Your Water Heater Uses More Energy Than You Think—These 4 Models Can Help You Save
Our engineers teamed up with outside experts to tap the best, most reliable models on today's market.
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Water heater technology has advanced leaps and bounds in the last decade, based on our continuous testing in the Good Housekeeping Home Improvement & Outdoor Lab, which includes long-term assessments in the homes of expert testers. Our current top pick shines a light on that evolution. The A. O. Smith Signature 900 Smart Electric Water Heater with Hybrid Heat Pump draws energy from the air to heat water, lowering annual energy costs by hundreds of dollars while delivering plenty of hot water to your home for showers, washing dishes, and the like.
Heat pump water heaters save you big money in the long run, but they do cost more upfront than traditional units. If you’re on a tight budget, or if your home runs on gas, our roundup includes options that perform best in those situations.
Pros
- Extremely energy efficient
- Wi-Fi connectivity adds convenience and security
- Built-in leak detector and automatic shutoff eliminates major flood risks
Cons
- Needs to be installed in wide open area
WHY BUY IT: If it's been a while since your last water heater, heat pump technology will likely be new—this A. O. Smith unit shows why it's worth a look. It's known as a hybrid system because it pairs an air-source heat pump with a conventional electric storage tank water heater. By drawing energy from the ambient air, it's several times more efficient than a standard water heater, saving the typical homeowner close to $600 a year in reduced energy costs, according to the brand. That will offset the steep upfront cost, as will the rebates offered by many states and utility companies (like the $1,000 Con Edison gives customers who upgrade to an Energy Star–certified heat pump water heater).
Boston-based contractor Marc Savatsky, who tested the A.O. Smith as part of our 2026 Home Reno Awards, praised the extreme efficiency and reliable operation. The Signature 900 Series comes in a range of tank sizes, from 40 gallons all the way up to 80 gallons, so you can find a model that’s right for your household size. On top of that, the line boasts an impressive “first-hour” rating—the industry standard for measuring how much water a unit can deliver in peak use. For example, the 66-gallon Signature 900 has a first-hour rating of 82 gallons, because it’s able to quickly replace hot water that’s sent out into the home.
But knowing that hot water demands can jump suddenly, for example when family is in town, A.O. Smith came up with a smart solution for the Signature 900. By activating Hot Water+ or Guest Mode, homeowners can increase their unit’s first-hour rating by 20% to 40%, depending on its size.
The 900 series is also loaded with smart technology, like the Wi-Fi-connected leak detector that will alert you via a smartphone app if it springs a leak. That's unlikely given the high-quality construction, including durable copper elements and a ceramic-fused tank, but the peace of mind is a nice bonus. There’s even a built-in shutoff valve that automatically turns off the water supply whenever a leak is detected.
WHEN TO SKIP: For all the benefits of heat pump water heaters like the Signature 900, they’re not for everyone. We already mentioned the steep upfront cost. On top of that, they need to be installed in an area with at least 1,000 cubic feet of air space to ensure it has sufficient available energy to maintain peak operating efficiency. Not all homes have that kind of space. And, of course, if you’re looking to replace a gas water heater, a heat pump is not for you, since they run on electricity.
| Capacity | 50, 66, and 80 gallons |
| Height | 61.5 in. |
| Weight | 262 lbs |
| Uniform energy factor | 3.7 |
| Wi-Fi compatibile | Yes |
Pros
- Excellent price
- Provides plenty of water for large households
- Solid construction
Cons
- Uses more energy to heat water
WHY BUY IT: While heat pump water heaters represent the category's leading edge, many homeowners still choose to install traditional storage tank water heaters, since they offer excellent value and get the job done. Over the years, our experts have been consistently impressed by the overall quality of Rheem water heaters, including this no-nonsense gas model from Home Depot.
The 50-gallon unit provides ample hot water for households with up to five people. And our experts say you can expect at least a decade of reliable service, thanks to the water heater's enamel-lined tank and premium anode rod, which protect against rust and corrosion.
Looking for a top-value electric storage tank water heater? Rheem's 50-gallon Gladiator has most of the same performance and durability features as its gas counterpart. It costs about $100 more, but that comes with several smart upgrades, including Wi-Fi connectivity for remote operation and monitoring, plus leak detection with automatic shutoff.
WHEN TO SKIP: If you’re trying to lower your energy bills with your next water heater, you can do much better than this Rheem. Its uniform energy factor, or UEF, of 0.63 is three to four times worse than the most efficient water heaters on the market, which could translate into a few hundred dollars more in energy costs over the course of the year.
