Is Solar Worth It in 2026? Real Numbers From Real Homeowners

What Actually Changed in 2026

The Residential Clean Energy Credit (Section 25D of the tax code) allowed homeowners who purchased solar systems to deduct 30% of the installed cost from their federal income taxes. On a $28,000 system, that was an $8,400 reduction in taxes owed — not a deduction, a direct credit. It made solar dramatically more affordable and compressed payback periods by roughly 3 years.

As of January 1, 2026, that credit is gone for homeowner-purchased systems. Here's what the change means in real numbers:

• Before (with 30% ITC): $28,000 system → $19,600 net cost after credit → ~8 year payback (national average)
• After (no ITC): $28,000 system → $28,000 full cost → ~13–14 year payback (national average)

According to EnergySage's analysis, the loss of the ITC extends the average American's solar payback period by approximately 43%. That's significant — but it doesn't make solar uniformly bad. In states where electricity costs 30+ cents per kWh, the math remains compelling. In states where electricity is cheap, it was already borderline and is now clearly not worth it.

One Exception: Third-Party Owned Systems

There's an important nuance in the OBBB legislation: third-party owned (TPO) solar systems — leases and power purchase agreements (PPAs) where the solar company owns the panels installed on your roof — still qualify for federal tax credits under commercial solar provisions if construction begins before July 2026. This has made leases and PPAs suddenly more attractive in early 2026, because solar companies can pass those savings to customers through lower lease rates.

We'll cover the lease vs. buy decision in detail below, but the short version is: for 2026 specifically, get quotes on both. The gap between buying and leasing has narrowed.

The Payback Math Without the ITC

Let's work through a concrete example so the math is transparent. We'll use a 8 kW system — approximately right for a home using 900–1,000 kWh/month.

System Cost in 2026

Per EnergySage marketplace data, the average 12 kW installation was priced at $30,505 before incentives in 2025. Scaling down to 8 kW (a more typical residential size), you're looking at approximately $19,000–$23,000 installed before any state incentives. Per EnergySage's cost data, the national average installed cost runs approximately $2.50–$3.20 per watt DC in 2026 — slightly lower than 2024 as panel costs continued declining.

Annual Production and Savings

An 8 kW system in an average US location (4.0–4.5 peak sun hours per day) produces approximately 10,500–12,000 kWh per year. What that's worth depends entirely on your electricity rate:

Annual savings based on 11,000 kWh/year production from an 8 kW system, offset at retail rate with net metering. Payback does not include state incentives, which vary. Sources: EnergySage 2025–2026 cost data; EIA state electricity price data.

The pattern is stark. In Hawaii and California, solar without the federal ITC is still excellent. In New York and Massachusetts, it's still good. In Texas and the Southeast, it becomes a longer-term bet that requires confidence you'll stay in the home and that electricity rates will keep rising. In Louisiana, Idaho, and Utah, the math is very difficult to justify with a purchased system.

Use the solar payback calculator to run your specific numbers — your actual bill, your state's current rate, and available state incentives change the picture significantly.

Is Solar Worth It in Your State?

The most useful framework for deciding whether solar makes sense is your electricity rate. Here's a simplified guide:

Who Should (and Shouldn't) Go Solar in 2026

Beyond state electricity rates, several personal factors determine whether solar makes sense for your specific situation.

Solar is a strong fit if you:

• Pay electricity bills consistently above $150/month
• Live in a state with rates above 14¢/kWh
• Plan to stay in your home for at least 8–10 years
• Have a south-, west-, or east-facing roof with minimal shading
• Have adequate tax liability to use state tax credits (if your state offers them)
• Are considering an EV — solar + EV creates the most compelling economic case

Solar is a poor fit if you:

• Live in a state with electricity rates below 10¢/kWh and no strong state incentives
• Plan to move within 5 years (solar adds home value, but you won't recoup full payback)
• Have a roof older than 10 years that needs replacement (replace first, then solar)
• Have significant shading from trees or neighboring structures — heavy shading can cut production by 30–50%
• Already participate in community solar — buying in may cost more than your subscription savings
• Have an unusually low electricity bill (below $60/month) because you already use very little energy

State-Level Incentives Still Available in 2026

The federal ITC is gone, but many states have robust incentive programs that can meaningfully reduce your system cost. Some of the strongest:

Sources: DSIRE (Database of State Incentives for Renewables & Efficiency); individual state program websites. Programs change — verify current availability.

Use the DSIRE database (dsireusa.org) or the incentive finder tool to see what's available in your specific state and utility service territory. Net metering policies — which determine how much you get paid for excess power — are arguably as important as tax credits for long-term economics.

Lease vs. Buy in 2026 — A Different Calculation

In past years, buying solar was almost always better than leasing in the long run — largely because buyers captured the 30% ITC themselves. That calculus has partially shifted in 2026 for a specific reason: third-party solar companies can still access commercial tax credits through mid-2026 under the OBBB transition rules, and can price leases lower as a result.

