Are Solar Panels Worth It in 2026? The Honest Math After the Federal Credit Expired

The residential federal solar tax credit (Section 25D) expired on December 31, 2025 under the One Big Beautiful Bill Act (P.L. 119-21, signed July 4, 2025). No phase-down, no grace period — owner-financed residential solar placed in service on or after January 1, 2026 gets a 0% federal credit. That single change rewrites the math for any homeowner thinking about solar this year.

Here is the short version. Solar still pencils out in a lot of places. It stops penciling in others. The answer depends almost entirely on your state's electricity rate, net metering policy, and any local incentive — not on a federal credit that no longer exists.

What Actually Changed on January 1, 2026

Sources: IRS OBBB FAQ, IRS Residential Clean Energy Credit page.

Average Solar Costs in 2026

Cost per watt still runs $2.50–$3.80 installed nationally. What changed is simply that there is no federal credit to subtract from those numbers.

System SizeInstalled Cost (2026)Typical Monthly Bill Savings 5 kW$15,000$75–$125 8 kW$24,000$120–$200 10 kW$30,000$150–$250

Payback Without the Federal Credit

Before OBBB, typical residential payback was 6–9 years. In 2026, for cash-purchased systems with no federal credit, payback typically lands 10–14 years, with huge state-by-state variation:

For current state-by-state rebate and net metering info, DSIRE is the incentive database run by NC State with federal funding. It's what I check first.

When Solar Still Makes Sense in 2026

When It No Longer Pencils

What About TPO/Lease?

If buying outright no longer pencils, third-party-owned (TPO) or leased systems still get the Section 48E commercial ITC at 30% through 2027. The leasing company claims the credit and theoretically passes some of the value through to you as a lower monthly lease or PPA rate. The catch: you don't own the system, and a TPO contract can make selling the house messier. Run the numbers carefully and have a real estate attorney look over any 20+ year contract before you sign.

Bottom Line

Solar in 2026 is a state-level decision, not a federal one. Run your numbers against your actual state incentives, your actual net metering policy, and your actual electricity rate — not against outdated articles still assuming a 30% credit that no longer exists.

*Run your numbers in the solar ROI calculator — it uses your location, bill, and roof, and assumes no federal credit. For the full rundown of state and utility incentives, see the solar incentives guide.*