Is solar still worth it in 2026 without the federal tax credit?

What actually changed for a system installed in 2026

The Residential Clean Energy Credit, the section 25D credit most solar marketing leaned on, paid 30 percent of the cost of qualifying property installed from 2022 through 2025. The IRS page for the credit, last reviewed on July 4, 2026, now states plainly that the credit "is not available for any property placed in service after December 31, 2025." The same page says the credit is claimed for the tax year in which the property is installed, not merely purchased. A contract signed and paid in 2025 for panels that went up in 2026 therefore does not qualify.

On a benchmark-priced 8 kW system the difference is easy to state. At $2.95 per watt the gross price is $23,600. With the old 30 percent credit, the owner's net cost would have been $16,520, because 30 percent of $23,600 is $7,080. In 2026 the owner carries the whole $23,600 unless a state, utility or local program removes part of it. Every payback figure on an older web page that started from the lower number is now too short by the same proportion: dividing by the same annual value, a $23,600 start takes about 43 percent longer than a $16,520 start (23,600 divided by 16,520 is 1.43).

Nothing else in the physics moved. Panels make the same energy they made in 2025, the export rule at your utility is whatever it was last month, and the price per watt is still set by the installer in front of you. That is why the useful 2026 question is no longer "how big is the credit?" but "what is a kilowatt-hour from this roof worth, and is this quote priced low enough for that value to repay it?"

The break-even test in one line

Simple payback is the gross price divided by the value the system delivers in a year. Turn that around and you get the number this page is built on: the value each kilowatt-hour must earn for the system to repay itself in a chosen number of years.

Value needed per kWh = (price per watt × 1,000) ÷ (production factor × target years)

The price per watt times 1,000 is the price of one kilowatt of panels. The production factor is the kilowatt-hours one kilowatt of panels makes in a year on your roof, the figure a PVWatts run or the installer's production model gives you. The target years are your own patience: many owners want their money back well inside the 20 to 30 year lifespan the Department of Energy's Federal Energy Management Program gives for PV systems. The system size cancels out, which is why the tables below hold for an 8 kW system and a 12 kW system alike, as long as the price per watt is the same.

1. Take the quote's gross price and divide by its DC watts to get the price per watt. A $28,500 quote for 7.6 kW is $28,500 ÷ 7,600 = $3.75 per watt.
2. Take the first-year production on the quote and divide by its DC kilowatts to get the production factor. 10,640 kWh from 7.6 kW is 1,400 kWh per kW.
3. Pick a payback target. Twelve years is a common line, but the choice is yours.
4. Compute the break-even value: $3,750 ÷ (1,400 × 12) = 22.3 cents per kWh.
5. Compare that figure with what a kWh is worth at your meter, worked out in the sections below.

Break-even values at the $2.95 per watt benchmark

The first table holds the price at the U.S. Department of Energy's Q1 2025 residential benchmark, $2.95 per watt DC (modeled market price for an 8 kW system, 2024 dollars, checked October 30, 2026), which this site uses as its comparison line. That figure is a national modeled benchmark, not a quote and not a price cap; it is here so that every row shares one stated input. The production factors span 1,100 to 1,700 kWh per kW a year, which covers the planning ranges this site records for its 13 states, from 1,050 to 1,250 in New York and Ohio to 1,550 to 1,750 in Arizona and Nevada.

Read across a row and the trade-off is plain: accepting 15 years instead of 10 lowers the bar by a third. Read down a column and production does the same work: a roof that makes 1,700 kWh per kW clears a 12-year payback at 14.5 cents, while a roof at 1,100 needs 22.3 cents for the same result. That second gap is why a shaded or poorly oriented roof can sink the case in a state where an open south-facing roof wins it easily; the shade guide shows how to price that loss before you sign.

The same test at real quote prices

Quotes rarely land exactly on the benchmark. The second table holds the payback target at 12 years and moves the price instead. The lowest row is the benchmark itself: the Department of Energy's Q1 2025 modeled market price for an 8 kW residential PV-only system, $2.95 per watt DC in 2024 dollars, which is $23,600 for the whole system. The three higher rows are stated illustrations of quotes above the benchmark, the kind a reader holding a padded quote or a premium-equipment quote will recognise.

