What Does Propane Tank Installation Cost? (2023 Guide)

Many homeowners opt to use propane gas rather than natural gas in rural areas, installing large tanks near their homes and refilling them when necessary. However, propane tanks are large—up to 1,000 gallons—and installing them isn’t a project you can tackle alone.

Often, propane providers will offer tank installation, but the price can vary significantly depending on the project. For example, you can pay anywhere from $300–$3,000 for an above-ground tank. Residential propane tank installation costs will depend on two factors: the capacity of the tank and where you install it. This cost guide will break down the average price for different propane tank sizes and answer common questions about propane usage.

The cost of having a propane tank installed varies by the method of installation and the size of the tank. Considering a smaller propane tank? You can have a 100-gallon tank installed above ground for about $300. If you’re looking for a larger size, a 1,000-gallon tank can be installed underground for around $5,000.

However, underground installation can increase that price significantly. We found a median price for an average-sized home would be about $2,500 for the underground installation of a 500-gallon propane tank. An above-ground tank may be your ideal choice if you’re looking to save on costs.

Above-Ground Tank Cost

Installing propane tanks above the ground is more cost-effective, both because this process requires less labor and because the tank sizes tend to be smaller. There are other benefits to above-ground installation, including greater accessibility when it comes to checking on and refilling the tank. Any maintenance or repair work that needs to be done will be less expensive because you’ll save on labor costs.

Before installation, you’ll want to educate yourself on the safety laws that govern where a propane tank can be installed—for example, it often needs to be a certain distance from the house and away from any septic fields. This may mean it needs to be placed right in the middle of the yard, usually on top of a large concrete pad, which some homeowners feel is an eyesore. Ultimately, installing an aboveground tank typically costs between $300 and $3,000.

Underground Tank Cost

The installation process for an underground propane tank is far more involved. You need to excavate the ground, dig trenching for the pipes, and then cover the tank, which all usually costs at least $1,500 and can run up to $5,000 or more. Although an underground tank’s pipes and gauges are visible aboveground, much of the plumbing is buried, as well, meaning repairs cost more.

Underground tanks are also protected from severe weather and freezing temperatures. What’s more, there’s a greatly reduced danger of fire in the case of a leak. A professionally installed underground propane tank that is routinely inspected and maintained can last up to 30 years.

Propane Tank Prices by Brand

As with other home appliances and systems, branding plays a role in pricing. Pricing for larger tanks varies by brand. Price also changes drastically based on the other factors outlined in this article. Many suppliers, such as AmeriGas, lease you a tank at no cost or a low rate. Overall, we advise you to obtain multiple quotes to accurately compare each brand’s pricing. 

If you’re searching for a smaller propane tank, such as one for your grill, you can find pricing readily available.  

AmeriGas Propane Tank Cost

AmeriGas doesn’t charge for tank installation. Instead, it leases you the tank with a contract for regular delivery. Some AmeriGas branches contract through a smaller local company but still handle the billing. AmeriGas costs vary by region, so we recommend contacting your local office to obtain accurate pricing. 

Blue Rhino Propane Tank Cost

Blue Rhino propane tanks cost between $15 and $20. However, Blue Rhino is an exchange propane service, so your price might change depending on when you return the tank. You’ll purchase a tank from your local supplier, use the propane, and return it when you need a new one. 

Costco Propane Tank Price

Costco charges $10–$20 for its propane tanks, but you’ll need to be a Costco member to make the most of your purchase. Costco members can use an exchange program that allows them to exchange their tank at a discounted rate. 

Residential Propane Tank Cost by Capacity

While larger tanks cost more, they have to be refilled less often which means you can wait until propane prices lower. Here’s how costs break down by tank size. You’ll notice that smaller tanks aren’t usually installed underground.

There are tanks larger than 1,000 gallons, but they’re usually used for industrial or agricultural purposes. Also note that a full propane tank is not actually filled to capacity. For safety purposes, the tank will only hold about 80% of its total capacity in propane gas. For example, a 120-gallon tank holds approximately 96 gallons at a time, and a 250-gallon tank holds 200 gallons.

Residential Propane Tank Cost by Use

Although it’s rare to buy or rent a propane tank to use for just one appliance, there’s no reason you can’t do this. Of course, the size of the tank you need will depend on how often you are willing to refill it and how much you use the appliance you’ll power. For hot tubs, stoves, fireplaces, and water heaters, a 100-gallon or 250-gallon propane tank is probably sufficient. You’ll probably want a 500-gallon tank or even larger to heat a whole home.

The choice to rent or buy can impact how much you pay for your propane tank over time. So can the length of pipe that you use to connect the tank to your home. Before purchasing a residential propane tank, consider these factors.

Buying or Renting

The tank itself can be a substantial part of the total cost. Many propane suppliers will lease you a tank that may come with free installation and maintenance. There are often hidden fees, though. For example, you will usually pay monthly rental fees, and you’ll have to buy a minimum number of gallons of propane from the company every month or year.

