Solar got more expensive to buy this year without anything on the price tag changing. The 30% federal tax credit that used to take roughly a third off the bill expired for systems completed after 2025, so the number you pay in 2026 is the full installed cost. Equipment prices are still low and state incentives still exist, but the math is tighter than it was, and it varies a lot more by state. Here's exactly what you'll pay in 2026, what you'll save, and how to figure out whether solar still makes sense for your home.
Average Solar Panel Cost in 2026
The average residential solar panel system in the US costs between $15,000 and $25,000 installed. That is also what you actually pay in 2026: the 30% federal tax credit that used to knock roughly a third off that figure expired for systems completed after 2025 (details below). Not cheap — but still potentially transformative for your electricity bills, depending on where you live.
| System Size | Installed Cost (2026) | Cost After the Old 30% ITC | Best For |
|---|---|---|---|
| 5 kW | $12,500–$17,500 | No longer available | Small homes, 1–2 people |
| 7 kW | $17,500–$24,500 | No longer available | Average homes, 2–3 people |
| 10 kW | $25,000–$35,000 | No longer available | Larger homes, 4+ people or EV charging |
| 12 kW+ | $30,000–$42,000+ | No longer available | High-usage homes, full offset goal |
Cost Per Watt
The industry-standard way to compare solar prices is cost per watt ($/W). In 2026, you can expect to pay between $2.50 and $3.50 per watt before incentives, depending on your location, installer, and equipment choices. Premium panels (like SunPower or REC Alpha) run higher, while budget-friendly options from brands like Canadian Solar or Trina come in at the lower end.
The Federal Solar Tax Credit Has Expired
This used to be the single biggest factor that made solar affordable. The Residential Clean Energy Credit (IRC §25D) let you deduct 30% of your total solar installation cost — equipment, labor, permits, and battery storage — from your federal income taxes.
It is gone. Public Law 119-21, enacted July 4, 2025, terminated the credit early: it cannot be claimed for expenditures made after December 31, 2025. The IRS treats an expenditure as made when the original installation is completed, so a system finished in 2026 does not qualify, regardless of when it was contracted or paid for. Systems completed in 2025 or earlier can still be claimed on the return for that year using IRS Form 5695.
You'll still find older articles quoting a "30% through 2032" schedule from the Inflation Reduction Act. That schedule no longer applies. The authoritative sources are the IRS FAQs on Public Law 119-21 and its Home Energy Tax Credits page. Our solar tax credit guide covers the timing rule and how to claim a 2025 completion in more detail.
The practical consequence: budget the full installed price, and treat any quote or calculator that still shows a "net cost after the federal credit" for a 2026 install as out of date.
State and Local Incentives
With the federal credit gone, state and local programs are now the whole incentive picture:
- State tax credits — available in states like SC, NY, and AZ
- Net metering — your utility pays you for excess electricity you send back to the grid
- Solar Renewable Energy Credits (SRECs) — earn tradable credits in states like NJ, MA, and IL
- Property tax exemptions — many states exempt the added home value from solar from property taxes
- Utility rebates — some utilities offer $500–$2,000+ upfront rebates
How much these move your effective cost varies enormously by state — from a meaningful discount in places like New York or South Carolina to essentially nothing in states with no program. Check current terms for your address on DSIRE and on our state solar incentive pages.
Lease vs Buy: Which Is Better?
| Factor | Buy (Cash or Loan) | Lease / PPA |
|---|---|---|
| Upfront cost | $15,000–$35,000+ | $0 |
| Monthly savings | 50–100% electricity offset | 10–30% lower electric bill |
| Tax credit | None for 2026 completions (§25D expired) | None for 2026 completions |
| Home value increase | Yes ($15K–$25K+ added value) | No (you don't own the panels) |
| Maintenance | Your responsibility | Included |
| Best for | Homeowners staying 7+ years | Renters or short-term owners |
Our take: if you can afford to buy (even with a solar loan), buying still wins long-term. You get the home value boost and you own the electricity your system produces. The tax credit used to be a third reason and no longer is, which narrows the gap somewhat but doesn't close it.
Payback Period and ROI
Solar payback used to be quoted at 7–12 years, and nearly every one of those figures assumed the 30% federal credit. Strip the credit out and the same system takes meaningfully longer to pay for itself — often on the order of a third longer, before any state incentives. Your actual number depends on your electricity rate, system size, net metering terms, and whatever your state and utility offer.
Here's a simplified example using 2026 assumptions, with no federal credit:
- Installed system cost: $20,000
- Annual electricity savings: $1,600
- Payback period: 12.5 years
- 25-year lifetime savings: $20,000
For comparison, the same system completed in 2025 would have cost $14,000 after the credit and paid back in about 8.75 years. States with high electricity rates (California, Connecticut, Massachusetts, New York) still see the fastest payback, and a state credit or utility rebate can pull the number back down. Run yours on installed cost, not on a "net" figure, with our solar savings calculator.
Roof Requirements
Before you get too excited about solar, your roof needs to check a few boxes:
- Age: If your roof is more than 15 years old, consider replacing it first. Installing solar on an old roof means you'll pay to remove and reinstall the panels when you eventually need a roof replacement.
- Direction: South-facing roofs produce the most energy. East/west-facing roofs still work but produce about 15–20% less.
- Shade: Trees, chimneys, and neighboring buildings that cast shade will reduce your output significantly.
- Material: Asphalt shingle and metal roofs are the easiest (and cheapest) to install on. Tile and slate roofs cost more for installation.
Curious about other energy upgrades? See how solar compares with a full HVAC system upgrade for long-term savings potential.