It’s also worth noting that gas water heaters are going away in some parts of the country. For example, the California Air Resources Board (CARB) has adopted a statewide rule phasing out the sale of new natural gas-fired space and water heaters by 2030.
| Capacity | 29, 40, 50, 55, 75, 98 gallons |
| Height | 58.25 in. |
| Weight | 150 lbs |
| Uniform energy factor | 0.63 |
| Wi-Fi compatibile | No |
Pros
- Delivers instant hot water at a highly efficient rate
- Maintenance-free design
- Compact design doesn't take up much storage space
Cons
- Relatively steep upfront cost
- Limits to how much hot water it can deliver
WHY BUY IT: Tankless water heaters are another energy-saving technology that’s transforming the category. Besides their superb efficiency, our experts like the fact that they deliver instant hot water (i.e., no standing around in a towel waiting for the shower to heat up). They are also very compact, making them a good fit if your home is short on utility space.
The A. O. Smith Signature Series model was a 2025 Good Housekeeping Home Reno Award winner. Both of our expert judges gave it perfect marks for performance and overall satisfaction. “The one-gallon-per-minute internal recirculating pump ensures fast delivery of hot water to fixtures,” one noted. Nearly two years later, the tankless water heaters continue to perform flawlessly.
Another feature that our engineers and outside experts like is the scale-prevention technology, which keeps the system running smoothly without the need for annual descaling by a professional. In the past, this maintenance requirement was a pain point with consumers, since it typically cost about $250 a year, and not doing it could void the manufacturer's warranty. For added peace of mind, A. O. Smith's generous 15-year warranty covers scale-related failures. Wi-Fi connectivity with the companion app enables remote monitoring of the water heater.
WHEN TO SKIP: Like heat pump water heaters, tankless models cost a lot more upfront than traditional tank water heaters, and that’s the case with this A. O. Smith model. Retrofit installations can be more involved, often requiring new water lines and wiring.
There is also a limit to how much hot water tankless systems can deliver. The A. O. Smith tops out at 10.5 gallons per minute, which is very good for the category, but could fall short for large households where multiple showers, as well as the dishwasher and washing machine, might be in use at the same time. This U.S. Energy Department water heater sizing calculator is useful for determining your home’s hot water requirements.
| Capacity | Unlimited |
| Height | 44.6 in. |
| Weight | 104 lbs |
| Uniform energy factor | 0.95 |
| Wi-Fi compatibile | No |
Pros
- Uses much less energy than a traditional tank storage heater
- Built-in leak detection
- Excellent brand reliability
Cons
- Storage tank takes up more space
WHY BUY IT: Storage tank water heaters have seen some serious innovation, too. Leading the charge are gas-fired models with condensing technology, which are nearly as efficient as tankless models, thanks to their ability to reuse energy from exhaust fumes that rise through the flue in traditional units. This 50-gallon water heater from State achieves a 0.9 UEF rating, good enough for the Energy Star label.
State is owned by A. O. Smith Corporation, so it offers much of the same performance and reliability. It’s the go-to brand for many plumbing professionals, who like its 75-year track record. Many of the high-tech features our experts see on A. O. Smith water heaters are evident on this condensing gas model too, including leak detection sensors that alert if a leak occurs.
Condensing technology used to be exclusive to extra-large storage tank heaters—up to over 60 gallons in most cases. But innovations have allowed manufacturers to house them in smaller tanks. In addition to this 50-gallon unit, State also carries a 40-gallon version, suitable for smaller households with two to three people.
WHEN TO SKIP: Installation is more complicated with condensing water heaters, since they need to be properly ventilated and they require a special drain to safely capture the liquid condensate that's created during the water heating process. Also, since condensing water heaters run on gas, they'll be subject to any bans or phase-outs of gas-fired appliances for residential use.
| Capacity | 40 or 50 gallons |
| Height | 56.5 in. |
| Weight | 246 lbs |
| Uniform Energy Factor | 0.9 |
| Wi-Fi Compatible | No |
How we test the best water heaters
To evaluate water heaters for this guide, experts in the Good Housekeeping Institute Home Improvement & Outdoor Lab combined industry reporting with Lab reviews and real-world installation insights. We gathered insights from trade shows like the International Builders' Show and interviewed builders, contractors, and manufacturers to understand current performance trends and features.
