Tankless or tank water heater in Michigan: what the federal data says

The real difference between the two

A tank heater keeps a volume of water hot all day and gives it up until the tank runs low. A tankless heater heats water as it flows, so nothing is stored. Most of what people argue about, from the size of the bill to the wait for hot water, follows from that one difference. Public sources do not settle which is right for Michigan homes in general, so what follows is what they say and where they stop.

How long each lasts

The Department of Energy’s consumer pages say storage tank water heaters typically last about 10 to 15 years, and tankless about 20 years with maintenance. The page returned an error when we tried it, so those figures come from a search summary and are best read as a soft range. How long a water heater lasts goes further.

No Michigan source ties local water hardness to heater life, so we make no such claim. You can look up your own utility’s figure, though. Grand Rapids’s 2025 plant water averaged 142 mg/L, Lansing’s treated water was typically 98, and the Great Lakes Water Authority’s plants ranged from about 96 to 130, according to utility reports. Our water softener page lays out those numbers.

What they cost to run

Two federal sources give figures, and neither is specific to Michigan. The Department of Energy’s Federal Energy Management Program uses a federal average of 9.9 cents per kilowatt-hour and lists annual energy cost at $82 for the best available electric water heater, $97 for an ENERGY STAR model and $340 for a less efficient electric storage model, which it assumes lasts 13 years. That rate is for federal facilities, not what a Michigan homeowner pays, so use the pattern and ignore the dollars.

ENERGY STAR’s factsheet compares a certified heat pump water heater with a standard electric tank. For a household of two it shows $300 a year in savings with a 5.0 year payback; for three people $450 and 3.3 years; for four, $600 and 2.5 years. Those savings apply only if you are replacing a standard electric tank.

Efficiency standards matter too. Those that took effect April 16, 2015 require electric storage units over 55 gallons to meet a formula that, in the Department of Energy’s words, will effectively require heat pump technology. We have not verified the standards for gas tanks.

What it costs to buy and install

Our estimate for a tank water heater replacement is below, with the Michigan prices beside it. It is for a tank heater; a tankless unit costs more, as the company prices show.

Item	Figure	What it is
Estimated range, not a quote	$1,050 to $2,025 installed, tank heater	Built from 2 national published ranges, adjusted by the Michigan plumber wage ratio (1.07) plus a typical permit fee ($100). Michigan company prices are shown separately.
Published by 4 Michigan companies	$400 to $4,000, tank and tankless	Early sample of four, read Oct 19, 2026. Published prices, not quotes.

Estimated range. Built from national published ranges (2 sources), adjusted by Michigan’s plumber wage ratio to the US (1.07, BLS May 2025), plus the local permit fee where the city publishes one. Not a quote. Where Michigan companies publish prices we show them separately.

On Oct 19, 2026 we read what four Michigan plumbing companies publish on their own websites for water heater replacement. Four is an early sample, so the table lists what each company says and is not a typical price.

Company (area)	Tank	Tankless
Thornton & Grooms (Farmington Hills)	Starting at $2,300	Starting at $4,000
Mr. Rooter (Detroit, Flint and Saginaw pages)	$400 to $2,000 for electric; gas can cost up to twice as much	Not stated
Mazure’s (Jenison, Grand Rapids area)	$1,200 to $2,500 installed	$2,500 to $4,500 installed
A Grand Rapids replacement company	$1,500 to $2,995, parts, labour, permit and haul-away included	Starting at about $3,995

Across the four, published figures run from $400 to $4,000. Only one says the permit is in the price, and the Thornton & Grooms page does not say whether the unit, permit or haul-away is included, so compare like with like. Where a company shows a tankless figure, it sits above its tank figure. Tankless units often bring extra work, such as venting or electrical or gas changes, and with no Michigan source on those costs, ask each plumber to itemise them.

The permit is a separate, small line. Of the Michigan permit forms read directly, seven list a water heater line, with a median of $30 and a range of $5 to $70. Several add an application fee and a final inspection fee on top.

Permits and licenses in Michigan

Michigan’s permit rule exempts only repairs to the working parts of a faucet or valve and the clearing of stoppages, and a replacement water heater is not among them. Sterling Heights says in its FAQ that installing a water heater takes a plumbing permit, and Delta Township lists a water heater change out among the projects that always require one.

For a gas heater, LARA’s mechanical FAQ says replacement needs a Michigan mechanical license in HVAC equipment or gas piping and venting, plus a plumbing contractor’s license, with a mechanical permit and a plumbing permit. Confirm that with LARA before you rely on it for a specific job. Fees vary by city: Grand Rapids lists $21 for a water heater plus a $52 application fee, and Sterling Heights $40 for a water heater or a tankless unit plus a $55 application fee. More is in water heater permits in Michigan and whether you can replace your own water heater.

Rebates that exist, and one that ended

DTE’s water heater page offers instant discounts, through participating contractors and first-come, first-served, on ENERGY STAR gas tankless or storage heaters and on ENERGY STAR heat pump water heaters. The day we checked it was marked Limited Funds Available. It shows no dollar amounts, and neither do we. Consumers Energy’s page describes discounts passed through participating contractors for qualifying gas and heat pump heaters, valid for installs from January 1 to December 31, 2026, and its 2026 chart lists no water heater amounts.

The state’s Michigan Home Energy Rebates program covers heat pump water heaters for households at or below 150% of area median income, but income-qualified applications were temporarily unavailable in the Detroit, Warren, Grand Rapids, Lansing and Kalamazoo districts the day we checked. The federal 25C credit applied to improvements through December 31, 2025, per the IRS, so do not count on it for a 2026 install. Ask your installer what is open now.

Safety on any new heater

The Consumer Product Safety Commission advises setting water heaters to 120 degrees Fahrenheit and notes that hotter water can scald quickly. With a gas appliance, if you smell gas, leave the building and call 911, then DTE’s gas leak line at (800) 947-5000, from a safe distance. Next steps are on the water heater replacement and water heater repair pages, and our repair or replace tool can help you sort out which one you need.

Choosing, with what we know

If your tank is in the 10 to 15 year range, start asking. If it is a standard electric tank, ask about a heat pump unit and where its rebate stands this month. On gas, ask whether a tankless unit changes the venting or gas supply and what the permits cost in your city. Put the license question first.