Assumes 3%/yr rate increases, 0.5%/yr panel degradation and no federal tax credit (the 30% §25D credit ended for systems installed after Dec 31, 2025). How we calculate
Data approachEIA rates · NREL sun hours · 2026 federal policy · methodology
2026 update: the 30% federal residential solar tax credit (§25D) ended for systems installed after December 31, 2025. Figures on this page that subtract a 30% credit no longer apply to 2026 purchases — installed cost is the full price. We are updating this guide; see our 2026 tax credit checker and methodology.
In 2026, residential solar averages about $2.60 per watt before incentives on the EnergySage marketplace, roughly $31,000 for a 12 kW system. State averages there run from $2.12 per watt in Florida to $3.43 in Hawaii, and broader datasets show higher medians of about $3.10–$3.50 per watt. The biggest change for buyers this year: the 30% federal tax credit for homeowner-owned solar ended on December 31, 2025, so state incentives and your local electricity rate now carry more of the financial case.
This guide combines EnergySage marketplace prices (updated September 2026), EIA retail electricity prices (July 2026), and transparent payback math you can check yourself. Where a number is our own model rather than a reported statistic, we say so.
💰 System Cost
What Solar Panels Actually Cost State by State in 2026
EnergySage’s marketplace reports an average of about $2.60 per watt nationally. Its average for an 8 kW system is $2.62 per watt, or $20,960. Broader installed-price data is higher: Lawrence Berkeley National Laboratory’s Tracking the Sun reports a cash-purchase median near $3.50 per watt for 2024, partly because it covers installers outside competitive online marketplaces.
The table below shows selected states. The 8 kW column is our estimate (state $/W × 8,000 W); real quotes vary by system size, roof and equipment. Rates are EIA residential averages for July 2026.
“None noted” means we did not verify a statewide incentive; utilities and cities often add their own. Confirm current programs at DSIRE.
Average solar cost per watt by state. Source: EnergySage marketplace data, updated September 2026. Before incentives; averages reflect marketplace quotes, not every installer.
Chart summary: Among these 12 states, Florida ($2.12 per watt), Texas ($2.25) and Arizona ($2.27) are cheapest, while Minnesota ($3.23) and Hawaii ($3.43) are the most expensive. On an 8 kW system, that spread is roughly $10,500 (about $16,960 versus $27,440). The full EnergySage list runs as high as $3.81 in Alabama, but a few small-market averages may rest on limited quote counts, so treat single-state outliers with caution.
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🗺️ State Factors
Why Solar Costs Differ So Much Between States
EnergySage’s cost breakdown, based on a 2021 study by the U.S. National Laboratory of the Rockies (formerly NREL), shows why the same panels can cost different amounts to install. On a $31,135 12 kW system, panels are about 12% of the price and all equipment together (panels, inverters, racking, wiring, supply chain and sales tax) about 45%. The rest is installer labor, sales and marketing (about 18%), overhead, profit and permitting and interconnection (about 8%). Because most of the price is not hardware, local business conditions matter.
Four factors do most of the work:
System size. EnergySage notes that hotter states usually need larger systems, and larger systems cost less per watt, which helps explain lower $/W in warmer states and higher $/W in colder ones. It also means total bills can end up similar: a bigger Arizona system can cost about what a smaller Nebraska system does.
Installer competition and sales costs. Marketplace competition lowers customer-acquisition costs, one reason EnergySage prices run below broader national datasets.
Permitting and interconnection. These are about 8% of the average price. The Department of Energy’s SolarAPP+ program aims to shorten permit timelines and lower these costs where cities adopt it.
Roof and home. Complex roofs, shading and electrical panel upgrades (a panel below 200 amps may need one) add cost.
Electricity rates do not change what a system costs to install, but they strongly change how fast it pays back. EIA data show U.S. residential prices rose 4.9% in July 2026 versus a year earlier, and Hawaii’s July average was 48.00¢ per kWh, versus 12.72¢ in Louisiana.
The Federal Tax Credit Ended: What Reduces Your Solar Cost Now
The 30% Residential Clean Energy Credit (Section 25D) ended for expenditures made after December 31, 2025 under the One Big Beautiful Bill Act, which was signed July 4, 2025. The IRS’s Residential Clean Energy Credit page states that the credit is not available for property placed in service after that date. Under the IRS’s timing rule, an expenditure is made when installation is completed, so a 2025 deposit on a system finished in 2026 does not qualify.
