Is Solar Worth It in 2026? (Honest State-by-State Analysis)

Reviewed by: Dylan DeSantis, SolarMetric
Last Updated: May 16, 2026

Quick Answer

For most homeowners paying above-average electricity rates, yes — solar is still worth it in 2026. The typical payback period without the federal tax credit runs 7–12 years depending on your state. After that, you get 13–18 more years of electricity at essentially no cost, with lifetime savings averaging $37,000–$110,000.

The biggest change in 2026: the 30% federal residential solar tax credit (Section 25D) expired on December 31, 2025, after Congress passed the One Big Beautiful Bill (H.R. 1) in July 2025. For homeowners buying with cash or a loan, there is no federal subsidy in 2026. This extended payback periods by roughly 2–3 years nationally.

The math still works — but it depends heavily on your state. In Massachusetts or New Jersey, solar pays off in 6–8 years even without the federal credit. In Texas or Louisiana, you’re looking at 11–14 years.

What’s Changed in 2026

Three things shifted the solar calculus heading into 2026:

1. The 30% federal tax credit is gone for homeowners who buy. The One Big Beautiful Bill eliminated the Section 25D Residential Clean Energy Credit for systems placed in service after December 31, 2025. Homeowners purchasing solar outright (cash or loan) receive no federal subsidy in 2026. Solar leases and PPAs still qualify for a commercial ITC (Section 48E) through December 31, 2027 — the savings are passed through to customers as lower monthly rates. Important caveat: projects beginning construction after July 4, 2026 must be fully installed and placed in service by December 31, 2027 to qualify; there is no extension available for late-starting projects.

2. Electricity rates are up 5.4% from 2025. The national average residential rate hit 18.05¢/kWh in May 2026, per EIA data. Higher rates make solar savings more valuable and shorten payback periods. The Northeast and West Coast saw 8–9% increases year-over-year.

3. California NEM 3.0 has been upheld. Appeals courts confirmed California’s Net Energy Metering 3.0 policy, which cut export compensation by ~75% for new solar customers. New California solar installations receive roughly $0.05/kWh for exports — down from ~$0.30/kWh under NEM 2.0. California solar-only paybacks now run 10–14 years, though solar + battery systems are performing better (7–9 years) by using more of their own power.

The Math: How to Calculate If Solar Is Worth It

The core formula is simple:

Payback Period = Net System Cost ÷ Annual Electricity Savings

Here’s what that looks like for a typical 8kW system in 2026:

Component Amount
System cost (8kW × $2.58/watt) $20,640
Federal tax credit (Section 25D) $0 — expired
Net system cost $20,640
Monthly electricity bill offset (estimate) $150–$300/month
Annual savings $1,800–$3,600
Payback period 6–11 years
Years of free power after payback 14–19 years
Estimated 25-year net savings $40,000–$75,000

The $2.58/watt figure comes from EnergySage’s 2026 marketplace data. Your actual cost will vary by installer, roof type, panel brand, and region.

Two variables matter more than anything else: your electricity rate and your state’s net metering policy. A homeowner paying 25¢/kWh with 1:1 net metering gets twice the annual savings of someone paying 13¢/kWh with partial export compensation. That can swing payback from 6 years to 14 years on identical systems.

See our solar panel cost guide for a full breakdown of what drives installation pricing.

Average Payback Period by State (2026)

