Short answer: yes in many places, but not everywhere. The 30 % federal tax credit that homeowners used to claim for solar panels ended for systems installed after December 31, 2025. Solar now has to justify itself on its own numbers. For homeowners in states with high electricity rates and fair net metering, it still does. For homeowners in low-rate states with weak export compensation, it often doesn’t.
This guide shows you how to decide for your own home, with real payback math, four example scenarios and the situations where you should wait or skip solar entirely.
Quick answer: when solar is still worth it
- Usually worth it: electricity above 20 cents per kWh, good sun, a roof with little shade, and a utility that credits exported power at or near the retail rate. You plan to stay in the home at least 10 years.
- Maybe worth it: moderate rates (14–20 cents per kWh), partial net metering or time-of-use plans. The result depends on your system price and how much power you use during the day.
- Probably not worth it: electricity below 12 cents per kWh, heavy shade, a roof that needs replacing soon, or a plan to move within 5–7 years.
What changed: the end of the 25D credit
Until the end of 2025, buyers of residential solar and home batteries could deduct 30 % of the system cost from their federal income taxes through the Residential Clean Energy Credit (known as 25D). On a $20,000 system that was a $6,000 reduction. Federal legislation passed in 2025 ended this credit for expenditures made after December 31, 2025.
Three things follow from that:
- Your net price is higher. The same system that cost $14,000 after the credit in 2025 now costs close to $20,000 unless a state or local incentive fills the gap.
- Payback is longer. Roughly 30 % more upfront cost stretches the payback period by about three to four years in a typical market.
- Leases and PPAs may look better than before. Companies that own the system can sometimes still claim a business credit under rules that are changing, and they may pass part of the savings to you. This depends on the provider and the current law, so ask for the details in writing.
Tax rules change often. Confirm the current situation on IRS.gov or with a tax professional before you sign.
The five factors that decide if solar pays off
1. Your electricity rate
This is the biggest driver. Every kilowatt-hour your panels produce saves you what you would have paid the utility. A home paying 32 cents per kWh in Massachusetts saves more than twice as much per kWh as a home paying 14 cents in parts of the South. Check your last 12 bills and divide the total cost by the total kWh to get your real average rate.
2. How your utility pays for exported power
Net metering lets you send excess solar power to the grid and receive credit, ideally at the full retail rate. Some states have cut that credit sharply. Under California’s NEM 3.0, for example, exports are paid at a fraction of the retail rate, so the value of solar now depends on using the power yourself or storing it in a battery. Look up your state and utility rules before you request quotes.
3. Sunshine and roof quality
A south-facing roof with no shade in Arizona produces far more than a shaded east-facing roof in the Pacific Northwest. Most online calculators estimate production for your exact roof, so use one that accepts your address.
4. Installed system price
A system at $2.50 per watt and one at $3.50 per watt differ by $8,000 on an 8 kW installation. Compare at least three quotes. The same equipment can vary by 15–30 % between installers.
5. How long you will own the home
Solar is a long-term investment. With a payback of 10 to 12 years, you need to stay long enough to collect the savings, or be confident an owned system will raise your sale price.
Four example scenarios in 2026
The table below uses an 8 kW system with no federal credit and no battery. Costs and savings are illustrative estimates, not quotes. Your numbers will differ.
| Scenario | System cost | Est. yearly savings | Simple payback | Verdict |
|---|---|---|---|---|
| Massachusetts (high rates, state incentives) | $27,200 | $2,900 | 9.4 years | Strong |
| Arizona (good sun, moderate rates, low export credit) | $20,000 | $1,700 | 11.8 years | Good |
| California (NEM 3.0, no battery) | $24,000 | $1,800 | 13.3 years | Borderline without a battery |
| Texas (low rates, limited net metering) | $20,800 | $1,500 | 13.9 years | Weak unless rates rise |
Simple payback is the system cost divided by yearly savings. It ignores future rate increases, panel degradation and financing costs, but it is a useful first screen.