What still applies:
Systems completed by December 31, 2025 can claim 30% on the 2025 return (Form 5695), with unused credit carried forward.
Lease and PPA systems may still benefit from a business credit (Section 48E), subject to deadlines. The provider claims it, so compare whether savings reach you.
State credits. New York offers a 25% state income tax credit up to $5,000. Massachusetts offers 15% up to $1,000 and also runs the SMART program, which pays per kWh. Arizona has a state credit of up to $1,000.
Tax exemptions. Several states exempt solar from property and sales tax, including New York, Massachusetts and New Jersey. Details and limits vary.
Net metering and export credits. How your utility credits excess power can matter as much as any rebate. California has used a lower-value export structure since April 2023, so exports there earn less than retail.
Example: an 8 kW system in New York at the state average ($22,080) drops to about $17,080 after the maximum $5,000 state credit. Use our incentive calculator and DSIRE to see what applies to your address.
📈 Payback Period
Solar Payback Period by State: Where You Recover Costs Fastest
Payback is your net system cost divided by annual savings. It is driven by three things: the cost per watt, your electricity rate, and your sunshine. Because sun hours vary widely within and between states, we used one consistent assumption to isolate the effect of price and rates.
Our model: 8 kW system at each state’s EnergySage $/W; 4.5 peak sun hours; 0.80 system loss factor (about 10,500 kWh in year 1); every kWh valued at the state’s July 2026 EIA residential average; no incentives. For the U.S. base case ($2.62/W, 18.3¢), this gives about 11 years.
Illustrative simple payback by state. Our calculation from EnergySage cost per watt (Sept 2026) and EIA July 2026 residential rates, assuming 4.5 sun hours and full retail credit for all output, with no incentives. This is not a prediction for any specific home.
Chart summary: High-rate northeastern states pay back fastest in this model (New York about 7.0 years, Massachusetts 7.3, New Jersey 7.8), while low-rate or higher-priced states take longest (Louisiana about 13.9 years, Minnesota 14.1). The U.S. base case is about 11 years. Sunny states would look better with local sun data: at the same price and rate, moving from 4.5 to 6.5 sun hours cuts payback by roughly 30%, while 3.7 sun hours lengthens it by about 20%. State credits also help: with New York’s maximum credit, the modeled payback falls from about 7.0 to about 5.4 years.
Two states need extra caution. California (33.61¢) and Hawaii (48.00¢) would look fastest on a simple retail-rate calculation, but both have export rules that pay less than retail for power sent to the grid, so we left them out of the chart. Because exported kWh can be credited far below retail, savings depend heavily on how much you use at home and whether you add a battery. Get a quote with an hour-by-hour savings estimate.
How System Size Affects Your Total Solar Investment
Most quotes fall in the 6–10 kW range. EIA’s 2020 Residential Energy Consumption Survey reports average household electricity use of 10,566 kWh per year, which at 4.5 sun hours and a 0.80 loss factor needs roughly 8 kW (about 20 panels of 400 W): 10,566 ÷ (4.5 × 365 × 0.80) = 8.0 kW.
Bigger systems have a lower cost per watt because design, permitting and site visits are largely fixed. EnergySage’s marketplace shows the pattern.
Average solar cost per watt by system size. Source: EnergySage marketplace data, 2026; before incentives.
Chart summary: A 4 kW system averages $2.89 per watt ($11,560), an 8 kW system $2.62 ($20,960) and a 10 kW system $2.58 ($25,800). Going from 6 kW ($2.68 per watt) to 10 kW cuts the unit price about 4%, so scaling up helps most when your usage and roof justify it. Do not oversize purely for a lower $/W, because a larger system costs more in total and only pays back if your utility values the extra output.
Other sizing factors:
Export credits. If your utility credits exports below retail, a system sized closer to your own use may perform better than one sized to export.
Electric vehicles. As an estimate, an EV using about 0.3 kWh per mile and driven 12,000 miles adds about 3,600 kWh per year, which can raise the system size you need by roughly 2.7 kW (3,600 ÷ (4.5 × 365 × 0.80)).
