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
Solar panels are still worth it in 2026 for many US homeowners, but the 30% federal tax credit ended for systems installed after 2025. A typical 7.7 kW system costs about $23,100, has a simple payback of about 17 years (about 14 if electricity rates rise 3% a year) and saves about $22,900 over 25 years. In high-rate states such as Hawaii, California and Massachusetts, payback is about 7–9 years.
The honest answer depends on three things more than anything else: what you pay per kilowatt-hour, what your utility credits you for the power you export, and how long you will stay in the home. For many households in high-rate states, solar remains a solid investment. In low-rate states without strong export credits, it is marginal at best.
How we calculated the numbers. Our standard model uses $3.00/W installed (between EnergySage’s roughly $2.58–$2.60/W marketplace average in 2026 and Lawrence Berkeley National Laboratory’s $3.50/W median for cash purchases in 2024), the 2025 US average residential rate of 17.3¢/kWh (EIA), 4.5 peak sun hours, and 75% of the bill offset. Sun hours, bill offset, 3%/yr rate increases and 0.5%/yr panel degradation are our modeling assumptions, not measured values, so check your own roof with NREL’s PVWatts. EIA’s outlook has the 2026 US average closer to 18.2¢/kWh, so a 17.3¢ input is slightly conservative. State figures use EIA 2025 state averages with our state data. See the methodology.
💰 System Cost
What Do Solar Panels Cost in 2026 — and What Do You Get Back?
A typical system costs about $23,100 in 2026 (7.7 kW at $3.00/W) and returns about $1,350 in its first year, for a 17-year simple payback and about $22,900 in net savings over 25 years.
The $150 monthly bill is not an arbitrary example: EIA’s 2025 data put the average US residential bill at about $150 (roughly 869 kWh a month at 17.3¢/kWh).
Solar cost and return by monthly bill (2026, national inputs, no federal credit)Inputs: 17.3¢/kWh, 4.5 peak sun hours, 0.75 bill offset, $3.00/W; size = annual kWh ÷ (4.5 × 365 × 0.82); 25-year totals assume 3%/yr rate increases and 0.5%/yr degradation.
Monthly bill
System size
Installed cost
Year-1 savings
Simple payback
25-yr net savings
$100
5.1 kW
~$15,400
~$900
~17 yrs
~$15,300
$150
7.7 kW
~$23,100
~$1,350
~17 yrs
~$22,900
$200
10.3 kW
~$30,800
~$1,800
~17 yrs
~$30,600
Treated as an investment, the $150 example returns about 5.5% a year over 25 years (the internal rate of return on $23,100 up front and savings that start at $1,350 and grow about 2.5% a year net of degradation). That is lower than when the 30% credit applied, but the return arrives as avoided bills rather than taxable income, and it rises with your electricity rate. Every 10¢/W you save on the quote shortens payback by about 3%.
Data visualization
25-year cash flow, 7.7 kW system. Cumulative net cash flow turns positive in year 15 and reaches about $22,900 by year 25 (US dollars, no federal credit, 3% yearly rate increase). Source: EIA 2025 rates, EnergySage 2026 pricing, GEC model.
Chart summary: A $23,100 system starts at −$23,100 and crosses zero between years 14 and 15 once savings grow 3% a year with 0.5% annual panel degradation. By year 25 the cumulative gain is about $22,900. Without any rate increase, break-even would take about 17 years, which is the simple-payback figure above.
Financing changes the picture. A solar loan adds interest, so break-even comes later than with cash; with no federal credit there is no year-one lump sum to pay down the balance. A lease or PPA needs no upfront cash, and the owner may still use a business credit through 2027 that can lower the price, but your savings depend entirely on the contract’s starting rate and escalator. Compare total 20–25 year costs with the lease vs. buy calculator.
Data visualization
Grid only vs. solar over 25 years. A $150/month household pays about $65,600 on the grid versus about $42,700 with a 7.7 kW system (US dollars, no federal credit, 3% yearly rate increase). Source: EIA 2025 rates, EnergySage 2026 pricing, GEC model.
Chart summary: Staying on the grid costs about $65,600 over 25 years if rates rise 3% a year. With solar, the $23,100 system plus the roughly $19,600 of bills it does not offset totals about $42,700, a difference of about $22,900.
Equipment matters. Most panel warranties guarantee roughly 80–90% of rated output after 25 years; our model assumes about 0.5% a year of degradation. Higher-efficiency panels need less roof space for the same output, which helps on small or complex roofs. Run your own figures with the solar savings calculator.
