Is Solar Worth It in 2026? An Honest Answer Without the Tax Credit
Solar is still worth it for many U.S. homeowners in 2026, but fewer than before, and the margin is thinner. The 30% federal credit for homeowner-owned systems ended for installations completed after December 31, 2025, so the system now has to pay for itself from bill savings alone. Whether it does comes down to seven things: your electricity rate, your sun, how your utility pays for exports, the price per watt, how long you stay, your roof, and how you pay. This guide shows how each one moves the answer, who should not go solar, and three worked examples.
What changed in 2026
Until the end of 2025, a homeowner who bought a system could claim a 30% federal tax credit under Section 25D. The One Big Beautiful Bill Act ended that credit for “expenditures made after December 31, 2025,” and the law treats an expenditure as made when installation is completed. Paying or signing in 2025 was not enough. The details are in our federal solar tax credit guide.
What that means in practice:
- Cash and loan buyers get $0 from the federal government for a 2026 install.
- Lease and PPA companies can still claim a 30% credit under a different section (48E), with deadlines. That is why so many salespeople now push leases.
- Prices did not drop by 30% to make up for it. EnergySage’s marketplace median was $2.57 per watt in the first half of 2026, about 3% higher than late 2025.
So the same system that cost $16,800 after the credit in 2025 now costs the full $24,000. That pushes payback out by several years for most homes.
The seven things that decide whether solar pays
1. Your electricity rate
Solar saves you whatever you would have paid the utility for each kWh it replaces. The U.S. residential average was 18.31 cents per kWh in July 2026, according to the EIA, but rates vary a lot by state and utility. At 30 cents a kWh, every panel earns about twice as much as at 15 cents.
Look at your own bill and divide the total by the kWh used. That “all-in” rate is a fair starting point, though fixed monthly charges do not go away with solar. See our electricity rate history tool for your area.
Future rates matter less than salespeople claim. National residential prices rose about 3.1% a year from 2005 to 2025, roughly 0.5% a year after inflation. Quotes that assume 5% or more a year make solar look better than history supports. More on that in our payback guide.
2. Your sun
One kW of panels produces very roughly 1,100 kWh a year in the cloudy Northwest and 1,600 kWh or more in the Southwest. Orientation and shade matter as much as region. Check any quote’s production estimate against the free PVWatts model with our production checker.
3. How your utility pays for exports
This is the factor most people miss. Solar panels make the most power at midday, often when you are not using much. What your utility pays for that surplus can make or break the deal.
| Export rule | What you get for surplus power | Example states (as of October 2026) |
|---|---|---|
| Full retail net metering | About the same as you pay | New York, Massachusetts (close to retail), Colorado, New Jersey |
| Net billing or reduced export | A fraction of retail | California (about 4 to 5 cents under the Net Billing Tariff), Arizona, Illinois, North Carolina (Duke) |
| Avoided cost or no policy | A few cents | Alabama Power, parts of the South and Plains |
Under full retail net metering, every kWh is worth the same. Under net billing, a kWh you use yourself might be worth 30 cents while a kWh you export earns 4 cents. That changes how big a system makes sense and whether a battery helps. Our net metering guide and the net metering by state page cover your rules.
4. Price per watt
Divide the total price, before any incentives, by the system size in watts. As of October 2026:
- About $2.60 per watt is a typical competitive marketplace quote (EnergySage).
- About $3.00 per watt is the median that cash buyers actually paid in 2025 (LBNL).
- About $4.50 per watt is the median for loan-financed systems, mostly because of hidden dealer fees.
A $3.00 and a $4.50 quote on the same home can be the difference between a 10-year and a 20-year payback. See what is a good price per watt and our solar panel cost guide.
5. How long you will stay
Most owned systems take 7 to 15 years to pay back. If you move before then, you are counting on a buyer paying extra for the panels. Older studies found premiums for owned systems (Zillow, 2019; LBNL, 2015), but they are dated and prices have fallen since. Leased systems can make a sale harder. Read selling a house with solar before you assume you will get your money back at closing.
