Are Solar Panels Worth It? A 2026 Reality Check Without the Tax Credit

Are solar panels worth it? For many US homeowners in 2026 the answer is still yes, but only when four things line up: a fair price near $3 to $3.60 per watt, a sunny and sound roof, an export credit close to your retail rate, and a plan to stay in the home for at least 10 years. Without the federal tax credit, the margin for error is thinner.

This guide shows the math rather than a slogan. We use Berkeley Lab's latest installed-price data, federal electricity price statistics and solar production estimates, then show how payback changes when the export credit, price or location changes. You can plug in your own numbers along the way.

Are solar panels worth it without the federal tax credit?

Often yes, but payback takes longer. As of October 2026, the 30% Residential Clean Energy Credit (25D) no longer applies to systems you own that were installed in 2026. In our national-average example, payback rises from about 8 years with the old credit to about 11 years without it, assuming full net metering.

The credit ended for expenditures made after December 31, 2025, under Public Law 119-21. The IRS explains in its FAQ on the 2025 law changes (opens in a new tab) (FS-2025-05, August 21, 2025) that the expenditure counts as made when installation is completed, so paying in 2025 for a system finished in 2026 doesn't qualify. Our federal solar tax credit guide covers who can still claim it and what changed for leases.

Here is the effect on one example. An 8.8 kW system at $3.00 per watt costs $26,400. With first-year savings of about $2,160, it pays back in about 11.2 years. The same system with the old 30% credit would have cost $18,480 net and paid back in about 8.2 years. After 25 years, the example comes out about $44,740 ahead without the credit and would have been about $52,660 ahead with it. That three-year gap is why the rest of this guide focuses on the other levers you still control.

How long does it take solar panels to pay for themselves?

Most owned systems in our examples pay back in about 10 to 20 years. Sunny homes with full net metering and a cash price near $3.00 per watt land near 10 to 12 years. Weak export credits, loan dealer fees or high quotes push payback toward 18 to 24 years, which may be longer than you plan to stay.

Payback is the year your cumulative bill savings, minus upkeep, equal the price you paid. Our solar payback calculator does this year by year. It raises your savings each year for utility price increases and lowers them slightly for panel aging.

Our national-average example

We built a baseline home with these assumptions:

1. Electricity rate: 18.19¢ per kWh, the US residential average for January through July 2026 from the EIA's Electric Power Monthly (opens in a new tab) (released September 24, 2026).
2. Usage: a $180 monthly bill, or about 11,875 kWh a year at that rate (we ignore fixed charges for simplicity).
3. Production: 1,350 kWh per kW per year, a middle-of-the-road US figure. That sizes the system at 22 panels of 400 watts, or 8.8 kW.
4. Self-use: 40% of solar output used in the home as it is made, the rest exported.
5. Price: $3.00 per watt (the 2025 cash median) or $3.60 per watt (the median across all homeowner-owned systems), from Berkeley Lab's 2026 data update (opens in a new tab).
6. Long-term: 3% yearly electricity price growth, 0.5% yearly panel output loss and $100 a year for upkeep.

The table makes the main point clear. The export credit moves payback more than almost anything else. A 25% export credit nearly doubles payback compared with full net metering, even with the same panels on the same roof.

What makes solar worth it for one home and not another?

Four factors decide the answer: your electricity rate, your sunshine, your utility's export rules and the price you pay. A high rate and full export credit can make an average quote look great. A low rate, a weak export credit and an inflated quote can turn a sunny roof into a 20-year wait.

Your electricity rate

Each kWh your panels make is worth what you would otherwise pay for it. EIA data for January through July 2026 show residential averages of 33.25¢ in California, 16.06¢ in Texas, 15.44¢ in Arizona, 15.30¢ in Florida and 14.94¢ in North Carolina. Rates also rose: the US average went from 17.01¢ to 18.19¢ year over year, about 7%.

Your sunshine

Location changes production a lot. NREL's PVWatts (opens in a new tab) model (now run by the National Laboratory of the Rockies) estimates about 1,755 kWh per kW per year in Phoenix, 1,677 in Los Angeles, 1,568 in Tampa and 1,421 in Houston for a standard south-facing array. Shade from trees or neighboring buildings can cut that sharply. Check your own estimate in our solar panel output calculator, and if your roof faces east or west or has a steep pitch, the solar panel angle calculator shows how far you are from the ideal tilt.

Your utility's export rules

Some utilities still credit exports at the full retail rate (classic net metering). Others pay a lower export rate or settle every 15 minutes or every hour. Our net metering explainer shows how each method works. In California, exports under the Net Billing Tariff are worth far less than retail, so our California NEM 3.0 guide treats that state separately.