State Avg. Rate (¢/kWh) Net Metering Est. Payback Key Incentive
Massachusetts 24.5¢ Full retail (1:1) 6–7 years SMART program, 15% state tax credit
New Jersey 19.8¢ Full retail (1:1) 6–8 years SREC-II ($76.50/MWh × 15 yrs), 0% sales tax
Connecticut 26.1¢ Full retail (1:1) 6–8 years $200/kWh battery incentive
Rhode Island 25.4¢ Full retail (1:1) 6–8 years REF grants up to $8,500
New York 22.7¢ Full retail (1:1) 7–9 years NY-Sun incentive, no sales tax
Maryland 18.3¢ Full retail (1:1) 7–9 years State tax credit, SREC market
Florida 14.8¢ Full retail (1:1) 8–10 years Full net metering, large competitive market
Arizona 14.2¢ Partial (varies by utility) 8–10 years 25% state tax credit (up to $1,000)
Colorado 16.1¢ Full retail (Xcel) 8–10 years Xcel rebates, state tax credits
Virginia 14.5¢ Full retail (Dominion) 9–11 years No sales tax on solar
North Carolina 13.9¢ Full retail 9–11 years Duke PowerPair (up to $9,000 for solar+battery)
Georgia 13.1¢ Full retail 10–12 years Strong sun, fewer incentives
Texas 13.5¢ Varies by utility 10–13 years No state income tax; limited utility incentives
Nevada 13.8¢ 75% of retail (~11.25¢/kWh exports) 10–13 years 30% property tax exemption
California 31.0¢ NEM 3.0 (~$0.05/kWh exports) 10–14 years SGIP battery rebate; high rate helps self-consumption
Oregon 12.8¢ Full retail 11–13 years $10,000 max state credit for lower income
Washington 12.1¢ Full retail 12–15 years Low rates limit savings

Sources: EIA (May 2026), EnergySage marketplace data, DSIRE. Payback ranges reflect 7–10kW systems at current installer pricing.

What Makes Solar MORE Worth It

High electricity rates. If your rate is above 16¢/kWh, solar economics are generally strong. Every cent you pay per kWh is a cent solar eliminates. Homeowners in Connecticut (26¢/kWh) get more than twice the annual savings of homeowners in Idaho (12.5¢/kWh) from the same system.

Strong net metering. States with full retail net metering (NJ, MA, CT, NY, MD, FL, CO) deliver significantly better ROI than states with reduced export rates. When your utility credits exports at the retail rate, every excess kWh has the same value as the electricity you’d otherwise buy.

High sun exposure. Arizona, Nevada, California, Florida, and Texas get more peak sun hours than the national average. A 7kW system in Phoenix produces ~11,000 kWh/year; the same system in Seattle produces ~7,000 kWh/year.

Long time horizon. If you plan to own your home for 15+ years, you capture the full profit window. The first 7–12 years pay off the system; the remaining years are pure savings.

State incentives. New Jersey’s SREC-II pays $76.50/MWh for 15 years. On a 7kW system producing 8,000 kWh/year, that’s ~$612/year in SREC income on top of electricity savings — shaving 2–3 years off payback by itself.

Battery storage pairing. In California with NEM 3.0, adding a battery (Powerwall 3, Enphase IQ Battery 5P) lets you use more of your own solar instead of exporting at 5¢/kWh. Solar+battery systems in California often pay back faster than solar-only.

What Makes Solar LESS Worth It

Low electricity rates. If you’re paying under 13¢/kWh (Louisiana 12.4¢, Idaho 12.5¢, North Dakota 12.9¢), payback periods stretch to 12–15 years.

Poor or no net metering. Always confirm your specific utility’s net metering policy — it varies within states, especially Texas (no statewide net metering mandate).

Planning to move soon. If you’re likely to sell in 5 years, you may not break even. Solar adds resale value (3–4% premium) but that’s uncertain and buyer-dependent.

Heavy roof shading. Partial shade can reduce production by 30–50%. Get a shading analysis from your installer before committing.

Roof needing replacement soon. Removing and reinstalling panels for a roof replacement costs $1,500–$3,000. If your roof is 10–15 years old with significant wear, plan accordingly.

Lease vs. Buy: Different Definitions of “Worth It”

Buying maximizes lifetime savings — over 25 years, a typical owned system saves $40,000–$110,000. No federal credit in 2026, but all electricity savings are yours.

Leasing or PPA minimizes upfront risk — no down payment, installer handles maintenance, and you get immediate savings. The third-party owner takes the commercial ITC (Section 48E through Dec 31, 2027 for qualifying projects), and passes savings to you as lower rates.

If your credit is good and you plan to stay 15+ years, ownership wins on total dollars. If you want zero complexity or can’t service a loan, a lease gets you solar savings immediately.

See our best solar companies guide for installers that offer all three financing options.

