Heat pump water heater or gas tankless for a new house? What the numbers say

The question came from an owner-builder in southern Indiana on Reddit's r/Plumbing: gas is already at the house, and the choice is a 50-gallon GE heat pump unit or a gas tankless that costs about $1,000 less upfront, for two people. On running cost, the two land close together.

Federal UEF ratings sort water heaters into usage bins, with 38 gallons of hot water a day for low use and 55 for medium, according to A. O. Smith. Heating that much water by 67°F takes about 7.8 to 11.2 million Btu a year. A heat pump with a UEF of 4 would draw roughly 570 to 820 kWh for that, or $97 to $140 at Indiana's August 2026 average of 17.02 cents per kWh, based on EIA figures. GE rates its GeoSpring at 4.7 times the efficiency of a standard electric tank. A condensing tankless at 0.95 UEF would burn about 82 to 118 therms, or $94 to $137 at $12 per thousand cubic feet, about the middle of what EIA reports Indiana homes paid from January to May 2026. If the heat pump runs at half its rating in winter, its bill roughly doubles.

Installation is where they differ. ENERGY STAR says heat pump water heaters belong in indoor spaces that stay between 40°F and 90°F year-round with about 1,000 cubic feet of air around them, and that they cool the room they sit in. With cold incoming water in winter they may switch to backup resistance heat, which uses more energy. GE's 240-volt GeoSpring models need a dedicated 30-amp circuit. A condensing gas tankless needs PVC venting and a condensate drain, according to ENERGY STAR.

Neither earns a federal tax credit here. The IRS says the 25C credit, which paid up to $2,000 a year for heat pump water heaters, applied only to existing homes and only to equipment installed through Dec. 31, 2025. At Indiana prices the energy savings won't pay back a $1,000 difference in either direction, so the choice comes down to installed price and where the unit will sit.