Guide to Propane Tank Costs: Installation, Sizing, and Long-Term Expenses

Installing a propane tank is a major investment for homeowners who rely on propane for heating, cooking, or powering appliances. The total cost depends on tank size, installation type (aboveground vs. underground), location, and ongoing maintenance. Based on current market trends, the average homeowner pays between $600 and $2,500 for a standard aboveground installation, with an overall average of $1,400. However, larger tanks, underground installations, or challenging sites can push costs up to $5,500 or more.

This comprehensive guide walks you through every aspect of propane tank costs—from initial purchase and installation to long-term fuel and maintenance expenses—to help you make informed decisions that align with your budget and energy needs.

Comprehensive Cost Breakdown by Tank Size and Type

Propane tank prices vary widely depending on their capacity and whether they are installed aboveground or buried underground. Here’s a breakdown of typical costs for various sizes:

Tank Size and Capacity

Small Tanks (100–250 gallons)

Ideal for single appliances like water heaters or dryers:

100-gallon tank: $350–$800 (aboveground only)
250-gallon tank: $500–$1,200 (aboveground only)

These tanks are compact and affordable but not suitable for whole-house heating unless combined with other systems.

Whole-House Tanks (500–1,000 gallons)

Designed for homes using propane for central heating and multiple appliances:

500-gallon tank:
- Aboveground: $1,000–$2,000
- Underground: $1,500–$2,500
1,000-gallon tank:
- Aboveground: $1,500–$2,500
- Underground: $2,000–$5,500

These tanks are necessary for off-grid or rural homes where natural gas isn’t available.

Portable Tanks (15–100 pounds)

Used for grills, fire pits, generators, and outdoor heating:

20-pound tank: $40–$60
100-pound tank: $100–$150

These tanks are refillable and often rented from suppliers at low monthly rates.

Aboveground vs. Underground Installation

Feature	Aboveground Tanks	Underground Tanks
Cost Range	$400–$3,500	$1,500–$5,500
Installation Time	4–8 hours	1–2 days
Pros	Lower cost, easy access, faster setup	Aesthetically pleasing, longer lifespan
Cons	Visible, weather-exposed, may need concrete pad	Higher cost, complex excavation, harder repairs

Key Considerations:

Aboveground tanks are best for temporary use, budget-conscious buyers, or areas with high water tables.
Underground tanks offer better curb appeal and protection from elements but require professional installation and regular inspections.

Key Factors Influencing Installation Costs

Several variables affect the final price beyond the tank itself:

Labor and Preparation

Labor Rates: $50–$150/hour, varying by region
Excavation (for underground tanks): $50–$200 per cubic yard
Concrete Pad (aboveground tanks): $50–$175
Gas Line Installation: $250–$800 ($15–$25 per linear foot)

Permits and Compliance

Permit Fees: $25–$150
Safety Regulations: Tanks must be ≥10 feet from structures and ≤150 feet from delivery truck access roads

Additional Expenses

Tank Removal:
- Aboveground: $100
- Underground: up to $1,500
Annual Maintenance: $50–$75 for inspections

Long-Term Ownership Costs

Once installed, the real expense comes from fueling and upkeep.

Refilling Expenses

As of early 2025, the national average for propane is $2.59/gallon, though prices fluctuate based on region:

Tank Size	Usable Capacity (80%)	Refill Cost @ $2.59/gal
100 gal	80 gal	$207
250 gal	200 gal	$518
500 gal	400 gal	$1,036
1,000 gal	800 gal	$2,072

Note: Propane tanks are filled to only 80% of capacity to allow for expansion under heat.

Renting vs. Buying

Homeowners have two options:

Renting:
- Annual fee: $150–$180
- Includes maintenance
- Locked into supplier pricing
Buying:
- Higher upfront cost
- Freedom to choose fuel providers
- Better value over time, especially for long-term homeowners

Regional and Market Considerations

Geographical Variations

Rocky Soil (New England): Excavation adds $200–$300
Hurricane Zones (Southern U.S.): Anchoring increases costs
Earthquake-Prone Areas (West Coast): Bracing required

Propane Price Trends

Wholesale price as of July 2025: $0.72/gallon
Retail prices vary due to delivery fees, taxes, and supplier markups
Forecasted retail increase to $0.79/gallon within a year

Strategies to Reduce Costs

Install During Off-Peak Season (Spring)
- Many installers offer discounts during slower months.
Get Multiple Quotes
- Compare at least three licensed contractors for competitive pricing.
Check for Incentives and Rebates
- Some states (e.g., Massachusetts) provide rebates up to $500 for switching from oil to propane.
Opt for Aboveground Tanks
- Save thousands compared to underground installation.
Consider Tank Ownership
- While renting is convenient, buying offers long-term savings and flexibility.

Critical Safety Note

DIY installation is not recommended for tanks over 100 gallons. Propane systems involve:

Risk of gas leaks
Fire hazards
Code violations that void insurance coverage

Always hire licensed professionals to ensure safe, compliant installation.

Balancing Upfront and Lifetime Costs

Choosing the right propane tank involves balancing initial investment with long-term efficiency and safety. For small-scale use, a 100–250-gallon aboveground tank ($600–$1,200) may suffice. Whole-house heating typically requires a 500–1,000-gallon unit, with underground installations offering aesthetic benefits at a higher cost.

When planning your installation:

Factor in regional fuel prices
Account for maintenance and refill schedules
Consider rental vs. ownership models
Ensure all work complies with local codes and permits

Propane remains a reliable and cost-effective energy source for off-grid living when properly planned and professionally installed. For accurate quotes tailored to your home, consult certified installers via platforms like HomeAdvisor or Angi, and always verify licensing and insurance before hiring.