When replacing a water heater, it's not always possible to simply put the old water heater on the curb for the trash men to pick up. Old water heaters can contain chemicals that are not appropriate for landfills. Regulations vary by state, so disposing of water heaters properly usually means doing some research and, in some cases, calling in a professional.
Disassemble and drain the old water heater. Once it has been removed from the electrical connection in the wall and allowed to cool, connect a length of hose to the drainage valve on the water heater. Run the hose to an area that won't be ruined by water, such as a floor drain or outside. Open the valve and allow the water to drain out of the water heater. Then, detatch the water heater from the water pipes and take it outside.
Check with the local garbage disposal and recycling management departments in the community. They will be able to say whether it is legal to dispose of a water heater in a landfill and, if it is legal, whether the local trash collector can pick up the water heater along with the regular trash.
Check out the community utilities' Web sites. Some trash and water treatment facilities hold special events in which they will come pick up old hot water heaters and other large, potentially toxic appliances free of charge and dispose of them properly.
Visit a recycling or steel industry Web site, such as the Steel Recycling Institute, to find a company that specializes in recycling large, steel objects such as water heaters. The majority of recycling companies will pick up old water heaters and other appliances at your home, most free of charge.