Looking at the same numbers as a yearly return on your investment:
- Massachusetts: about 10.7 % per year
- Arizona: about 8.5 % per year
- California: about 7.5 % per year
- Texas: about 7.2 % per year
Electricity prices have trended upward for years. If rates keep rising, those returns improve over time. Compare them with what you could earn with low-risk alternatives such as Treasury securities or certificates of deposit. Solar savings also come tax-free, since they reduce spending rather than add income.
Does financing change the answer?
Yes. The cash price is the baseline, and every financing option moves the numbers.
- Cash: the best return, because you pay no interest.
- Solar loan: can work if the interest rate is low and the price has no hidden dealer fee. A loan advertised at 6.99 % with a 25 % dealer fee can be much worse than it looks. Always ask for the cash price and compare.
- Home equity loan or HELOC: often cheaper than a solar loan but secures the debt on your home.
- Lease or PPA: little or no upfront cost, but you pay for 20 years or more and own nothing. These can make sense when the company still captures a tax credit and shares part of it with you, but compare the total cost over the contract.
When solar is probably NOT worth it
Skip solar, or wait, if any of these apply:
- Your electricity rate is below about 12 cents per kWh and you have little net metering.
- Your roof is shaded for much of the day and the shade can’t be removed.
- Your roof needs replacement in the next five years and you haven’t budgeted for it.
- You expect to move within five to seven years and the local market doesn’t reward owned solar.
- The only offer on the table is a high-fee loan or a lease with a steep annual price escalator.
- Your electricity use is very low. A tiny bill leaves little to save.
How to make solar pay off without the federal credit
- Use state and local incentives. Look up your state on the DSIRE database. Rebates, performance payments, property tax exemptions and sales tax exemptions can cut thousands from the net cost.
- Get at least three quotes. Compare price per watt, equipment, warranties and the installer’s track record, not just the total.
- Size the system carefully. Match it to your annual usage and expected changes such as an EV or a heat pump. Oversizing doesn’t pay if exports earn little.
- Shift your usage. Run the dishwasher, laundry and EV charging during solar hours to use more of your own power.
- Consider a battery only if the math supports it. A battery makes sense with steep time-of-use rates, low export credits or frequent outages.
- Avoid dealer fees. Pay cash, use a home equity loan, or choose a lender that doesn’t inflate the price.
- Keep your roof in mind. Do repairs first. Removing and reinstalling panels later can cost $3,000–$6,000.
What about adding a battery?
The federal credit for batteries ended along with the solar credit, so storage is more expensive too. A home battery typically adds $10,000–$18,000 to a project. For most homeowners, it is worth it only for backup power or in markets where exports are paid poorly. If outages are rare and your utility pays well for exports, a battery rarely pays for itself through bill savings alone.
Frequently asked questions
Is solar still worth it in 2026?
For many homeowners, yes. It works best where electricity is expensive, the sun is strong and the utility credits exports fairly. In low-rate states with weak net metering, payback can exceed 14 years, and waiting or skipping solar may be wiser.
How long does it take for solar to pay for itself without the tax credit?
Typical payback in 2026 ranges from about 7 to 10 years in high-rate states, 10 to 14 years in average markets and over 14 years in low-rate markets. Panels carry warranties of 25 years, so a payback in the first decade or so still leaves years of savings.
Will the tax credit come back?
Nobody can say for sure. Tax policy can change with new legislation, but you shouldn’t count on a credit returning. Make your decision on the current numbers, and verify the latest rules before signing.
Is it better to lease solar panels now?
Not automatically. Leases and PPAs avoid the upfront cost and may include savings from a business credit, but over 20 years you usually pay more than if you buy. They can make sense if you can’t afford the upfront cost or your tax situation never allowed you to use the credit. Compare the total cost over the whole contract.
Does solar still increase home value?
Owned systems tend to add value, particularly where electricity is expensive. Leased systems generally don’t add the same value and may complicate a sale.
Bottom line
Solar without the federal tax credit is a more selective investment, not a dead one. If you pay high electricity rates, have a sunny, unshaded roof and expect to stay in your home for ten years or more, it can still deliver a solid return. If your rates are low or your utility pays little for exports, run the numbers carefully and consider waiting.
The best next step is simple: collect your last 12 utility bills, check your state’s incentives and compare three quotes before you decide.