6. Your roof
Panels last 25 years or more. If your roof has less than about 10 to 15 years left, you may pay to remove and reinstall the panels later, often a few thousand dollars on top of the new roof. Heavy shade, a small or broken-up roof, or a north-facing roof can also sink the numbers. See should you replace your roof before solar and our roof replacement timing tool.
7. How you pay
Paying cash or using a low-rate home equity line usually gives the best return. “Low APR” solar loans often hide a dealer fee of 10% to 30% of the cash price, sometimes more, according to the CFPB. Leases and PPAs avoid the upfront cost but often include price escalators. Our financing options guide compares the true cost of each.
Typical outcomes in 2026
These are our modeled ranges for an owned system paid in cash, assuming 3% yearly rate increases, 0.5% yearly panel degradation and one inverter replacement. They are not guarantees.
| Situation | Simple payback | What it usually looks like |
|---|---|---|
| Strong | About 7 to 10 years | High rates (25 cents or more), retail net metering, good sun, price near $3.00/W or less |
| Typical | About 10 to 15 years | Average rates, partial export credit, fair price |
| Weak | 20 years or never | Low rates, avoided-cost exports, shade, or dealer-fee loan pricing |
For comparison, the same systems with the 2025 credit paid back faster. Paying 100% of the price instead of 70% makes simple payback about 43% longer, so an 8-year payback became roughly 11 years.
Who should not go solar right now
Solar is a poor fit, or at least not a first step, if any of these apply:
- You plan to move within about 5 to 7 years. You likely will not recover the cost through savings.
- Your roof needs replacing soon and you are not ready to do that first.
- Your roof is heavily shaded or too small for a useful system.
- Your rates are low and exports earn only a few cents. Payback can stretch past the life of the inverter, or never arrive.
- The only way you can afford it is a dealer-fee loan with a payment that is higher than your current bill.
- You have not cut obvious waste yet. Cheaper steps like LEDs, a smart thermostat or air sealing often pay back faster. See efficiency before solar.
- You are being rushed. “Today only” pricing and claims that the 30% credit still applies to a 2026 purchase are red flags. See solar scams.
If you rent or cannot put panels on your roof, community solar may give you a 5% to 15% bill discount with no installation, where your state allows it.
Three worked examples
All three use our standard assumptions: rates rise 3% a year, panels lose 0.5% of output a year, a $2,500 inverter replacement in year 12, and a 6% discount rate for the “present value” column. Your numbers will differ. Plug your own into the calculator.
Household A: a good fit
- Uses 9,600 kWh a year and pays 28 cents per kWh.
- Full retail net metering, so every kWh is worth 28 cents.
- South-facing roof, about 1,300 kWh per kW per year.
- 7 kW system at $3.00 per watt, paid in cash: $21,000.
- Produces about 9,100 kWh in year 1, saving about $2,548.
| Measure | Result |
|---|---|
| Simple payback (price ÷ year-1 savings) | 8.2 years |
| Payback with rising rates, degradation, inverter | About 7.6 years |
| Discounted payback (6%) | About 10 years |
| 25-year net savings (not discounted) | About $63,000 |
| 25-year net present value (6%) | About $19,000 |
This is solar working as advertised. Even without the credit, it beats most safe investments if the family stays 10 years or more.
Household B: a marginal fit
- Uses about 11,000 kWh a year and pays 18 cents, close to the national average.
- Net billing: about 60% of solar output is used at home (worth 18 cents), and 40% is exported at 8 cents.
- 8 kW system producing 11,200 kWh a year at $3.00 per watt: $24,000.
- Year-1 savings: 6,720 kWh × $0.18 + 4,480 kWh × $0.08 = about $1,568.
| Measure | Result |
|---|---|
| Simple payback | 15.3 years |
| Payback with rising rates, degradation, inverter | About 14.3 years |
| Discounted payback (6%) | About 25 years |
| 25-year net savings (not discounted) | About $27,000 |
| 25-year net present value (6%) | About $0 |
On paper this household comes out ahead over 25 years, but once you count what the $24,000 could have earned elsewhere, it roughly breaks even. That is “worth it” only if they are sure they will stay, value the hedge against higher rates, and get a firm price. A smaller system sized to daytime use, or a better price, could tip it into a clear yes. Compare sizes with compare options.