What a 2026 Solar Lease Looks Like

A typical solar lease or PPA in 2026 offers:

• $0 down (no upfront cost)
• Monthly lease payment or fixed per-kWh PPA rate
• Escalator clause: rates typically increase 1–3% per year
• The solar company handles maintenance and monitoring
• You don't own the system — complicates home sales

The Long-Term Comparison

Over 25 years, a purchased system typically saves 2–3x more than a leased system — even without the ITC. That's because lease payments continue indefinitely, whereas a purchased system delivers free electricity after payback. The break-even against a lease is typically 10–15 years for a purchased system.

Our recommendation: if you can afford to buy (cash or loan), buy. If you cannot afford upfront costs and wouldn't qualify for state credits, a 2026 PPA from a reputable company can still reduce your electricity bill — just understand you're renting, not investing. Make sure the PPA rate starts below your current retail rate and that escalators don't exceed projected rate increases from your utility.

Real 25-Year Savings by Region

Payback period matters, but the bigger picture is lifetime savings. Here's what homeowners in different regions can realistically expect from an 8 kW purchased system in 2026 — without the federal ITC but including 2–3% annual electricity rate escalation:

25-year savings include 2.5% annual electricity rate escalation and 0.5%/year panel degradation (per NREL median). Does not include state incentives or battery storage. Sources: EnergySage 2025–2026 marketplace data; EIA electricity prices; NREL degradation research.

Even in Louisiana — the weakest-performing state in this table — a purchased solar system produces a positive 89% return over 25 years. The issue isn't that solar loses money; it's that in low-rate states, the payback period is so long that most homeowners won't stay in the home long enough to see the bulk of returns.

The Electricity Rate Wildcard

Every solar analysis depends on an assumption about future electricity prices — and getting this wrong changes the payback calculation significantly.

Here's the historical context: per EIA data, US residential electricity rates have risen approximately 32% over the past 10 years. From 2020 to 2025 specifically, rates rose faster than inflation, driven by grid infrastructure investment, fuel cost volatility, and growing demand from data centers and EV charging.

EIA's Annual Energy Outlook projects continued rate increases of 1–3% per year through 2035 in most regions. Some states — particularly California and New England — have historically exceeded those projections due to aggressive decarbonization mandates and distribution grid investment.

What this means practically: your solar system is essentially a hedge against electricity rate increases. If you locked in a 2026 solar purchase at today's system cost, and electricity rates rise 25% over the next decade (a reasonable estimate in high-rate states), your year 15 savings will be 25% higher than your year 1 savings from the same panels — and the system has zero additional cost to you.

The inverse is also true: if electricity rates stagnate or fall (possible in some markets due to cheap natural gas or increased competition), solar ROI will be lower than projections. No analysis can eliminate this uncertainty — but the weight of evidence suggests rates in most US markets will be higher in 2036 than they are today.

Solar and Home Resale Value in 2026

An often-overlooked component of solar ROI is the value it adds to your home. Multiple studies confirm that solar panels increase property value:

• A 2025 SolarReviews study found homes with solar sold for approximately 6.9% more than comparable non-solar homes — roughly $29,000 on a median-priced home
• A 2019 Zillow analysis found a 4.1% premium for solar-equipped homes nationally
• Lawrence Berkeley National Laboratory research consistently confirms that solar adds statistically significant value in most US markets

The premium is highest in markets where electricity rates are highest — California, Massachusetts, and the Northeast generally — which is the same pattern as solar financial returns. In low-rate markets, the value premium is smaller because buyers discount solar's financial benefit.

One important caveat: homes with leased solar systems are harder to sell, because the buyer must either take over the lease or the seller must buy out the lease before closing. This is one of the strongest arguments for purchasing rather than leasing if you have any likelihood of selling within 15 years.

The Honest Verdict

Here's my assessment after working through the numbers:

Solar is absolutely still worth it in 2026 — if you're in a high-rate state, plan to stay in your home for 8+ years, and have a suitable roof. The loss of the federal ITC makes it a longer-term bet and narrows the geography of good markets, but it doesn't fundamentally change the value proposition in states like California, Massachusetts, New York, Connecticut, Hawaii, and New Jersey.

Solar is borderline in mid-rate states (Texas, Virginia, Colorado, Nevada) — worth running the numbers carefully with your specific utility rate, available state incentives, and honest assessment of how long you'll own the home.

Solar is not worth it for most homeowners in low-rate states (Louisiana, Idaho, Utah, Wyoming, North Dakota) with a purchased system and no meaningful state incentives. A community solar subscription may be a better fit there.

The people for whom solar is most compelling in 2026: homeowners who already own an EV or are planning to buy one. Pairing solar with an EV eliminates two of the three biggest household cost centers (home energy and transportation fuel) simultaneously, and the economics reinforce each other — the EV needs cheap electricity, and the solar provides it.

Frequently Asked Questions