The answer depends on a number of factors including the number of people in your household, number of bathtubs and / or showers, whether your home has a dishwasher, washing machine or whirlpool bathtub and whether your water heater is a natural gas or electric unit. Typically, for a family of 4, a 40 gallon gas water heater will be sufficient for your needs. If your water heater is electric you would want to consider a 50 - 60 gallon unit. Consult your plumbing contractor or water heater dealer to ensure the unit you choose will serve your needs.