Quick answer: NREL benchmarks residential solar at $2.95 per watt (modeled market price, 2025Q1), so a typical 8 kW system runs roughly $22,000 to $26,000 before local variation. The big change this year: the 30% federal residential credit (Section 25D) expired on December 31, 2025, so a system you buy with cash or a loan in 2026 gets no federal credit. Leases and power purchase agreements can still capture the commercial credit through the provider. State rebates, SRECs and net metering are now the main ways to cut the price.
The federal tax credit is gone for purchases
The Residential Clean Energy Credit under Section 25D paid 30% of the cost of a purchased solar system back at tax time. It ended on December 31, 2025 under the One Big Beautiful Bill Act, years earlier than its original 2032 schedule. Systems whose installation is completed in 2026 or later do not qualify — the test is when installation finishes, not when the utility grants permission to operate. If installation of your system was completed by December 31, 2025, you can still claim it on your 2025 return.
One route to federal money remains. Under a lease or power purchase agreement, a third party owns the system on your roof and claims the commercial credit under Section 48E, subject to restrictions added in 2025 — ask the provider to show in writing that the credit applies and how it reaches your payment. You do not receive the credit yourself, and you do not own the system, so weigh the lifetime cost carefully before choosing this over ownership.
What solar costs in 2026 by system size
| System size | Typical home | Cost at $2.50/W | Cost at $3.50/W |
|---|---|---|---|
| 4 kW | Small home, low usage | $10,000 | $14,000 |
| 6 kW | Average 1,500 sq ft home | $15,000 | $21,000 |
| 8 kW | Average US home | $20,000 | $28,000 |
| 10 kW | Large home or EV charging | $25,000 | $35,000 |
| 12 kW | High usage, all-electric | $30,000 | $42,000 |
These are gross prices with no federal credit applied, which is what a 2026 purchase actually costs. Any quote showing an “after 30% credit” column for a 2026 purchase is using outdated figures.
Where the money actually goes
Panels are the cheapest part of the job. Of the roughly $2.95 per watt NREL benchmarks for residential solar, only a small fraction is the panels themselves. The rest is the inverter, racking, wiring, labour, permits, inspection, and installer overhead. That is why cutting panel brand rarely saves much, and why installer competition in your area moves the price more than equipment choice.
- Panels: a modest share of the installed price. Module prices move with global supply, and this is the part of a quote least worth optimising.
- Inverter: a meaningful line item, and generally higher for microinverters than for a string inverter.
- Everything else: mounting hardware, electrical work, labour, permitting, interconnection, and margin.
Costs vary a lot by state
State pricing moves with installer density, permitting speed, and labour costs. Mature markets such as California, Arizona, Texas and Florida sit at the lower end, below the national benchmark, because permitting is routine and installers compete hard. Smaller markets in the Northeast and Mountain West run higher, above the national benchmark, because crews travel further and permitting takes longer. Roof complexity matters as much as geography: a simple south-facing asphalt roof is far cheaper than a steep tile or slate roof with multiple planes.
State incentives that still exist
| State | Incentive | Value |
|---|---|---|
| New York | State tax credit | 25% of cost, up to $5,000 |
| South Carolina | State tax credit | 25% of cost, with annual limits and a multi-year carryforward — confirm current terms on DSIRE |
| Arizona | State tax credit | 25% of cost, up to $1,000 |
| Massachusetts | State tax credit | 15% of cost, up to $1,000, stacks with SMART and SRECs |
| Oregon | State rebate | Up to $2,500 for solar plus $2,500 for storage |
| California | SGIP battery rebates, property tax exclusion | Varies; check the current sunset date for the exclusion on DSIRE |
Many states also offer SRECs (tradeable certificates for the power you generate), sales tax exemptions, property tax exemptions, and utility rebates. Values change with programme funding, so check the DSIRE database at dsireusa.org for your exact address before signing anything.
Does solar still pay off?
Yes, but more slowly than in 2024. At current installed costs and an average US residential rate of about 18.2 cents per kWh in 2026 (EIA), payback depends heavily on your own utility rate, net metering terms and sunlight. Run the numbers on your last twelve bills rather than on a national average. The case is strongest where electricity is expensive and net metering is generous, and weakest where power is cheap and the utility pays little for exported energy.
How to compare quotes without getting burned
- Compare price per watt, not total price. A cheaper total often just means a smaller system that will not cover your usage.
- Get at least three quotes. Bids on the same roof routinely differ by thousands.
- Check the production estimate in kWh per year, and compare it against your last 12 electricity bills.
- Ask what net metering applies in your utility territory. This affects savings more than panel brand.
- Read the warranty terms: panel product warranty, performance warranty (about 25 years, degrading roughly 0.5% a year), inverter warranty, and workmanship warranty.
- For a lease or PPA, calculate the 25-year total, including annual escalator clauses, and compare it against buying outright.
- Confirm roof condition first. If the roof needs replacing within 10 years, do that before the panels go on.
Frequently asked questions
Can I still get the 30% federal tax credit?
Not for a system you buy in 2026. Section 25D ended for expenditures made after December 31, 2025, and an expenditure counts as made when installation is completed. If installation was finished by that date, you can claim it on your 2025 return.
Are prices going to fall now that the credit is gone?
Residential installations are widely expected to fall in 2026, which puts pressure on installers to compete on price. That may soften quotes in busy markets, but it has not offset the loss of the credit.
Is a lease better than buying now?
A lease or PPA lowers the upfront cost to near zero and captures the commercial credit through the provider, but you do not own the system, savings are smaller, and escalator clauses can raise payments each year. Buying still produces more lifetime savings if you can fund it.
Do panels add to home value?
Owned systems generally add value; leased systems can complicate a sale because the buyer must assume the contract.
Last updated September 2026. Costs are national ranges and change by state, roof and installer. Tax rules described here are general information, not tax advice; consult a tax professional about your situation.
Sources
IRS — Residential Clean Energy Credit and the IRS FAQs on the 2025 changes to Section 25D, which establish that the credit ends for expenditures made after 31 December 2025 and that an expenditure counts as made when installation is completed; DOE/NREL Solar PV System Cost Benchmarks for installed cost per watt; EIA Short-Term Energy Outlook for average residential electricity prices; and NREL on panel lifetime and degradation. State incentive terms change frequently — verify any figure in the state table against DSIRE before relying on it.
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