I am going to try to brake down your question.
I have a 60 amp max tankless water heater.
Now just off of what you said the 2014 NEC Table 310.15(B)(16) shows that a #6 or #4 wire is needed for 60 amps, depending on which wire you use.
The circuit breaker is 60 amps.
You are right in line with the amps of the water-heater.
The water heater is connected to a NEMA 10-50 power receptacle
That receptacle is only rated up to 50amp but try to find a 60amp 3wire receptacle.
There a switch to turn on and off the water heater from inside the house. I am going to replace the switch. I noticed that it is a double pole 30 amp switch.
BIG problem, the switch is way under sized, but from your picture it doesn't look like the correct size wire ether.
I would look at the wiring that is going to the breaker and see if it is correct. You may have to start over again.
Well, to simplify the maze somewhat, you have all the usual loads of an all-electric house.
- 50A furnace
- 50A range
- 30A air conditioning pack
- 30A dryer
- Eleven 120V branch circuits, some MWBC, many on 30A breakers (WTH?)
Obviously we can oversubscribe this somewhat, e.g. You're not likely to run heater and A/C at the same time.
The fine art of panel subscription is not a core skill for me, but hopefully this summary will make it easier for someone else.
That panel, though
While we're here, we gotta talk about that panel. First, panel B top-tapping panel A before the main breaker is very dangerous unless there is another main breaker before this. The meter is not a fuse, and there are no fuses between the transformer and main breaker. This is considered acceptable for a very short hop from the meter to the main, however, in your case this totally unfused feeder crosses your whole house. Nothing prevents a short in the cable, or in this panel, or summed loads on this panel, from setting that cable on fire.
Second, all 4 panels are Federal Pacific "StabLok". It has serious issues with panel fires due to bus defects, and unreliable trip. When feasible, all four should go.
The three subs will be straightforward to DIY, the main will be more troublesome unless there's an outside main breaker. I would DIY install a 200A main service panel right next to it as a subpanel, reuse that 70A breaker to feed it, and move all the 120V circuits out of the main into the new sub. Then bring in an electrician to cut it over to be the new main.
I see many branch circuits on 30A breakers. Those should be 15 or 20 depending on wire gauge.
Gaps in the panel covers should be patched so curious fingers can't touch buses, except finding either breakers or blanks to cover those spots will be a pain.
Best Answer
Not likely will it be possible to replace the two 30A breakers with 40A breakers.
The wire size (AWG) for a 30A circuit should be 10 gauge. Proper wire size for a 40A circuit is 8 gauge if the run from the service entrance to the tankless heater is a reasonably short distance.
So do not simply replace the breakers like you asked. The breaker's primary function is to protect the wiring from over current so as to prevent a fire in overload or short circuit conditions.