The federal homeowner solar tax credit — Section 25D — expired December 31, 2025. Every cost estimate on legacy solar websites assumes a 30% federal credit that no longer applies to residential installations. This guide uses 2026 numbers: what solar actually costs, which states still have meaningful incentives, and whether the math still works without Washington's help.
Disclaimer: All cost estimates are based on NREL and Lawrence Berkeley National Laboratory data. Actual quotes vary by installer, roof type, and local labor markets. Get at least three installer quotes before deciding.
Key Takeaways
- Solar costs $2.50–$3.50/watt installed nationally in 2026 — a typical 9 kW system runs $22,500–$31,500 with no federal credit
- New York, Hawaii, Oregon, and Massachusetts have active state programs that cut net costs by 15–40%
- EIA data shows electricity rates rose 4.3% in 2025 — every rate increase improves solar ROI retroactively for every installed system
- Payback takes 9–16 years depending on your state and sun exposure; high-incentive states can get to 6–9 years
National Average Solar Cost in 2026
Before breaking it down by state, the baseline:
- Average system size: 8–10 kW for a U.S. home
- Installed cost (before incentives): $2.50–$3.50 per watt
- Typical 9 kW system: $22,500–$31,500 installed
In 2025, after the 30% Section 25D credit, that same system cost $15,750–$22,050. In 2026, you pay the full installed price — unless your state has its own credit.
Lawrence Berkeley National Laboratory's 2024 Tracking the Sun report puts the median residential installed cost at $2.75/watt. That baseline has been creeping up as electrician labor costs outpace falling panel prices. The practical takeaway: don't rely on cost estimates from 2022 or 2023. They're meaningfully lower than what installers are quoting today.
Why Solar Costs Vary So Much by State
Four factors drive the difference:
| Factor | Impact |
|---|---|
| Labor costs | Electricians in Hawaii and California earn 40–60% more than in the Midwest |
| Permit fees | Range from $0 (some Texas cities) to $500+ (parts of California) |
| State incentives | NY-Sun, SMART, and similar programs offset $0.20–$0.60/W |
| Solar irradiance | More sun hours = more kWh per panel = smaller (cheaper) system for the same output |
Solar Cost by State — 2026 Estimates
These figures represent a typical 9 kW system. State incentives are deducted where applicable. No federal 25D credit is included.
| State | $/W Installed | 9 kW Gross Cost | State Incentive | Net Cost |
|---|---|---|---|---|
| California | $3.10 | $27,900 | NEM 3.0 export credit (ongoing) | $27,900 + NEM value |
| Texas | $2.65 | $23,850 | None statewide | $23,850 |
| Florida | $2.75 | $24,750 | Sales tax exemption | ~$23,500 |
| New York | $3.20 | $28,800 | NY-Sun rebate + 25% state credit | ~$19,300 |
| Arizona | $2.55 | $22,950 | 25% state tax credit (up to $1,000) | ~$21,950 |
| Massachusetts | $3.30 | $29,700 | SMART program + 15% state credit | ~$22,200 |
| New Jersey | $3.00 | $27,000 | SRECs + sales tax exemption | ~$24,000 |
| Colorado | $2.80 | $25,200 | None statewide | $25,200 |
| North Carolina | $2.70 | $24,300 | None statewide | $24,300 |
| Hawaii | $3.60 | $32,400 | 35% state credit | ~$20,900 |
| Illinois | $2.90 | $26,100 | SREC II program | ~$22,000 |
| Georgia | $2.70 | $24,300 | None statewide | $24,300 |
| Ohio | $2.80 | $25,200 | SREC market | ~$23,000 |
| Michigan | $3.00 | $27,000 | None statewide | $27,000 |
| Nevada | $2.60 | $23,400 | Net metering | $23,400 |
| Washington | $2.85 | $25,650 | Sales tax exemption | ~$23,500 |
| Oregon | $2.90 | $26,100 | 40% state credit (up to $6,000) | ~$20,100 |
| Minnesota | $3.10 | $27,900 | Property tax exemption | $27,900 |
| Virginia | $2.75 | $24,750 | None statewide | $24,750 |
| Maryland | $2.95 | $26,550 | SREC program | ~$23,500 |
Source: NREL Solar cost benchmarks, LBNL Tracking the Sun 2024, state energy office data.