Household C: a poor fit
- Pays 13 cents per kWh. Exports earn about 3 cents (avoided cost).
- Partly shaded roof: about 1,100 kWh per kW per year.
- 7 kW system, sold through a “2.99% APR” loan with the price at $4.50 per watt: $31,500.
- Uses about half the output at home. Year-1 savings: 3,850 × $0.13 + 3,850 × $0.03 = about $616.
- Plans to move in about 5 years.
| Measure | Result |
|---|---|
| Simple payback | 51 years |
| 25-year net savings (not discounted) | About −$13,000 |
| Same system at a $3.00/W cash price | Still a 34-year simple payback |
Even at a fair cash price, this home does not recover its cost within the system’s life. The sale would rest on promises of a “$0 bill” or big rate increases. This household would save more by cutting usage, switching rate plans, or looking at community solar.
Bottom line: Solar pays when each kWh it makes is worth a lot (high rate, fair export credit) and each watt costs little (cash or low-rate financing near $3.00 per watt or less). If either side is weak, the numbers fall apart fast.
What about leases and PPAs?
Because lease and PPA companies can still claim the 30% credit, some offers in 2026 are priced well. EnergySage found prepaid leases about 39% cheaper per kWh than cash purchases, and prepaid PPAs about 57% cheaper, in the first half of 2026. But PPAs without prepayment were about 33% more expensive per kWh than buying with cash.
The main risks are yearly escalators (often 2.9% a year, which nearly doubles the payment over 25 years), complications when you sell, and depending on a company that may not survive 25 years. Read lease vs buy vs PPA vs loan and is a solar lease a bad idea, then run both options in our lease vs buy tool.
Batteries
A battery adds roughly $12,000 to $16,500 for a typical 13.5 kWh unit (about $1,130 per kWh, EnergySage H1 2026) and no longer gets a federal credit when you own it. Batteries rarely pay back on bill savings alone, except under net billing with time-of-use rates or with a paid program like ConnectedSolutions in parts of New England. See do solar batteries pay off and our battery calculator.
What to do next
- Pull 12 months of usage (kWh per month) from your utility account. Estimates based on one bill are unreliable.
- Run the calculator with your rate, location and utility. It uses current 2026 costs and no federal credit for owned systems.
- Check your export rules on your state page or the net metering page.
- Cut waste first if your usage is high. See efficiency before solar and our cheaper first steps.
- Size the system to your usage and export rules with the system size calculator and how many solar panels do I need.
- Get at least three quotes with total price, kW, $/W and equipment model numbers. Compare them in compare quotes and read how to compare solar quotes.
- Check every sales claim with the sales claim checker and know your cancellation rights before you sign.
Common questions
Is solar still worth it without the 30% federal tax credit?
For many homes, yes, but by a smaller margin. Losing the credit means you now pay 100% of the price instead of 70%, which raises the effective cost by about 43% and stretches payback by several years. Homes with high rates and fair export credits can still come out well ahead over 25 years.
What is a good payback period for solar in 2026?
Under about 10 years is strong, 10 to 15 years is acceptable if you plan to stay, and anything over about 15 years is hard to justify because inverters, roofs and policies can change in that time.
Is it better to lease solar now that the tax credit is gone for buyers?
Sometimes. Lease and PPA companies can still claim a 30% federal credit, and some pass part of it on in lower prices, especially with prepaid leases. But a lease with a yearly escalator can cost more than staying with the utility, so compare the total payments, not the first-year savings.
How do I know if my roof is good for solar?
A good roof faces roughly south, east or west, gets little shade from 9 a.m. to 3 p.m., and has at least 10 to 15 years of life left. If it needs replacing soon, do that first or budget for removing and reinstalling the panels later.
Do solar panels pay off if I move in a few years?
Usually not in cash terms. Home value studies suggest an owned system can add some value at sale, but those studies are dated and the premium is uncertain. If you expect to move within about 5 to 7 years, solar is a weak bet unless the numbers are unusually good.
Spotted an error or outdated number? Email hello@unbiasedsolar.com and we'll fix it. No installer or lender paid for or reviewed this guide.