How Much Do Solar Panels Cost in 2026?

The cost of solar panels has decreased by over 70% in the past decade, making solar energy more accessible than ever. In 2026, the average cost of a residential solar installation in the United States ranges from $2.50 to $3.50 per watt before incentives, depending on your location, equipment quality, and installer.

After applying the 30% federal tax credit and any state incentives, most homeowners pay significantly less. Let's break down the true cost of going solar and calculate your potential savings.

Average Solar System Costs by Size

Here's what you can expect to pay for different system sizes before and after the federal tax credit:

What Factors Affect Solar Panel Cost?

Several factors influence the total cost of your solar installation:

1. Equipment Quality

• Premium Panels (Tier 1): Brands like SunPower, LG, and Panasonic cost 15-25% more but offer higher efficiency and longer warranties
• Mid-Range Panels: Canadian Solar, Jinko, and Trina offer excellent value with good performance
• Budget Panels: Lower-cost options may save money upfront but could produce less energy over time
• Inverter Choice: Microinverters cost $1,000-$2,000 more than string inverters but offer better monitoring and warranty

2. Location and Labor Costs

• High-Cost States: California, New York, and Massachusetts have higher installation costs ($3.00-$4.00/watt)
• Mid-Range States: Texas, Florida, and Arizona average ($2.50-$3.00/watt)
• Lower-Cost States: Rural areas and some Midwest states ($2.00-$2.75/watt)

3. Roof Complexity

• Simple Roof: Single orientation, minimal obstructions - standard pricing
• Complex Roof: Multiple angles, dormers, skylights - 10-15% higher cost
• Roof Material: Tile and metal roofs require specialized mounting - 5-10% premium
• Ground Mount: Requires trenching and foundation - typically 10-20% more than roof mount

Solar Savings: How Much Can You Save?

Your solar savings depend on your electricity usage, local utility rates, and solar production. Here's how to calculate your potential savings:

Step 1: Know Your Current Electricity Cost

Check your utility bill for your monthly kWh usage and cost per kWh. The national average electricity rate in 2026 is approximately $0.16 per kWh, but rates vary significantly by region:

• Hawaii: $0.35-$0.45 per kWh (highest in US)
• California: $0.25-$0.35 per kWh
• Northeast (NY, MA, CT): $0.22-$0.28 per kWh
• National Average: $0.16 per kWh
• Southeast (FL, GA, NC): $0.12-$0.14 per kWh
• Midwest (TX, OK): $0.10-$0.13 per kWh

Step 2: Calculate Solar Production

Use our Solar Production Calculator to estimate your annual production. A typical 7 kW system produces 9,000-12,000 kWh per year depending on location.

Step 3: Calculate Annual Savings

Annual Savings = Annual Solar Production × Electricity Rate

Example: A 7 kW system in California producing 10,500 kWh/year at $0.28/kWh saves approximately $2,940 per year.

Regional Savings Examples

Here's what homeowners can expect to save in different regions with a 7 kW system:

Note: 25-year savings assume 2% annual electricity rate increases and 0.5% annual panel degradation.

Solar Payback Period

The payback period is how long it takes for your solar savings to equal your initial investment. Here's how to calculate it:

Payback Period = Net System Cost ÷ Annual Savings

Payback Period Examples

• California: $14,700 net cost ÷ $2,940 savings = 5 years
• Massachusetts: $14,700 net cost ÷ $2,106 savings = 7 years
• Florida: $14,700 net cost ÷ $1,404 savings = 10.5 years
• Texas: $14,700 net cost ÷ $1,344 savings = 11 years

After the payback period, your solar panels generate essentially free electricity for the remaining 15-20 years of their lifespan.