Each extra 50 cents per watt adds between about 2.5 and 3.8 cents to the value a kilowatt-hour must earn for a 12-year payback, depending on the roof. Put differently, a $4.25 quote on a 1,700 kWh roof asks exactly as much of each kWh as a $3.25 quote on a 1,300 kWh roof, and a $3.75 quote needs about 1,650 kWh per kW to ask as little as the $2.95 benchmark does at 1,300. Price is the input the homeowner controls most directly, which is why the cost per watt guide and three competing quotes matter more in 2026 than they did when a credit absorbed part of any overpayment.

What a kilowatt-hour from your roof is worth

The break-even figure is only half of the test. The other half is the value your system's energy actually earns, and that depends on where each kilowatt-hour goes. Energy the house uses at the moment it is produced replaces energy you would have bought, so it is worth your retail price. Energy sent to the grid is worth whatever your export rule pays, which ranges from the full retail rate under classic net metering to a fraction of it under net billing and buyback plans.

Blended value per kWh = (share used on site × retail price) + (share exported × export credit)

Retail prices vary widely. The U.S. Energy Information Administration's Electric Power Monthly, released September 24, 2026, put the national average residential price for July 2026 at 18.31 cents per kWh. The same table shows how far apart states sit in that month: California 33.61 cents, Massachusetts 30.49, Texas 15.88, Arizona 15.38, Florida 15.03 and Washington 14.71. A single month is not an annual average, and your own tariff, with its fixed charges and time-of-use periods, is what counts. For what drives those prices and where they are heading, EnergyBS covers the rate side in its 2026 electricity rate increase guide and its utility rate plan guide.

The right-hand column is the generous case, because it assumes every kilowatt-hour earns the full retail price. Under net billing the exported share earns less, so the blended value falls below the retail figure and the bar gets harder to clear. The net metering and net billing explainer walks through the export families, and the California Net Billing Tariff guide works the state where the gap between retail and export value is widest.

Three households run through the test

The three cases below use one system, 8 kW DC at the $2.95 benchmark ($23,600), and change only the roof, the retail price and the export assumption. Production factors are taken from inside this site's recorded state planning ranges, and retail prices are the EIA July 2026 figures above. The export credits of 8 cents and 6 cents are stated illustrations, not published tariff values; replace them with the figure on your own utility's tariff. The 50 percent on-site share is also an illustration: a household that is home in the daytime may use more, a household that is out all day may use less.

Household A shows why California still pencils out for many owners despite its lower export values: the retail price is high enough that even a blended value clears a 12-year bar. Household C shows that a modest roof in a high-price state can beat a sunny roof in a low-price state. Household B is the hard case. On a sunny roof with a retail price near 16 cents, the full-retail result already sits at 13 years even at the benchmark price, and the realistic blend pushes it toward 19 years, deep into the panels' 20 to 30 year working life. For household B the answer depends almost entirely on the export rule and the quote price, and an expensive quote hurts more than anything else: at an illustrative $3.25 per watt quote ($26,000), the blended case stretches from 18.9 to 20.8 years and the full-retail case from 13.0 to 14.4.

A second test: what the system's energy costs over its life

Payback asks how fast the money comes back. A second, slower test asks what each kilowatt-hour from the system costs over its working life, so it can be set beside the retail price you pay today. If the system's lifetime cost per kWh sits well under your retail price, the purchase is sound even when the payback is slow; if it sits near or above the retail price, the system is a bet that prices will rise.

The table below divides the $23,600 benchmark price, with and without a running-cost allowance, by 25 years of production. Production falls by 0.5 percent a year, the degradation rate the Federal Energy Management Program gives for PV modules, which makes 25 years of output equal to about 23.56 times the first year's. The running-cost allowance is the Department of Energy's Q1 2025 residential PV-only operations and maintenance benchmark of $34 per kW DC a year, which is $6,800 over 25 years for 8 kW. Nothing is discounted, so this is the plain undiscounted cost, and the figures leave out an inverter replacement, which the inverter replacement guide prices separately.

Every row sits below the July 2026 national residential average of 18.31 cents. That is the quiet case for solar after the credit: over its life a benchmark-priced system usually makes energy for less than the grid sells it. The catch is timing. The money is spent in year one and recovered over decades, so a reader who will move in five years, or who is paying 9 percent interest on the purchase, faces a different question, worked below.

