Solar panels are worth it for many homeowners, but not for everyone. They pay off best if you own your home, have a sunny roof that will not need replacing soon, pay high electricity rates and plan to stay for years. In our worked example below, a cash-bought system at 2025 median prices pays for itself in about 13 years at the national average rate. High-rate states can be faster, and cheap-power states much slower.
The math changed in 2026. The 30% federal tax credit for homeowners no longer applies to systems finished after December 31, 2025, so the quote you get now is close to what you will actually pay. This guide walks through costs, savings, pros and cons, and how to run the numbers for your own house.
When solar is worth it and when it is not
Start with a quick fit check. Solar tends to make sense if most of these are true:
- You own the house and expect to live there at least 10 years.
- Your roof faces roughly south, west or east and gets little shade.
- The roof has many years of life left, so panels will not have to come off for a re-roof.
- You pay well above the national average for electricity.
- You use a lot of power during the day, or you plan to add an electric car or heat pump.
On the other hand, solar is usually a poor deal if you rent, if trees or nearby buildings shade the roof, or if you may move in a few years. It is also harder to justify where power is cheap. In those cases a utility green power plan or simple efficiency upgrades often do more for less money.
What solar panels cost in 2026
The best public price data comes from Lawrence Berkeley National Laboratory, which tracks hundreds of thousands of real installs. Its 2026 distributed solar data update found that the median homeowner-owned system installed in 2025 was 7.7 kilowatts. It cost about $3.60 per watt before incentives, or roughly $27,700.
How you pay matters a lot. Cash buyers paid a median of about $3.00 per watt, or around $23,100 for that size. Loan-financed systems came in near $4.50 per watt, about $34,700, and that is before interest. Adding a battery raised the price by roughly $2.10 per watt for cash buyers. Our full guide to solar panel costs in 2026 breaks these numbers down by system size.
The bigger change is the tax credit. According to the IRS page on the Residential Clean Energy Credit, the credit does not apply to property placed in service after 2025. So a system finished in 2026 gets no federal homeowner credit, even if you paid for it earlier. Some states, cities and utilities still offer rebates, so check locally before you sign.
How much solar panels can save you
Your savings depend on two things: how much power the panels make and what each kilowatt-hour is worth to you. Power you use at home is worth your full retail rate, because you no longer buy it from the utility. Power you send to the grid is worth whatever your utility credits for it, which is often less.
Rates vary hugely by state. Here are average residential prices from the EIA for July 2026, along with what 1,000 kWh of solar used at home would save at that rate:
| Location (July 2026) | Average residential price | Value of 1,000 kWh used at home |
|---|---|---|
| Hawaii | 48.00 cents/kWh | about $480 |
| California | 33.61 cents/kWh | about $336 |
| Massachusetts | 30.49 cents/kWh | about $305 |
| US average | 18.31 cents/kWh | about $183 |
| Texas | 15.88 cents/kWh | about $159 |
| Washington | 14.71 cents/kWh | about $147 |
| Louisiana | 12.72 cents/kWh | about $127 |
These are preliminary monthly figures from the EIA’s table of average electricity prices by state, and summer prices can differ from the yearly average. Still, the gap is the point. The same panels can save three times as much in Hawaii as in Louisiana.
Rates have also been climbing. The EIA’s October 2026 outlook puts the US average residential price at about 16.5 cents in 2024, 17.3 cents in 2025 and 18.2 cents in 2026, with 18.7 cents forecast for 2027. If that trend continues, each kilowatt-hour your roof produces becomes worth a bit more every year.
A worked payback example
The payback period is how long it takes for bill savings to cover what you paid. Here is a simple illustration, not a quote:
- System: 7.7 kW, bought with cash at the 2025 median of $3.00 per watt, so about $23,100.
- Production: about 10,000 kWh a year, a fair guess for a fairly sunny roof of that size.
- Value: all of it used at home at about 18.3 cents per kWh, so roughly $1,830 a year.
- Payback: $23,100 divided by $1,830 is about 12.6 years.
Change one input and the answer moves fast. Finance the same system at $34,700 and payback stretches past 19 years before interest. Then again, at 30 cents per kWh with full retail credit, yearly savings rise to about $3,000 and payback drops to under 8 years. But that only holds if your utility credits exports at retail, and many no longer do.