Return on Investment (ROI) Analysis

Solar panels typically deliver a 10-20% annual return on investment, outperforming many traditional investments:

• Solar Panels: 10-20% average annual ROI
• Stock Market (S&P 500): 7-10% historical average
• Savings Account: 0.5-2% typical APY
• CD/Bonds: 3-5% typical return

Federal and State Solar Incentives

Take advantage of these programs to maximize your savings:

Federal Investment Tax Credit (ITC)

• 2022-2032: 30% tax credit on total installation cost
• 2033: 26% tax credit
• 2034: 22% tax credit
• 2035+: Credit expires for residential (unless extended)

The ITC applies to the total cost of your system, including equipment, labor, and permitting. You must have sufficient tax liability to claim the full credit, but unused credits can be carried forward to future tax years.

State Tax Credits and Rebates

• New York: 25% state tax credit (up to $5,000) + NYSERDA rebates
• Massachusetts: 15% state credit + SMART program incentives
• South Carolina: 25% state tax credit
• Arizona: 25% state tax credit (up to $1,000)
• Maryland: $1,000 state rebate

Net Metering

Net metering allows you to send excess solar electricity back to the grid and receive credits on your utility bill. Policies vary by state:

• Full Retail Rate: California, New York, Massachusetts (best value)
• Reduced Rate: Some states offer 50-75% of retail rate
• Avoided Cost: Some utilities pay wholesale rates only

Solar Renewable Energy Credits (SRECs)

In some states, you can earn SRECs for every 1,000 kWh your system produces. These credits can be sold to utilities for additional income:

• New Jersey: $200-$250 per SREC
• Massachusetts: $250-$350 per SREC
• Washington DC: $300-$400 per SREC
• Pennsylvania: $30-$50 per SREC

Financing Your Solar Investment

You don't need to pay cash upfront for solar. Compare these financing options:

Solar Loans

• Down Payment: Often $0 down available
• Interest Rates: 3-8% depending on credit and term
• Loan Terms: 5-25 years
• Ownership: You own the system and receive all incentives
• Best For: Homeowners who want to maximize long-term savings

Home Equity Loan/HELOC

• Interest Rates: Often lower than solar loans (4-7%)
• Tax Benefit: Interest may be tax-deductible
• Requirement: Sufficient home equity needed
• Risk: Uses home as collateral

Solar Lease

• Upfront Cost: $0
• Monthly Payment: Fixed payment (typically less than current bill)
• Ownership: Leasing company owns the system
• Incentives: Leasing company keeps tax credit and incentives
• Best For: Those who want simplicity without ownership concerns

Power Purchase Agreement (PPA)

• Upfront Cost: $0
• Payment: Pay per kWh produced (typically 10-20% below utility rate)
• Ownership: Third party owns and maintains system
• Best For: Those who want immediate savings without ownership

Hidden Costs and Considerations

Be aware of these potential additional costs:

• Roof Repairs: If needed before installation, budget $500-$5,000+
• Electrical Upgrades: Panel upgrade if needed - $1,000-$3,000
• Tree Removal: For shading issues - $500-$2,000 per tree
• HOA Fees: Some associations charge review fees - $50-$500
• Monitoring Subscriptions: Some systems require paid monitoring - $10-$20/month

Increasing Home Value

Studies show that solar panels increase home value:

• Homes with solar sell for approximately 4.1% more than comparable homes without solar (Zillow study)
• A 6 kW system adds an average of $14,000-$18,000 to home value
• Solar homes sell 20% faster than non-solar homes
• Buyers increasingly seek energy-efficient, sustainable homes

Conclusion: Is Solar Worth It?

For most homeowners, solar is an excellent investment. Here's a quick summary:

• Yes, strongly recommended if: You have high electricity rates ($0.15+/kWh), good sun exposure, and plan to stay in your home 5+ years
• Yes, good investment if: You have moderate rates, decent sun, and want to reduce carbon footprint
• Maybe wait if: Your roof needs replacement soon, you may move within 2-3 years, or rates are very low
• Consider alternatives if: Heavy shading, very small roof, or rental property

Ready to see your potential savings? Use our free Solar Production Calculator to get personalized estimates for your location.