States With the Strongest Incentives in 2026
Without the federal credit, state programs now carry more of the weight than ever.
New York — NY-Sun + 25% State Tax Credit
New York has the most generous state solar program outside Hawaii. The NY-Sun rebate pays installers directly — no waiting for a tax credit — and the 25% state income tax credit stacks on top. A $28,800 system can drop to ~$19,300 after both programs.
Hawaii — 35% State Tax Credit
Hawaii has the highest electricity rates in the U.S. ($0.40–$0.45/kWh) and a 35% state solar tax credit. Solar payback periods of 5–7 years are realistic even without the federal credit. If you're in Hawaii, solar is one of the clearest financial wins in the country right now.
Oregon — 40% Residential Energy Credit (Up to $6,000)
Oregon's Residential Energy Tax Credit covers 40% of system cost up to $6,000. Combined with below-average installation costs relative to the Pacific Coast, Oregon buyers get real value.
Massachusetts — SMART Program
The Solar Massachusetts Renewable Target (SMART) program pays a flat per-kWh incentive for 10 years. Rates vary by utility and system size, but the ongoing cash flow meaningfully offsets the higher upfront cost in a high-labor market.
New Jersey — SREC Market
New Jersey's Solar Renewable Energy Certificate market remains active. Each SREC represents 1 MWh of generation; prices have ranged $200–$250/SREC, adding an ongoing revenue stream on top of electricity savings.
Does Solar Still Make Financial Sense Without the Federal Credit?
Yes — but payback is longer, and the math varies sharply by state.
EIA data shows residential electricity prices rose 4.3% year-over-year in 2025. That's a meaningful tailwind. Every rate increase makes your solar system more valuable retroactively — because the electricity it's producing is now worth more than when you sized the system. Most financial models for solar assume flat rates; real rates are climbing.
Key drivers that still make solar compelling in 2026:
- Rising electricity rates. Every rate increase improves solar ROI retroactively.
- Net metering. Most states still credit solar owners for grid exports (though California's NEM 3.0 reduced export rates significantly).
- Property value premium. NREL research shows solar homes sell for 3–4% more on average.
- Inflation hedge. Locking in energy cost at zero after payback is valuable as utility rates climb.
Typical payback periods in 2026 (no federal credit):
| Scenario | Estimated Payback |
|---|---|
| High-sun state (AZ, NV, TX), no state incentive | 9–12 years |
| High-cost state (NY, MA, HI) with state credit | 6–9 years |
| Midwest or Southeast, no state incentive | 12–16 years |
| Any state with favorable net metering + high rates | 8–11 years |
Use our Solar ROI Calculator to run the numbers for your specific home, utility rate, and state.
What's Included in an Installed Solar Quote
When you receive a quote, confirm it covers all of the following — any missing item is a hidden cost:
- Panels — monocrystalline is standard; avoid outdated polycrystalline
- Inverter — string inverter vs. microinverters (microinverters cost ~$1,000 more but perform better on shaded roofs)
- Racking and mounting hardware
- Wiring and conduit
- Permit and inspection fees
- Utility interconnection application
- System monitoring platform
- Equipment warranties (10–25 years depending on component)
- Installer workmanship warranty — ask for at least 10 years
Items typically not included: battery storage, roof repairs required before install, electrical panel upgrades.
Buy vs. Lease vs. PPA in 2026
Without the 30% federal credit, cash purchases and solar loans are less differentiated from leases than in 2025 — Section 25D only benefited buyers, not lessees.
