How Does Losing the Credit Change Solar Payback?
Losing the credit makes simple payback about 43% longer, because you now recover 100% of the cost from bill savings instead of 70%. At national-average inputs, simple payback moves from about 12.8 years to about 18 years.
National example: $150/month bill, before and after the credit ended
Model inputs: 16.3¢/kWh, 4.5 peak sun hours, 0.75 bill offset, $3.00/W, 8.2 kW. 25-year totals assume 3%/yr electricity rate increases and 0.5%/yr panel degradation. These are modeled estimates, not guaranteed results.
| Scenario | Installed cost | Federal credit | Net cost | Year-1 savings | Simple payback | 25-yr net savings |
|---|
| Installed by Dec 31, 2025 (30% §25D) | $24,600 | $7,380 | $17,220 | $1,350 | 12.8 yrs | ~$28,800 |
| Installed in 2026 (no credit) | $24,600 | $0 | $24,600 | $1,350 | 18.2 yrs | ~$21,400 |
The arithmetic: year-1 savings = $150 × 12 × 0.75 = $1,350. Simple payback = $24,600 ÷ $1,350 = 18.2 years (this holds savings flat). With savings growing about 2.5% a year net of degradation, 25-year cumulative savings are about 34.1 × $1,350 ≈ $46,000, minus the $24,600 system cost = about $21,400.
Chart 1: Cumulative net savings over 25 years
| Year | With 30% credit (installed 2025) | No credit (installed 2026) |
|---|
| Year 5 | -$10,100 | -$17,500 |
| Year 10 | -$2,100 | -$9,500 |
| Year 15 | +$7,000 | -$400 |
| Year 20 | +$17,200 | +$9,800 |
| Year 25 | +$28,800 | +$21,400 |
Summary: With rates rising 3% a year, the no-credit system breaks even around year 15, about four years later than the credited system (around year 11). After 25 years the gap is about $7,400, which roughly equals the $7,380 credit. Losing the credit delays the finish line but does not erase the savings in this scenario.
Chart 2: Payback with and without the credit
| Measure | With 30% credit | No credit |
|---|
| Simple payback (flat savings) | 12.8 yrs | 18.2 yrs |
| Break-even with 3%/yr rate growth | ~11.2 yrs | ~15.2 yrs |
Summary: Payback is shorter if you assume electricity prices keep rising, and longer if you assume they stay flat. Either way, removing the 30% credit adds roughly four to five and a half years in this example. Compare quotes on the same assumptions.
Chart 3: Modeled payback by state, no credit
| State | Modeled simple payback (years) |
|---|
| Hawaii | 6.8 |
| California | 9.8 |
| Rhode Island | 10.9 |
| Connecticut | 11.1 |
| Massachusetts | 11.2 |
| New York | 12.0 |
| Colorado | 14.8 |
| US average example | 18.2 |
Source: Green Energy Calculators state model (see methodology). These are modeled estimates from state average rates, sun hours and net metering assumptions, not measured results.
Summary: Payback is shortest where electricity is expensive and exports are credited well. In the highest-rate states in our model, solar pays back in roughly 7 to 12 years without federal help. In low-rate states without net metering, our model shows payback can run past 20 years. See the payback period by state guide or run your own numbers with the solar payback calculator.
Colorado shows how a state-specific input changes the answer. An 8 kW system at 5.5 peak sun hours produces about 13,170 kWh a year in our model. At 14.2¢/kWh with full retail net metering (0.87 offset), that saves about $1,627 in year one. At $24,000 installed, simple payback is about 14.8 years and 25-year net savings are about $31,500. With the old credit, the same system would have paid back in about 10.3 years.