Panels also lose a little output each year. A large review of field data by NREL researchers found a median degradation rate of about 0.5% a year. At that pace, panels still make roughly 88% of their original output after 25 years. So a system that pays back in 12 or 13 years can keep saving money for a decade or more after that.
Pros of solar panels
- Lower bills. Every kilowatt-hour you use from your roof is one you do not buy.
- A hedge against rate increases. Once the system is paid off, your cost per kWh is fixed while utility rates keep moving.
- Long life, little upkeep. Panels have no moving parts and degrade slowly, as the NREL data shows.
- Possible home value boost. The Department of Energy’s homeowner’s guide to going solar cites research where buyers paid a premium of about $15,000 for homes with an average-sized, owned array. Leased systems showed mostly neutral effects.
- Lower emissions. Solar makes power without burning fuel, which cuts the carbon footprint of your electricity. Our explainer on what renewable energy is covers how solar fits into the wider grid.
Cons and risks
- High upfront cost. Even a cash system is a five-figure purchase, and it now comes with no federal credit.
- Long payback in cheap-power states. Where rates sit near 13 to 15 cents, payback can take close to two decades.
- Roof complications. If the roof needs replacing in a few years, panels must be removed and reinstalled, which adds cost.
- Export rules can change. Utilities and regulators set how exports are credited, and new customers often get less generous terms than earlier ones.
- Equipment beyond panels. Inverters usually wear out sooner than panels, so plan for a replacement during the system’s life.
- Selling and contracts. Aggressive door-to-door sales are common. Leases and power purchase agreements can include yearly price escalators and transfer rules that complicate selling your home.
California: net billing changes the math
California has some of the highest rates in the country, which helps solar. However, new customers of the three big investor-owned utilities have been on the Net Billing Tariff since April 15, 2023. Under it, exported power is credited at values that the California Public Utilities Commission says are usually lower than what you pay for grid power.
In practice, that means the value of solar in California depends on how much you use yourself. Running laundry, dishwashers and EV charging at midday helps. A battery helps more, because it stores cheap midday solar for the expensive evening hours instead of exporting it. That is why so many California systems now include storage, even though it raises the upfront price.
How to decide if solar is worth it for you
- Pull 12 months of bills. Note your yearly kWh use and your real rate, including fees.
- Check your roof. Age, shade, size and direction all matter. Fix the roof first if it is near the end of its life.
- Learn your export rules. Ask your utility how exported power is credited for new customers.
- Get at least three quotes. Berkeley Lab found median prices among large installers ranged from about $2.40 to $6.30 per watt in 2025, so comparison shopping pays.
- Run the payback yourself. Divide the net price by expected yearly savings, then compare that with how long you plan to stay.
If the payback lands well inside the time you expect to own the house, solar is likely worth it. If it lands close to or beyond that, wait, shop harder or put the money into efficiency first. For more explainers on energy and technology, browse our science and technology guides.
This is general information, not financial advice.
Frequently asked questions
Are solar panels worth it without the tax credit?
Often yes, but payback is longer. In our example, a cash system at 2025 median prices pays back in about 13 years at the national average rate. In high-rate states it can be much faster.
What are the main solar panels benefits?
Lower electric bills, protection from rising rates, low maintenance and lower emissions. An owned system may also add value when you sell your home.
What are the biggest solar panels pros and cons?
The pros are savings and long panel life. The cons are a high upfront cost, long payback where power is cheap, and export rules that can reduce what your extra power earns.
How long do solar panels last?
Panels typically keep working for decades. Field data shows a median output loss of about 0.5% a year, so most still produce close to 90% of their original output after 25 years.
Is solar worth it in California?
It can be, because California rates are among the highest in the US. Under net billing, though, savings depend on using solar power at home, and a battery often improves the numbers.
Have a question about this topic? Ask in the comments below. Our editors read every comment and answer questions here, and we add useful answers to the guide.
Sources
- eta-publications.lbl.gov/publications/us-distributed-solar-and-storage-0
- irs.gov/credits-deductions/residential-clean-energy-credit
- eia.gov/electricity/monthly/epm_table_grapher.php
- eia.gov/outlooks/steo/pdf/steo_full.pdf
- osti.gov/biblio/1073525
- energy.gov/eere/solar/homeowners-guide-going-solar
- cpuc.ca.gov/industries-and-topics/electrical-energy/demand-side-mana…