If you are a customer of National Fuel Gas Distribution Corporation, they offer $300 rebates for indirect hot water heaters. Check out this EnergySavvy page for more information.

Also, if your tankless water heater is powered by gas, oil or propane and has a minimum EF of 0.82 or has a thermal efficiency rating of at least 90 percent, you may qualify for the federal energy efficiency tax credit. The credit is equal to 30 percent of the cost of your heater and installation for up to $1,500.