Short answer: it depends mostly on your electricity rate. The 30% federal credit for homeowner-owned systems ended for systems installed after December 31, 2025 (IRS). Cash payback is now roughly 7-10 years in high-rate states and 10-14 years in average-rate states, according to Solar.com. With panels lasting 25 years or more, that can still be a good deal, but it’s no longer an easy yes.
What changed
- Homeowner purchases (cash or loan): no federal credit for expenditures made after Dec 31, 2025. The IRS counts the expenditure as made when installation is completed, not when you paid.
- Leases and power purchase agreements (PPAs): the solar company owns the system and can still claim a commercial tax credit, which it may pass on as a lower monthly price, according to EnergySage. That’s why leases are being marketed harder in 2026.
- State and utility incentives still exist in some places and now matter more.
How much the credit was worth
| 7 kW system at $3.36/W | With 30% credit (2025) | Without credit (2026) |
|---|---|---|
| Net cost | about $16,460 | about $23,520 |
| Payback at $1,640/yr savings (18¢/kWh) | about 10 years | about 14 years |
| Payback at $2,910/yr savings (32¢/kWh) | about 6 years | about 8 years |
Assumes about 9,100 kWh a year of output and simple payback without financing. Rising electricity rates shorten payback; the EIA forecasts the U.S. average residential price to climb from 17.3¢ in 2025 to 18.7¢ in 2027 (EIA).
The 5-question test
- Is your all-in electricity price above about 20¢ per kWh? The higher it is, the better solar looks. Find it with our bill-reading guide.
- Does your utility credit exports fairly? Full net metering helps a lot; low export credits favor smaller systems or adding a battery.
- Is your roof sunny and in good shape? South-facing, little shade, and less than about 10 years old if asphalt shingles.
- Will you stay 10+ years? Owned systems may raise resale value, but payback is easiest to capture if you stay.
- Can you get at least three quotes near the national average price? At $3.36/W, a quote at $4+/W wipes out years of savings.
Four or five “yes” answers: solar likely pays off. Two or fewer: look at community solar or efficiency upgrades first.
Lease, loan or cash now?
Cash usually gives the most lifetime savings. A loan works if its interest rate doesn’t eat the savings. A lease or PPA can now be competitive because the company keeps the tax credit, but watch for annual price escalators above about 2-3% and transfer terms if you sell the house. See buy, loan or lease.
FAQ
Will the credit come back? Nobody can promise that. Decide based on today’s numbers.
Does a battery help payback? Usually not on its own, except where export credits are low or time-of-use gaps are large. See are home batteries worth it.
General information, not financial or tax advice.