Batteries. Owner-owned batteries lost the federal credit with the same law, so price them as a separate option and check state and utility programs.
Method and sources: state cost per watt from EnergySage marketplace data (updated September 2026); retail electricity prices from the U.S. Energy Information Administration’s Electric Power Monthly, Table 5.6.A (July 2026); household use from EIA’s 2020 Residential Energy Consumption Survey; incentive rules from IRS guidance and state program summaries (verify on DSIRE); home-value research from Lawrence Berkeley National Laboratory, “Selling into the Sun.” Payback figures are our own calculations from stated assumptions (0.80 loss factor, 4.5 sun hours, retail-rate valuation, no incentives unless noted). This guide is general information, not financial, tax or legal advice. Last reviewed September 29, 2026.
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Direct answers for US homeowners — sized for a $160/month electric bill.
About $2.60 per watt before incentives on the EnergySage marketplace, or roughly $31,100 for an average 12 kW system. Prices are higher in broader datasets: Lawrence Berkeley National Laboratory's Tracking the Sun reports a median near $3.50 per watt for 2024 cash purchases. A typical 8 kW system averages about $20,960 on EnergySage ($2.62 per watt), and small 4 kW systems cost more per watt ($2.89). With the federal credit ended, these prices are now the starting point for most buyers, minus any state incentives.
On EnergySage marketplace data, the lowest state averages are Florida ($2.12 per watt), Texas ($2.25), Arizona ($2.27), Mississippi ($2.29) and Louisiana ($2.33). Hawaii averages $3.43, and a few states with fewer quotes, such as Alabama ($3.81) and Tennessee ($3.51), show the highest figures. Warmer states tend to buy larger systems, which lowers the price per watt. Your own quote depends on roof, equipment and installer, so compare at least three.
Not for homeowners who buy. Section 25D ended for expenditures made after December 31, 2025, and the IRS treats the expenditure as made when installation is completed. Systems finished by that date can still claim 30% on the 2025 return, and unused credit can carry forward. State incentives remain in some places, such as New York (25% credit up to $5,000) and Massachusetts (15% up to $1,000, plus the SMART program). Lease and PPA providers may still claim a business credit, so compare offers carefully. Confirm details with a tax professional.
It depends mainly on your electricity rate, the system price and local sunshine. In our illustrative model (8 kW, 4.5 sun hours, no incentives, every kWh valued at the state's July 2026 EIA residential average), simple payback runs from about 7 years in New York and Massachusetts to about 14 years in Minnesota and Louisiana. The U.S. base case is about 11 years. Sunnier locations shorten these figures, while reduced export credits, as in California, lengthen them.
Research suggests solar can raise sale prices, but the effect varies. A Lawrence Berkeley National Laboratory study of about 22,800 sales in eight states (2002–2013) found average premiums of roughly $4 per watt, or about $15,000 for a 3.6 kW system, with California near $4.21 per watt and other states near $3.11. Those results cover owned systems and older prices, and the study notes premiums for any individual home are market dependent. Leased systems were not studied.
$160/month electric bill by state
System size and payback vary by electricity rate and sun hours — see your state.
18.19¢/kWh — US average residential price. Source: EIA Electric Power Monthly, Table 5.6.B (year-to-date through July 2026), residential average retail price (July 2026) (EIA)
Solar production
4.5 peak sun hours/day × 0.82 system derate. Approximate state-average daily solar resource (peak sun hours) based on NREL solar resource data (NSRDB); not location-specific — use NREL PVWatts for an address-level estimate. (NREL PVWatts)
Installed price
$3.00 per watt before incentives. Blended 2026 US residential installed price used by this site; EnergySage marketplace reported about $2.60/W (mid-2026); full-market medians are higher.
Federal tax credit
$0 for homeowner-owned systems installed in 2026 — the 30% §25D credit ended Dec 31, 2025 (IRS)
Net metering
National blend — solar assumed to offset 75% of the bill (87% in full-retail net-metering states, 55–70% elsewhere).
Estimates only — not tax, legal or financial advice. Get at least three installer quotes and confirm incentives with your utility and a tax professional.