Is Home Solar Worth It in 2026? The Math Without the Federal Credit

For most of the last decade, "is solar worth it?" had an easy answer: take the 30% federal credit and the math usually worked. In 2026 that credit is gone for homeowners who buy, prices dropped only slightly, and the market is shrinking. Solar can still make sense, but you now have to run your own numbers.

What changed in 2026

• The homeowner credit ended. The residential clean energy credit (Section 25D) does not apply to expenditures made after December 31, 2025. A system installed in 2026 counts as a 2026 expense.
• Prices fell only a little. The national residential price averaged about $3.36 per watt in the second quarter of 2026, down just 1.4% from a year earlier, according to SEIA and Wood Mackenzie.
• The market is contracting. Residential installations fell 12% year over year in the second quarter of 2026, and analysts forecast a 23% contraction for the year.
• Leases and PPAs still get a credit, indirectly. Installers that own the system can claim a federal business credit under Section 48E under current rules, which can lower lease or power purchase agreement prices.

What solar costs now

EnergySage reports an average system cost of about $31,000 before incentives. Without the 30% credit, a buyer now pays roughly $9,300 more on that system than a 2025 buyer paid, simply because 30% of $31,000 is $9,300.

Marketplace quotes can come in below the national modeled price, because shoppers comparing several installers tend to find lower prices.

How to run your own payback

You need three numbers:

1. System cost after any state or utility incentives
2. Annual production in kWh, from the installer's estimate or the National Renewable Energy Laboratory's free PVWatts calculator
3. The value of each kWh, which depends on your electricity rate and how your utility credits power you send to the grid

Simple payback in years is the system cost divided by the annual savings. Solar pays back fastest where electricity is expensive. EIA's summer 2026 forecasts range from about 15 cents per kWh in the Mountain and West South Central regions to over 28 cents in New England, so identical systems can pay back on very different schedules.

Net metering vs. net billing

How your utility credits exported power can matter as much as the price of the panels.

• Net metering credits exports at or near the retail rate.
• Net billing credits exports at a lower rate. California's net billing tariff, often called NEM 3.0, applies to applications submitted from April 15, 2023 and credits exports far below retail. A California appeals court upheld it in March 2026, and the state Supreme Court has agreed to review the case.

Under net billing, using more of your solar power yourself, or storing it in a battery, becomes more valuable. See solar battery storage.

Buy, lease or PPA?

A loan can hide extra costs. The Consumer Financial Protection Bureau has found that dealer fees often raise solar loan costs by 30% or more above the cash price, usually without appearing in the stated interest rate. Always ask for the cash price. Our guide to vetting a solar installer covers this.

When solar still makes sense

• Your electricity rate is high and rising
• Your utility offers net metering or fair export credits
• Your roof has good sun exposure and at least 15 to 20 years of life left
• You plan to stay long enough to reach payback
• State incentives lower the upfront cost

When to wait or skip it

• Your roof needs replacing soon; replace it first. See roof replacement cost.
• Your electricity is cheap and exports are poorly credited
• You may move within a few years and are buying with a loan
• An offer relies on a federal credit that no longer applies to buyers

Questions to ask on every solar quote

• What is the total cash price and the price per watt?
• How was annual production estimated, and does it account for shading and roof direction?
• Does the quote assume any tax credit? In 2026 it should not for a purchase.
• What does the workmanship warranty cover, for how long, and who honors it if the company closes?
• Who handles roof penetrations and leaks around the mounts?
• Is a panel upgrade or other electrical work included?
• For a lease or PPA: what is the yearly escalator, and what happens if you sell the house?

Check the roof first

Panels usually stay on a roof for decades, and removing and reinstalling them to replace the roof later adds real cost. If your roof is in the last third of its life, replace it before installing solar. Our guide to how long a roof lasts helps you judge where your roof stands, and the roof cost calculator prices the job.

Before you sign

Get at least three quotes, compare price per watt and production estimates, and confirm who handles repairs and the workmanship warranty if the installer closes. For the energy side of the decision, see why your energy bill is so high.