You will also be locked into paying that propane company’s prices instead of being able to shop around. Overall, rental propane tank prices typically range from $50–$75 per year for a 250-gallon tank up to $100–$250 a year for a 1,000-gallon tank, not including the cost of propane.

Pipe Length

Typically, a propane tank of more than 125 gallons must be installed at least 10 feet away from the side of a building and 10 feet from a property line. There’s no theoretical maximum to how far away it can be installed, but the hose on the propane delivery truck must be able to reach it. Remember that longer pipes mean more initial digging and more potential maintenance and repair, which mean higher labor costs initially and over time.

Beyond pipe length, the decision to rent or buy, the location of the tank, and its size, there are a few more considerations that play into propane tank installation cost. Other cost factors include these:

• Any mechanical support needed
• Permits and inspection fees
• Removal, if needed
• The tank’s location
• Your annual inspection cost

Annual Inspection

Even once the tank is installed, you’ll likely need to pay between $50 and $75 for a yearly inspection. Though it’s an added cost, this step will help ensure your safety. During a visit, the inspector will check to ensure there are no leaks, corrosion, or gouges. They’ll also check the regulator and valves, replacing them if necessary.

Concrete Pads

If you need an above-ground tank, you must install a concrete pad or slab. Larger tanks take up more space and therefore require larger slabs, which results in a slightly higher installation cost. Here are the prices for concrete pads based on the propane unit’s size:

• 120 gallons: $50–$75
• 250 gallons: $75–$125
• 500 gallons: $125–$175

Filling the Tank

You’ll also need to pay to fill your tank. According to the U.S. Energy Information Administration, the average propane cost in the United States is around $2.69 per gallon. However, your home’s location plays a large role in propane prices. For example, Iowa features an average cost of $1.93 per gallon, while Florida’s average propane price is $4.69 per gallon. 

Gas Lines

Gas line installation is a necessary part of propane tank installation. As with other additional costs, the size of the propane tank influences the cost of installing gas lines. Here’s what gas line installation costs per propane tank size: 

• 120 gallons: $200–$500
• 250 gallons: $200–$1,000
• 500 gallons: $500–$1,500

Location

Beyond the choice to install underground or above-ground, your broader geographic location can play a factor. Installation costs will likely be higher if your yard is rocky or on a steep incline. Furthermore, you’ll probably pay more if your home is located a substantial distance away from the company or contractor installing the tank, as they’ll have to drive machinery out to your location.

Mechanical Support

Putting the tank in place, especially if it’s underground, often requires heavy machinery. If this part of your property is difficult for machinery to access, you may face extra charges. Usually, the tank location must be close enough to a road for a truck to be able to drive up next to it.

Permit and Inspection

Installation of a new propane tank will likely require a permit. Most cost between $25 and $50, but you’ll want to check with your city or county for an accurate picture of permit pricing in your area. You may also need to pay for an initial inspection by the fire department.

Removal

Between drainage, disconnection, and excavation fees, you could pay $500 or more if you decide to have your propane tank removed. Because there are significant safety and environmental concerns that accompany removing a propane tank, this must be completed by a propane company. As with installation, the cost will be higher if the tank is located underground.

Another cost consideration is having to refill your propane tank when it’s empty. The cost to refill your propane tank is linked to your area’s average propane-per-gallon cost. Using the average cost of $2.69 per gallon of propane, here’s the cost to refill standard tank sizes: 

• 120 gallons: $322.80
• 250 gallons: $538
• 500 gallons: $1,076

How Long Does a Propane Tank Last?

Propane tanks only fill up to 80% of their total capacity with propane. Assuming an average household uses 100–125 gallons of propane per month, here’s how long various tank sizes should last if propane powers the whole home.

If you ever need to move your propane tank in the future, it will cost more to move an underground tank than an above-ground tank. Moving an above-ground tank is closer to $200, including the unhooking, moving, and reconnecting. If it needs a new concrete pad, you can expect to pay an additional $100. 

Moving an underground tank costs between $1,000 and $1,500, as it’s a more challenging job. It requires digging up the tank, excavating a new hole, filling the previous hole, relocating it, and reconnecting it.

Unfortunately, it’s difficult to save money by installing a residential propane tank yourself. Aboveground tanks usually require a concrete pad to sit on, and underground tanks require a hole much larger than the tank to be dug in the ground. Although professional installation can be expensive, keep in mind that renting heavy machinery to install a tank yourself would fetch a similar price.

Additionally, it takes the work of licensed plumbers to hook the pipe system up correctly. Most of the time, companies who sell propane services will have a team of licensed contractors at the ready to take care of all components of the installation. For the safety of your home and your family, it’s best to leave propane tank installation to the professionals.

As an alternative to natural gas, propane is an excellent option for homeowners in rural or more remote areas, and a professionally installed propane tank can last for decades. As a national average, professional propane tank installation costs range from a few hundred dollars to about $5,000 depending on the size of the tank and where it’s located. For tanks large enough to power an entire home, you’ll need to hire professionals to ensure that everything is installed correctly and safely.