Is Solar Worth It in 2026 Without the Federal Tax Credit?

What changed on January 1, 2026

For most of the last two decades, homeowners who bought a solar system could take 30% of its cost off their federal income taxes through the Residential Clean Energy Credit (Section 25D). The 2025 budget law ended that credit early: systems installed after December 31, 2025 no longer qualify. If you finished an installation in 2025, you can still claim it on that year's return; if your system goes in now, there is no federal credit for a system you own.

The effect is simple arithmetic. On a $25,000 system, the credit was worth $7,500. Without it, you pay the full price up front, and a system that once paid for itself in 8 years now takes closer to 11 — roughly 40% longer, because the money you need to earn back is 1.43 times larger.

Two things soften the blow. Installed prices kept falling: Berkeley Lab found the median price of homeowner-owned residential systems dropped about $0.50 per watt in 2025 alone, to $3.60 per watt, and $3.00 for cash purchases. And electricity prices kept rising, which makes every kWh your panels make worth more.

Where solar still pays off

Across the 4,807 US places we estimate, the median payback for a typical system with no federal credit is 13.5 years. That hides an enormous spread. The fastest states are Massachusetts (8.1 years), Rhode Island (8.5 years), Connecticut (8.5 years), Maine (8.6 years), New York (9.2 years). The slowest are North Dakota (25+ years), South Dakota (25+ years), Alabama (25+ years), Louisiana (25+ years), Tennessee (25+ years).

The ranking is not mainly about sunshine. Arizona gets far more sun than Massachusetts, yet Massachusetts pays back faster. Three things drive most of the difference:

• What you pay for electricity. A kWh you don't buy is worth whatever your utility charges. At 30¢ per kWh, panels earn twice what they earn at 15¢.
• How your utility credits power you export. Under net metering, power you send to the grid earns the full retail price. In 18 states, utilities now pay a fraction of that. See net metering vs net billing.
• What installers charge. State medians run from about $3.00 to $4.10 per watt, and individual quotes vary much more.

Solar is probably worth it if…

• Your electricity costs well above the national average, roughly 20¢ per kWh or more.
• Your state still offers net metering, or you can use most of your solar as it's produced.
• You expect to stay in the home at least as long as the payback period.
• Your roof faces south, east or west, has little shade, and won't need replacing for 10+ years.
• You can pay cash or borrow at a low rate. Loan-financed systems cost a median $4.50 per watt, versus $3.00 for cash, partly because lenders' fees are built into the price.

Think twice if…

• Your power is cheap and exports earn little, as in much of the Southeast and Plains.
• You might move within five or six years. Solar adds some resale value, but rarely all of what you paid.
• Your roof is near the end of its life. Removing and reinstalling panels later costs thousands.
• A salesperson's savings estimate still includes a "30% tax credit" for a system you'd own. That credit no longer exists for 2026 installations.

What about leasing?

Companies that own systems on your roof under a lease or power purchase agreement can still claim a separate business tax credit for systems placed in service through 2027, and some pass part of it on in lower payments. That makes leases and PPAs relatively more competitive in 2026 and 2027 than they used to be. Our lease vs buy guide covers the trade-offs.

Check your own numbers

Every city page on this site runs the same math with local sunshine, your state's electricity price and export rules, and current installed costs. Look up your city from the home page, then put your own bill and an installer's price per watt into the calculator. To see how much power your home really uses through the day, a home energy monitor on your electrical panel shows it hour by hour.

Then get at least three quotes. The single biggest variable you control is the price per watt you pay, and quotes for the same house routinely differ by thousands of dollars. Our guide to reading a solar quote shows what to compare.