When the answer is no, or not yet

The break-even test fails in recognisable patterns. Each one has a specific next move, and several are cheaper to fix before signing than after.

"Not yet" is a legitimate answer. If the roof is due for replacement, if the quote is high, or if your utility is mid-way through changing its export rule, the cost of waiting a season is small next to the cost of buying a system priced for a subsidy that no longer exists.

What can still lower the price after 25D

The federal credit was the largest single incentive, but it was never the only one. Some states run their own credits, rebates or tax exemptions, some utilities pay rebates or performance payments, and a few markets pay for solar renewable energy certificates. None of these is assumed in any table on this page, because each one depends on the address, the utility and the date, and several have changed or closed in recent years. DSIRE, the database of state incentives for renewables and efficiency, is the place to check what applies to you, and the incentives checklist turns that search into a list of questions for the installer. The state incentives directory on this site lists the programs recorded so far, each with its official source, and the state solar tax credit table shows what each state's income tax credit pays and where it caps out.

To use an incentive in the break-even test, subtract it from the gross price before you divide. A $2,000 state rebate on the $23,600 benchmark system lowers the price to $21,600, or $2.70 per watt, which puts the system below the lowest row of the second table. Be careful with anything paid over time rather than at purchase: a performance payment belongs in the annual value, not in the price, and it only counts for as long as the program actually runs.

Leases and power purchase agreements raise a separate question. Trade press reports that companies which own systems on customers' roofs may still claim a business-side federal credit, subject to deadlines and sourcing restrictions. This page does not treat that as settled law or assume it lowers any lease or PPA payment. If a lease or PPA is on the table, ask the provider in writing how its price compares with buying the same system, and read the lease, buy or PPA guide before comparing the monthly figure with a loan payment. In a handful of markets the extra income is a certificate or a fixed program rate, and the certificate guide prices each one for a stated 8 kW system; households that qualify on income should also read the income-qualified programs guide.

Where simple payback flatters the result, and where it undersells it

Simple payback is a blunt tool, and it is blunt in both directions. Three adjustments matter most, and each one has a rough size you can apply to the tables above.

Degradation stretches payback slightly

Panels lose output slowly, about 0.5 percent a year on the federal figure. Averaged over the first 12 years, that leaves production at about 97.3 percent of year one, so payback stretches by a few percent. Household A's blended case moves from 9.8 to about 10.0 years when each year's value falls by 0.5 percent; household B's full-retail case moves from 13.0 to about 13.4. The adjustment is small for short paybacks and grows as payback lengthens.

Financing can stretch it a lot

The tables assume cash. A loan adds interest, and some solar loans add a fee that raises the amount financed above the cash price. Both belong in the price you test. A 12-year payback on a cash purchase can become a much longer one on a loan with a high rate or a large hidden fee, and a payment that looks smaller than the current electric bill says nothing about the total paid. The payback method page shows how to fold financing into the division.

Rising retail prices shorten it, if they happen

Every table here holds prices flat, which is the conservative choice. If retail prices rise, each self-consumed kilowatt-hour becomes worth more and payback shortens. The EIA table shows the national residential average at 18.31 cents in July 2026 against 17.45 cents in July 2025, about 5 percent higher year on year for that month. One month is not a forecast, and export credits do not necessarily rise with retail prices, so this site does not build price growth into any example. If you want to test it, raise the value per kWh in your own calculation and see how sensitive your result is.

How to run the test on your own quote

Everything above reduces to five numbers, all of which you can get from a quote and a year of bills. If you plan to finance, the cash-versus-loan guide adds the loan's cost on the cash price to the same test. Gather them, run the division, and you will know whether the quote passes before you hear the sales case for it. The payback estimator runs the same arithmetic with your system size, quote price and electricity price, and prints the assumptions beside the result.

1. Gross price and DC size from the quote, giving price per watt. Ignore any net price that subtracts a federal credit.
2. First-year production from the quote, giving the production factor. Check it against a production estimate reading before trusting it.
3. Your retail price per kWh from your bill, including the per-kWh delivery charges that solar actually offsets.
4. Your export rule and export credit from your utility's current solar tariff.
5. An honest guess at the share of production you will use at home in the moment it is made.