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🏛️ Incentives
Is There Still a Federal Solar Tax Credit in 2026?
No, not for a homeowner who buys a system installed in 2026. Until December 31, 2025, homeowners could claim 30% under §25D; the credit was ended by the One Big Beautiful Bill Act (Public Law 119-21, signed July 4, 2025).
The IRS treats the expenditure as made when installation is completed, so a system signed or paid for in 2025 but finished in 2026 gets no credit (IRS FAQ FS-2025-05). On the $23,100 example, the lost credit would have been worth $6,930, and simple payback moved from about 12 years to about 17.
Who still gets federal value:
2025 installs are claimed on the 2025 return (Form 5695, filed in 2026), and unused credit from earlier years can still carry forward. See how to claim on Form 5695.
Leases and PPAs: the company that owns the system may use the business §48E credit if it began construction by July 4, 2026 (that date has passed) or places the system in service by December 31, 2027. You see it only through the price, with no guaranteed discount.
Businesses and tax-exempt organizations that own systems can still use §48E under the same deadlines (nonprofits through elective pay).
The same law ended the other homeowner credits: home batteries lost the §25D credit along with solar, heat pumps and efficiency upgrades (§25C) end for property placed in service after 2025, and the EV credits (§30D, §25E) ended for vehicles acquired after September 30, 2025. Check the IRS page and a tax professional for your situation.
📈 Payback Period
How Does Your State Change Whether Solar Is Worth It?
Your state’s electricity rate and export-credit rules decide most of the answer. In our state model, simple payback ranges from about 6.8 years in Hawaii to about 22 years in Washington among the states below.
Is solar worth it? Selected states (2026, no federal credit)Inputs: EIA 2025 average residential rate by state, our state dataset for sun hours and bill offset, $3.00/W, 3%/yr rate increases, 0.5%/yr degradation. Typical system sizes come from our state data.
Simple payback by state, 2026. Hawaii pays back in about 6.8 years and Washington in about 22 years, against a 17.1-year US model (years, no federal credit). Source: EIA 2025 state rates, GEC state model.
Chart summary: Hawaii, California and Massachusetts pay back in about 7–9 years, well under the 17-year national model. Florida and Arizona land at 13–14 years, while Texas and Washington run past 21 years because their rates are lower and, in Texas, there is no statewide net metering.
Hawaii is the clearest yes: rates above 40¢/kWh outweigh a reduced export credit, and a 35% state credit (up to $5,000) helps further. California stays under 10 years despite NEM 3.0, though solar-only systems save less than before 2023 and batteries improve returns.
Massachusetts shows that northern states can do well: fewer sun hours than the Southwest, but rates above 30¢/kWh. Florida and Arizona have more sun but lower rates, and Arizona’s net billing reduces the value of exports.
Texas has excellent sun but no statewide net metering, so a solar-only system offsets less of the bill in our model; some retail plans and municipal utilities offer better buyback terms. Washington’s hydropower-driven rate makes payback long even with net metering. See all 50 states in our payback period by state guide, and model your utility’s export rules with the net metering calculator.
💰 System Cost
Which State Incentives Still Reduce Solar Cost?
State credits, production payments, utility rebates and tax exemptions are now the main incentives for homeowner-owned solar. A few states still offer thousands of dollars; many offer little.
Production payments: Massachusetts SMART, New Jersey’s Successor Solar Incentive (SuSI) program, and Illinois Shines REC incentives, which are often passed through as an upfront discount.
Utility rebates: for example Austin Energy in Texas and Xcel Energy’s Solar*Rewards in Colorado and Minnesota, usually capped and first-come, first-served.
Tax exemptions: many states exempt solar from sales tax, property tax, or both, including Florida, Arizona, Massachusetts and New Jersey; Texas offers a property-tax exemption.
The IRA Home Energy Rebates (HEAR and HOMES) were not repealed by the 2025 law. They do not pay for solar panels, but they can help income-qualified households with heat pumps (up to $8,000), electrical panel upgrades and efficiency work where the state program is live and funded, so check your state energy office.
Incentive programs change and run out of funds. Confirm current terms on DSIRE or with your state energy office before building one into your numbers.
🔋 Storage & EV
When Does Battery Storage Add Value in 2026?
