A heat pump water heater (HPWH) uses a small heat pump on top of the tank to pull heat from ambient air to warm the water. 3-4x more efficient than electric resistance, ~60% cheaper to operate than a gas tank.
Net cost after PSE rebate and federal 25C credit lands at $3,350 to $4,200 for a 65 or 80 gallon Rheem ProTerra. Operating cost is $160 to $240/year vs $380 to $520 for a gas tank, so the 10-year math wins by $1,950 to $4,150.
The catch: HPWHs need ~700 cu ft of unfinished space around them (garage, basement, mechanical room). Sealed closets don't work. We check during the consult.