Buying (Cash or Loan)
You own the system, capture all state credits, and receive the full electricity offset. Best long-term ROI if you plan to stay in the home 10+ years.
Lease or Power Purchase Agreement (PPA)
The installer owns the system and claims the Section 48E commercial credit (active through 2027). You pay a monthly rate or per-kWh rate, typically 10–30% below your utility rate. No upfront cost. Works well if capital is constrained or if you plan to sell the home in under 8 years.
See our Solar Lease vs Buy vs PPA Calculator for a side-by-side comparison.
How to Get the Best Price
Three tactics that consistently yield lower quotes:
- Get at least three competing quotes. Installer pricing is highly negotiable; the first quote is rarely the best.
- Use EnergySage or SolarReviews. These marketplaces let installers compete for your business and typically yield 15–20% lower quotes than calling companies directly.
- Buy in spring or fall. Installer demand peaks in summer. March–May and September–November offer more scheduling flexibility and negotiating room.
Bottom Line
Solar in 2026 costs more without the federal credit — but it still makes financial sense for millions of U.S. homeowners, particularly in high-electricity-cost states with their own programs. New York, Hawaii, Massachusetts, and Oregon have the strongest state incentives. Texas, Florida, and California pencil on payback math alone given sun exposure and electricity rates.
Run your numbers with our Solar ROI Calculator before calling any installer — know your target payback period and lifetime savings estimate first.
Frequently Asked Questions
How much does solar cost per watt in 2026?
The national median installed cost is $2.75 per watt, according to Lawrence Berkeley National Laboratory's 2024 Tracking the Sun report. The practical range runs $2.50–$3.50/watt depending on your state, labor market, and system configuration. Hawaii and California are typically the most expensive ($3.10–$3.60/watt); Texas and Arizona are among the lowest ($2.55–$2.65/watt).
Which states have the best solar incentives in 2026 without the federal credit?
The four strongest state programs in 2026 are: New York (NY-Sun rebate plus 25% state income tax credit, reducing a typical system by ~$9,500); Hawaii (35% state tax credit plus high electricity rates near $0.43/kWh); Oregon (40% Residential Energy Credit up to $6,000); and Massachusetts (SMART per-kWh incentive paid over 10 years plus 15% state credit).
Is solar still worth it in 2026 without the federal credit?
Yes in the right states. Payback periods now run 9–12 years in high-sun states without incentives, and 6–9 years in states with strong programs (New York, Hawaii, Oregon, Massachusetts). The biggest tailwind: EIA data shows residential electricity rates rose 4.3% in 2025 and are expected to keep climbing, which improves solar ROI retroactively for every installed system.
What happens if I get quotes from multiple installers?
Installer pricing is negotiable, and multiple quotes consistently yield lower prices. Research by EnergySage and SolarReviews shows homeowners who collect 3+ competing quotes pay 15–20% less on average than those who sign with the first installer they contact. Quote variability for the same system in the same city often spans $3,000–$8,000 — making the comparison effort well worth it.
Are there any federal incentives still available for homeowners in 2026?
Section 25D (the residential clean energy credit) expired December 31, 2025. Section 30C (EV charger credit, 30% up to $1,000) expires June 30, 2026 — if you're also adding an EV charger, claim it before that date. Section 25C (heat pump, insulation, and HVAC) is active through 2032. No federal incentive remains specifically for residential solar panel purchases after 2025.
Related Guides
- Home Solar Panels: The Complete 2026 Guide — Full overview of solar costs, sizing, brands, installation, and financing in one place.
- Is Solar Worth It in 2026? — State-by-state payback analysis to determine whether solar makes financial sense without the federal credit.
- Solar Panel Financing in 2026: Loan vs. Lease vs. Cash vs. PPA — Which financing path delivers the best return now that Section 25D is gone.
- Solar ROI Calculator — Model your exact payback period using your electricity rate, system size, and state incentives.