A battery adds the most value where exports earn little, on time-of-use rates with a wide evening peak, and where outages are common. EnergySage’s marketplace data put a Tesla Powerwall 3 (13.5 kWh) at about $13,500 installed in 2026 before incentives, and with no federal credit it rarely shortens payback on its own.
Without storage, much of a home’s midday solar output is exported. Under full retail net metering that is fine, because exports offset imports one-for-one. Under net billing or a low export credit, exported power is worth much less than the power you buy back in the evening, and a battery lets you use more of your own generation.
Where batteries make the strongest case:
Low-export states.California (NEM 3.0) and Hawaii, where a solar-only system captures less of the bill’s value. California’s SGIP program offers battery rebates, with larger incentives for income-qualified and high-fire-risk households.
Time-of-use rates. Charging from solar at midday and discharging during the evening peak avoids the most expensive kilowatt-hours. The time-of-use savings calculator tests your rate schedule.
Utility programs. Some utilities pay battery owners to share stored energy during peak events.
Backup needs. In hurricane, wildfire or outage-prone areas, keeping essential loads running has real value that a payback figure does not capture.
Solar is a poor fit when payback runs past about 20 years, when the roof or shading limits production, when usage is very low, or when you expect to move soon. With no federal credit, these situations are more common than they were in 2025.
Long payback. In our state table, Texas and Washington already exceed 21 years, and other low-rate states with net billing or no statewide net metering look similar. 25-year savings there are thin and sensitive to your actual quote.
Roof age. If your roof has less than about 10 years of life left, reroof first; removing and reinstalling panels later adds cost.
Low consumption. A household using under about 400 kWh a month needs a small system, and fixed costs (permits, labor, interconnection) make small systems more expensive per watt.
Heavy shading. Trees, chimneys or neighboring buildings that shade the roof from mid-morning to mid-afternoon can cut output substantially. Microinverters and optimizers limit partial-shade losses but cannot fix major obstructions. NREL’s free PVWatts tool gives a production estimate for your address.
A short horizon. Solar is a long-term purchase. If you might sell within about 10 years, the return depends on what buyers will pay for the system; owned systems often add value, leased ones less so.
Very low rates. Where rates are low and exports earn little, efficiency upgrades such as insulation, air sealing, LED lighting or a heat pump water heater can pay back faster. Use the solar payback calculator to confirm the numbers for your address before committing.
Sources: EIA (2025 residential average price, state averages, Short-Term Energy Outlook); EnergySage marketplace cost data (2026); Lawrence Berkeley National Laboratory, Tracking the Sun; IRS Fact Sheet FS-2025-05 (federal credits); DSIRE (state incentives); NREL PVWatts. Model details: methodology.
Related calculators
Free tools for US homeowners — instant results, all 50 states.
Direct answers for US homeowners — sized for a $150/month electric bill.
About 17 years on a simple basis at national averages. A 7.7 kW system at $3.00/W costs $23,100 and saves about $1,350 in year one on a $150 monthly bill. If electricity rates rise 3% a year and panels lose 0.5% of output a year, cumulative savings pass the cost in about year 14–15. In our state model, payback runs from about 7 years in Hawaii to 22 years in Washington.
Not for homeowner-owned systems. The 30% Residential Clean Energy Credit (§25D) is not allowed for expenditures made after December 31, 2025, under Public Law 119-21, and the IRS treats the expenditure as made when installation is completed. Systems finished in 2025 are claimed on the 2025 return, and unused credit can carry forward. Solar leases and PPAs may still carry business-credit (§48E) value, but you only see it through the price the company offers.
Mainly states with high electricity rates and decent export credits. In our model, Hawaii (6.8 years), California (8.9) and Massachusetts (9.0) pay back fastest, followed by Florida (13.3) and Arizona (14.4). Low-rate or no-statewide-net-metering states such as Texas (21.1) and Washington (22.0) are marginal, so confirm your utility's export rules and get several quotes first.
Owned systems often do. Lawrence Berkeley National Laboratory research has found that buyers pay a premium for homes with owned solar, and the size of that premium varies by market, system size and local electricity rates. Leased systems and PPAs usually add less and require the buyer to take over the contract, which can complicate a sale.
Where net metering credits exports at or near retail, solar alone usually delivers most of the available savings. In low-export markets such as California under NEM 3.0 and Hawaii, and on time-of-use rates, a battery raises self-consumption and can improve returns. EnergySage's marketplace data put a Tesla Powerwall 3 at about $13,500 installed in 2026, with no federal credit.
$150/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.