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Can the rusted connection simply be replaced?
Or does the rust mean I need to get a new hot water heater?

Water tank with corrosion around pipe entry

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  • Would need to check the tank itself, the picture is only showing the outer cover. Will probably need to think about replacing, if not now then soon. If rust is on the tank, then just get a new one, you don't need a leaking tank.
    – crip659
    Commented Apr 8, 2022 at 17:50

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Looks like you have or had a small/slow leak here that made the exterior wet, so it rusted. The buildup of hard water minerals on the pipe indicates a leak going on for quite a long time.

You should fix the leak, the rust shown has nothing to do with the condition of the tank (inside the insulation that's inside the rusty outer steel jacket.)

Age and condition of the tank (and anode rod, while inspecting the tank) would guide choosing to replace now or replace later.

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