We also oversaw the installation of several water heaters in testers’ homes as part of our annual Home Reno Awards, where products were installed and used in real-life conditions. Most installations were handled by outside judges on the program, including Fernando Pages Ruiz, a homebuilder, developer, and author from Houston, and Boston-based contractor and real estate developer Marc Savatsky. In select cases, consumer testers used the systems in their homes, which has allowed us to monitor performance, energy efficiency, and maintenance over time.
What to look for when shopping for the best water heater
Your home's next water heater could be with you for the next 20 years. Here's how to make sure you end up with the perfect model.
✔️ CHOOSE THE RIGHT TYPE. The market is still dominated by storage tank water heaters, but newer, high-efficiency technologies might also be worth a look. Here’s how they all stack up.
- Storage tank water heaters: The most common type of water heater used in about 90% of U.S. homes, these units consist of an insulated tank that stores heated water until it’s needed. Water is heated either by a gas burner or an electric element.
Electric water heaters are less expensive and easier to install, since they don’t need to be vented to the outdoors, unlike gas water heaters, which produce harmful carbon monoxide. But electricity costs more than natural gas in most parts of the country, making electric water heaters more expensive to operate.
- Tankless water heaters: Also known as on-demand water heaters, these models feature a coiled heat exchanger that produces instant hot water as needed. That means no waiting for the shower to heat up on cold winter mornings. Tankless water heaters are more expensive than tank models, but they’re extremely efficient because there’s no standby energy loss associated with heated water sitting in a storage tank.
Tankless water heaters can be gas or electric. Both versions are more expensive than standard storage-tank water heaters, and installation is more involved, often requiring new water lines and electrical work.
- Heat pump water heaters: A relative newcomer to the category, heat pump water heaters are sometimes called hybrids because they pair an air-source heat pump with a conventional electric storage tank water heater. Though they cost much more, they can be two to three times more efficient than conventional electric resistance water heaters. Installation is basically the same, but because they capture heat from the air and transfer it to the water, they need to be installed in an area with at least 1,000 cubic feet of air space where the temperature stays between 40° F and 90° F.
✔️ DETERMINE THE CAPACITY. Tank water heaters (whether traditional or heat pump) typically hold between 30 and 80 gallons. The capacity corresponds roughly to household size, for example:
- 1 to 2 people: 30 to 40 gallons
- 2 to 3 people: 40 to 50 gallons
- 3 to 4 people: 50 to 60 gallons
- 5 or more people: 60 to 80 gallons
With tankless water heaters, the key spec is gallons-per-minute, or GPM. This tells you how much hot water the unit can deliver in a set period. Small households might need a tankless heater with a maximum flow rate of 2 to 3 GPM, while larger ones might require a maximum flow rate of 4 to 5 GPM.
✔️ CHECK THE EFFICIENCY. To find the most efficient water heater, compare the uniform energy factor, or UEF. This is the percentage of energy that is converted into hot water by the water heater. A higher number means less wasted energy and lower operating costs.
The UEF of traditional water heaters is around 0.6, while tankless units have EFs of 0.9 or higher. With heat pump water heaters, UEF ratings range from 3 to 4, meaning they operate at an impressive 300 to 400% efficiency.
✔️ CONSIDER THE FEATURES. It might be worth spending more on upgrades that enhance the convenience, usability, or long-term durability of the water heater.
- Scale prevention: If your home has hard water, mineral deposits in your water heater can shorten its lifespan. Some premium tank and tankless water heaters feature anti-scale technologies that extend the unit's life and reduce the frequency of professional maintenance, saving you hundreds of dollars over the life of the unit.
- Technology upgrades: Wi-Fi connectivity enables homeowners to monitor and operate the unit remotely via the companion app, and users can also receive helpful maintenance reminders. Leak detection technology is another worthwhile upgrade, our experts say, since it can alert you to issues before they turn catastrophic.
- Warranty length: Water heater warranties generally range from 3 to 12 years. A model with a longer warranty will have features like brass drain valves, which are more durable than plastic ones, as well as glass- or ceramic-lined tanks, which resist rust and corrosion better than plain metal tanks.
Why trust Good Housekeeping?
Dan DiClerico is the director of the Good Housekeeping Institute Home Improvement & Outdoor Lab. He oversees all water heater testing in our Lab, as well as the continuous in-home, survey-based consumer testing that allows us to evaluate these devices in real-world conditions.
DiClerico has been testing and writing about water heaters for 25 years. In that time, he's become familiar with all the major brands in the category, so he knows which ones have the best track records for quality and reliability. He also spearheaded numerous investigative reports on energy and water efficiency, working closely with external experts from government, industry, and the home services sector.
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