPM), not tank gallons. ENERGY STAR lists average flow rates of 2.5 GPM for a shower or tub, 3.3 GPM for a clothes washer, 2.2 GPM for a kitchen or bathroom sink and 1.3 GPM for a dishwasher. Add up what might run at the same time. Two showers and a dishwasher need more than one shower alone. ENERGY STAR also says the installer should confirm whether your existing gas line is large enough, whether electricity is available for forced-vent models and how combustion gases will be vented.

It depends on the city and the job:

• Mesa's Residential Construction FAQ says a like-for-like replacement needs no permit, but replacing a gas storage water heater with a gas tankless unit does, and the gas utility must be notified before gas appliances go into service.
• Scottsdale's Permit Services page requires a plumbing permit for any water heater replacement.
• Chandler's Homeowner's Building Permit Manual exempts like-for-like replacement of residential water heaters from a permit.

Because a tankless conversion usually changes gas piping or venting, expect a permit in most cities and ask who will pull it.

• Tank makes sense if your current tank failed and you need hot water quickly at the lowest cost, if your gas line or electrical service would need a costly upgrade, or if you expect to move within a few years.
• Tankless makes sense if you plan to stay long enough to benefit from the longer lifespan, want the garage floor space, and will keep up with descaling or already have a softener.

Ask for written quotes for both options from a contractor licensed with the Arizona Registrar of Contractors. Our water heater guide and hiring guide have more detail. To reach a plumber, call one of the licensed contractors listed on this page or see all listed contractors. We are an independent guide, not a contractor; email us if you want help finding someone.