Is solar worth it in 2026?
For a lot of households, honestly, no. That answer got more common on January 1, and most sites will not give it to you because they are paid when you buy.
What changed
The 30% federal residential credit (§25D) expired for systems placed in service after December 31, 2025. On a $24,000 system that is $7,200 that simply is not there any more. A decision that was comfortably positive in 2025 can be negative in 2026 with nothing else changed.
When solar still works
- High electricity rates. Above roughly $0.25/kWh the arithmetic is forgiving. Massachusetts and California sit here.
- Full retail net metering. If every exported kWh is worth a retail kWh, the value of generation roughly doubles compared with avoided-cost export rates.
- A real state programme. With the federal credit gone, a state credit or performance payment is often the whole case.
- High daytime consumption. Working from home, an EV, a heat pump, or a battery all raise the share of generation you use at retail value instead of exporting cheaply.
- A long horizon. If you are moving in five years, a 15-year payback is not your payback.
When it does not
- Cheap electricity. Below roughly $0.14/kWh it is very hard to make the numbers work without a strong state incentive.
- Export compensation far below retail. California's NEM 3.0 is the clearest example: exports earn a fraction of retail, so a system sized to your annual usage saves far less than its output suggests.
- Shaded, north-facing or complex roofs. Production estimates assume good conditions; reality can be 20–30% below.
- A roof needing replacement within a decade. Removal and reinstallation is a real four-figure cost that no quote includes.
- You are being sold a loan with a large dealer fee. A fee of 15–30% folded into the financed price can consume the entire benefit.
Find out which one you are
Best option: Cash purchase — $4,611 net present value over 25 years, paying back in year 11.
| Option | Owns it | 30% credit | Upfront | 25-yr NPV | Payback | Cost/kWh |
|---|---|---|---|---|---|---|
| Cash purchase | You | None | $13,500 | $4,611 | Year 11 | $0.182 |
| Solar loan | You | None | $0 | -$657 | Year 23 | $0.236 |
| Lease | Provider | Indirect (§48E) | $0 | $3,588 | Year 1 | $0.192 |
| PPA | Provider | Indirect (§48E) | $0 | $2,886 | Year 1 | $0.200 |
What this calculation assumes, and where it can be wrong
Federal credit. The 30% federal residential credit (IRC §25D) expired for systems placed in service after December 31, 2025. A 2026 cash or loan purchase receives no federal credit. Leases and PPAs remain eligible indirectly: the third-party owner claims the commercial credit (IRC §48E) and reflects part of it in the price offered, provided the system is placed in service by December 31, 2027.
Estimated §48E value in a lease or PPA quote: about $2,025 for this system, assuming the provider passes through half the credit. That share is our estimate, not a published figure.
Export credit. NEM 3.0 compensates exports at avoided-cost rates far below retail.
State incentives. California has no statewide personal income tax credit or cash rebate for residential PV. Sales tax and property tax exemptions exist but are not cash incentives and are not modelled. SGIP pays roughly $200/kWh toward battery storage (far more for equity-resiliency customers) — that is storage, not PV, and belongs in the battery calculator rather than here. What actually decides California is NEM 3.0: exports earn a fraction of retail, which is already reflected in the export credit ratio.
- Cash purchase: No federal tax credit is applied: IRC §25D expired for systems placed in service after 2025-12-31.
- Cash purchase: Exported power is credited at 25% of retail, so savings depend heavily on using power as it is generated.
- Solar loan: Financed amount includes a 20% dealer fee, which is why a $0-down loan quote costs more than the same system bought outright.
- Solar loan: No federal tax credit is applied: IRC §25D expired for systems placed in service after 2025-12-31.
- Solar loan: Exported power is credited at 25% of retail, so savings depend heavily on using power as it is generated.
- Lease: Pricing assumes the system owner claims the §48E credit and reflects part of it in your quote. The system must be placed in service by 2027-12-31 to qualify.
- Lease: Exported power is credited at 25% of retail, so savings depend heavily on using power as it is generated.
- PPA: Pricing assumes the system owner claims the §48E credit and reflects part of it in your quote. The system must be placed in service by 2027-12-31 to qualify.
- PPA: Exported power is credited at 25% of retail, so savings depend heavily on using power as it is generated.
Sunlight data: 1616 kWh per installed kW per year (verified — NREL PVWatts v8). Retail rate: $0.333/kWh.
How to read a quote you have been given
- Check for a 30% credit. If the quote applies one to a purchase, it is wrong. Ask them to reissue it.
- Find the escalation assumption. If it assumes 5–6% annual utility increases, re-run it at 3% and watch what happens.
- Ask what export rate they assumed. If they valued every kWh at retail and your utility does not, the savings figure is fiction.
- Ask for the dealer fee on any loan. If they will not state it, compare the cash price against the financed price — the gap is the fee.
- Check whether O&M and inverter replacement are included. On an owned system they are yours.
Why we will tell you not to buy
We do not sell solar and we do not sell your contact details. When the calculator finds no positive option, it says so. A site that never returns "don't do this" is not calculating anything — it is qualifying you.
Common questions
Is solar still worth it now the tax credit is gone?
In high-rate states with full retail net metering, frequently yes. In low-rate states, or where exports are credited far below retail, often no — and no financing structure fixes that, because the problem is the value of what solar displaces, not how you pay for it.
Should I wait for the credit to come back?
Nothing currently indicates the residential credit returns, and waiting has its own cost: you keep paying full electricity bills, and the §48E route for leases closes at the end of 2027. Decide on the economics as they are, not on a policy change nobody can promise.
Does solar increase my home value?
Studies suggest owned systems can, but the effect varies enormously by market and is hard to pin down for any individual house. We leave it out of the model rather than pick a convenient number. Leased systems can complicate a sale rather than help it.
What single factor matters most?
Your electricity rate, followed closely by how your utility credits exported power. A household paying $0.32/kWh with full net metering and one paying $0.12/kWh with avoided-cost exports are not in the same decision, and no amount of sales framing changes that.
See also: what happened to the credit, payback specifically, and the assumptions behind every number here.