Turns out... Coffee is just as hydrating as water and not dehydrating. But why?
Well there is actually a lot to understand here...
A study directly measured various beverages and their effect on hydration, urine production, electrolyte balance, and electrolyte excretion.
They found no difference between tea, coffee, soda, and diet soda. All of which were as equally hydrating as water.
They also found no difference in urine production between caffeinated beverages and water. However, they did find that tea and coffee groups had lost slightly more sodium in their urine than the water group. But this was not significant enough to impact overall hydration status.
Now here are the beverages that hydrate significantly better than water:
Orange juice, whole milk, and semi-skimmed milk, along with oral rehydration solution.
We all know that that caffeine is a diuretic and can cause dehydration. But only in high doses. For reference, an 8oz cup of coffee contains roughly 95mg of caffeine which is a relatively small dose.
A study did show that caffeine consumption from coffee could increase urine output at a dose of 6mg per kilogram, but not at 3mg per kilogram.
To give you an idea, for myself, that equals 654mg of caffeine or 6.8 cups of coffee to be consumed in one sitting.
To do this yourself, divide your body weight in pounds by 2.2 and multiply that number by 6. That's how much caffeine you would need for it coffee to be LESS hydrating than coffee. Not dehydrating, just less hydrating.
The short of it is that unless you're consuming a large amount of coffee in one sitting, it's just a hydrating as water.