The price you pay

Berkeley Lab found a median of $3.0 per watt for known cash purchases in 2025 and $4.5 per watt for loan-financed systems, partly because loan fees get rolled into the price. Among the 100 largest residential installers, almost 25% had medians under $3 per watt. Our guide to how much solar panels cost breaks prices down by system size.

How does solar payback compare across sunny states?

With the same $180 bill, 40% self-use and full net metering, our model gives paybacks of about 10 to 12.5 years in Arizona, Florida, Texas and North Carolina at $3.00 per watt. With a half-value export credit, the range moves to about 14 to 17 years. Your real export rule matters more than which of these states you live in.

Each state row uses that state's EIA residential average (January to July 2026) and the PVWatts yield for one city. Because the bill is the same but rates differ, homes in lower-rate states use more kWh and need bigger systems. The export credit columns are scenarios, not each state's actual tariff, which varies by utility.

Texas is a special case because there is no statewide net metering. Many households in competitive areas depend on a retail plan's buyback rate, as our Texas solar guide explains. California is the opposite extreme: rates are about twice the national average, but export credits are low, so self-use and batteries do most of the work.

When are solar panels not worth it?

Solar is usually a poor fit if your roof is heavily shaded, needs replacing within a few years, or faces mostly north. It also struggles when your rate is low, your utility pays little for exports and you use little power during the day, or when the quote is far above about $3.60 per watt.

Watch for these warning signs before you sign:

• A payback longer than your plans. If you expect to move in 5 to 7 years and payback is 15, you are betting on a home buyer valuing the system.
• A roof near the end of its life. Removing and reinstalling panels for a new roof adds cost later. The Department of Energy's homeowner's guide (opens in a new tab) advises considering your roof's age before installing.
• A quote that still subtracts 30%. For a system you own that is installed in 2026, that credit is gone. Ask for a corrected quote in writing.
• A loan with a large dealer fee. The cash price and the financed price should both appear on paper. Our guide to solar lease vs PPA vs loan explains how to compare them.
• Pressure to sign today. The Federal Trade Commission's guide to solar for your home (opens in a new tab) recommends getting multiple quotes and reading the contract before you commit.

Does buying, financing or leasing change whether solar is worth it?

Yes. Paying cash usually gives the shortest payback because there is no interest or dealer fee. A loan can still be worth it if the monthly payment is below your savings. A lease or PPA needs no money up front, but the company keeps the system and most of the long-term value.

On our national-average system, a 20-year loan at 7.99% APR for the full $26,400 costs about $221 a month. First-year savings with full net metering are about $180 a month, so the payment is higher than the savings at first. Savings grow as rates rise, but you would pay about $52,957 in total over 20 years. Compare that with paying $26,400 in cash.

A lease or PPA works differently. As of October 2026, the company that owns the system may still claim a federal business credit under section 48E, subject to deadlines and sourcing rules, and some of that value can show up in your monthly price. You don't claim it yourself. Read the escalator: a 2.9% yearly increase compounds over 20 to 25 years. Run all four options side by side in the solar lease vs buy calculator.

How long will the savings last?

Most panels keep producing for 25 years or more, losing a little output each year. A DOE-funded study of the US solar fleet found a median performance loss of about 0.75% per year. That means a system that pays back in 11 years has well over a decade of mostly profit after that.

That's why the 25-year net gain in our first table matters as much as payback. At full net metering and $3.00 per watt, the example home comes out about $44,740 ahead after 25 years. The DOE summary of that fleet research (opens in a new tab) also notes that panels lose output more slowly in cooler climates.

Plan for some costs along the way. Inverters usually wear out before panels and may need replacing once during the system's life. Our guide to how long solar panels last covers degradation, warranties and those mid-life costs in detail.

How do you check whether solar is worth it for your home?

Start with 12 months of electric bills, your utility's current export rules and at least three quotes. Then calculate payback and 25-year savings with your own numbers, not the installer's assumptions. If payback is clearly shorter than the time you plan to stay, solar is likely worth it.

Follow these steps:

1. Find your yearly kWh and average rate from your bills, including any fixed monthly charge.
2. Look up your utility's export credit. Ask whether it is full retail, a lower export rate, or time-varying.
3. Estimate production for your roof with PVWatts or our output calculator.
4. Estimate first-year savings in our solar savings calculator, setting the self-use share and export credit to match your utility.
5. Get at least three quotes and compare them on price per watt and warranty terms.
6. Run payback with the cash price and, separately, with any loan, using a cautious 3% escalation.
7. Check state and utility incentives, which still exist in some places; see solar incentives by state.

If you plan to buy an electric car, add that load before you size the system. Charging at home raises your usage, and with it the value of extra panels. The EV solar calculator estimates how many extra panels a typical commute needs.