State-by-State Verdict (2026)

State Verdict Short Reason
Massachusetts ✅ Strong Yes Very high rates, SMART program, 1:1 NEM
New Jersey ✅ Strong Yes SREC-II + 1:1 NEM = best economics in country
Connecticut ✅ Strong Yes Highest rates in continental US, strong NEM
Rhode Island ✅ Strong Yes High rates, REF incentives
New York ✅ Strong Yes High rates, NY-Sun incentives
Maryland ✅ Yes Good rates, 1:1 NEM, SREC market
Florida ✅ Yes Full NEM, strong sun, competitive installer market
Arizona ✅ Yes High sun output; state tax credit helps
Colorado ✅ Yes Good rates, Xcel rebates, strong sun
Virginia ✅ Yes Improving NEM, full retail credit
North Carolina 🟡 Depends Good sun + full NEM; fewer state incentives
Georgia 🟡 Depends Fewer incentives; works best for high-usage homes
Texas 🟡 Depends Moderate rates, no statewide NEM; varies by utility
Nevada 🟡 Depends NEM at 75% of retail; good sun partially offsets
California 🟡 Depends Very high rates help; NEM 3.0 hurts; solar+battery recommended
Oregon 🟡 Depends Low rates limit savings; good NEM but thin margins
Washington ⚠️ Caution Very low rates: 12–15 year payback
Louisiana ⚠️ Caution Lowest rates in the US; payback often exceeds 15 years

FAQ

Is solar worth it without the federal tax credit in 2026?
Yes, for homeowners in states with rates above 16¢/kWh and strong net metering. The credit’s expiration adds roughly 2–3 years to payback periods, but the long-term savings math still works out in most markets. In high-rate states like Massachusetts and New Jersey, payback periods of 6–8 years remain achievable.

How many years does it take for solar panels to pay for themselves in 2026?
The national average is roughly 8–10 years in 2026, up from 6–8 years when the 30% federal credit was available. In the best states (NJ, MA, CT), you can still break even in 6–7 years. In low-rate states (WA, LA, ID), expect 12–15 years.

Does solar increase my home’s value?
Yes. Lawrence Berkeley National Lab and Zillow studies consistently find solar-equipped homes sell for 3–4% more. On a $400,000 home, that’s $12,000–$16,000 in added value. The premium is highest in states where buyers understand solar savings and rates are high.

Can I still get the federal solar tax credit if I go solar in 2026?
Not if you buy. The Section 25D credit expired December 31, 2025. However, homeowners who sign a solar lease or PPA benefit indirectly — the installer takes the commercial ITC (Section 48E) and passes savings through lower rates. This applies to projects placed in service by December 31, 2027; post-July 4, 2026 construction starts must meet that deadline with no extensions.

What size solar system do I need?
The average U.S. home uses ~900 kWh/month and typically needs a 7–9kW system ($18,000–$23,000 installed). At 18¢/kWh, a properly-sized system saves roughly $1,944/year. At 25¢/kWh, the same system saves ~$2,700/year. Use our solar cost calculator to estimate based on your actual bill and state.

Is solar worth it if I might sell my house in 5 years?
Possibly. Solar adds 3–4% resale value in most markets, so you may recoup much of the cost at sale. If it’s leased, the buyer must assume the lease — this can complicate sales in some markets.

How We Researched This

Electricity rate data comes from the U.S. Energy Information Administration (EIA), May 2026. Payback estimates use EnergySage installer pricing data ($2.58/watt national average), EIA state rates, and NREL PVWatts production data. State incentive information was verified against the DSIRE database. Net metering summaries reflect each utility’s current filed tariff as of May 2026. Federal tax credit status reflects H.R. 1 (One Big Beautiful Bill), signed July 4, 2025.

Get Quotes From Installers in Your State

The fastest way to know if solar is worth it for your specific home is to get real quotes from licensed local installers. Comparing 3+ quotes typically saves homeowners $3,000–$5,000 on the same system.

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Sources

Also see: Solar Panel Cost Guide | Federal Solar Tax Credit Guide | Best Solar Companies