A water heater and thermal mixing valve assembly and method for providing a reduced discharge water temperature and a hot water temperature from the same tank. The assembly includes a tank adapted to accept and store an amount of cold water, a heater to heat the cold water held in the tank and increase the cold water temperature to a predetermined hot water temperature, at least one thermal mixing valve integrated with the tank in communication with a hot water passage and a cold water bypass conduit to provide a discharge water of a controlled temperature, the cold water bypass conduit being mounted to the cold water passage allowing the associated cold water to communicate with the tank and the thermal mixing valve. An adjustment member is mounted to the thermal mixing valve to adjust a temperature range of the discharge water, a discharge output passage and a hot output passage provide communication with an associated piping system oriented to supply discharge water from the thermal mixing valve and hot water from the tank to associated plumbing fixtures.