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Section 25D is dead. Homeowner purchases get $0 federal incentive. Lease/PPA still gets 30% under Section 48 — but only until July 4, 2026. Here's the honest math.
Section 25D — the 30% residential solar tax credit — is dead. If you buy solar with cash or a loan in 2026, you get $0 in federal incentives. That single change rewrites every "lease vs. buy" comparison published before 2026.
Before 2026
30% ITC
Homeowner claimed ~$7,500–$10,500 on tax return
2026: Cash / Loan
$0
Section 25D expired Dec 31, 2025. No credit for homeowners.
2026: Lease / PPA
30% ITC
Third-party owner (TPO) claims Section 48/48E. Savings pass to you.
Without the 30% federal credit, a $30,000 system now costs you the full $30,000 (minus any state incentives). Your payback period just extended by 3–5 years compared to 2024. Cash ownership still produces the highest lifetime savings — but you need more capital and more patience.
Lease and PPA companies are third-party owners (TPOs) that claim the 30% ITC under Section 48/48E. They pass those savings to you through lower monthly payments. Your lease rate effectively includes a ~30% federal subsidy that cash buyers no longer get. This is why lease/PPA is now more competitive than ever — but only until July 4, 2026.
The homeowner solar tax credit (Section 25D) expired December 31, 2025. There is no replacement for homeowner purchases. The only remaining federal solar incentive is Section 48/48E, which requires third-party ownership (lease/PPA). The financing company — not the installer — claims the credit and passes savings to you through lower monthly rates.
The Short Answer
In 2026, leasing solar is now more competitive with buying because homeowner purchases get $0 in federal tax credits (Section 25D expired December 2025). Lease and PPA financing companies still claim the 30% ITC under Section 48/48E and pass savings to you through lower payments. Buy if your state has strong incentives (NJ, RI, CT, MA) and you plan to stay 10+ years. Lease if your state has no incentives or you want immediate savings with $0 down. The Section 48 window closes July 4, 2026 — after that, even lease/PPA loses federal backing.
| Factor | Cash / Loan Purchase | Lease / PPA |
|---|---|---|
| Federal Tax Credit | $0 (Section 25D expired) | 30% (claimed by TPO under 48/48E) |
| Upfront Cost | $20,000–$30,000 | $0 down |
| Monthly Payment | $0 (you own it) | $80–$150/mo typical |
| System Ownership | You own it outright | TPO owns, transfers at term end |
| Maintenance | Your responsibility | TPO covers all maintenance |
| 25-Year Total Savings | Highest (after payback period) | Moderate (savings start day 1) |
| Home Value Impact | Increases ~4% | Minimal (lease transfers) |
| Best When | Strong state incentives, staying 10+ years | No state incentives, want immediate savings |
Buy
$0 (Section 25D expired)
Lease/PPA
30% (claimed by TPO under 48/48E)
Buy
$20,000–$30,000
Lease/PPA
$0 down
Buy
$0 (you own it)
Lease/PPA
$80–$150/mo typical
Buy
You own it outright
Lease/PPA
TPO owns, transfers at term end
Buy
Your responsibility
Lease/PPA
TPO covers all maintenance
Buy
Highest (after payback period)
Lease/PPA
Moderate (savings start day 1)
Buy
Increases ~4%
Lease/PPA
Minimal (lease transfers)
Buy
Strong state incentives, staying 10+ years
Lease/PPA
No state incentives, want immediate savings
This is the comparison other sites won't show you. Three financing paths, one 8kW system, with the real 2026 federal incentive landscape — not outdated 2024 numbers.
| Factor | Cash Purchase | Solar Loan | Lease/PPA (Propel) |
|---|---|---|---|
| Federal Incentive | $0 (25D expired) | $0 (25D expired) | 30% ITC via Section 48 |
| Upfront Cost | $25,000–$35,000 | $0 down | $0 down |
| Monthly Payment | $0 | $150–$300 (6–8% APR) | $80–$150 (fixed) |
| System Ownership | You own | You own | TPO owns → transfer at term |
| Maintenance | You pay | You pay | TPO covers |
| 25-Year Net Cost | $25,000–$35,000 | $35,000–$50,000 (with interest) | $24,000–$45,000 |
| Day-One Savings | No (paid upfront) | Maybe (depends on rate) | Yes (payment < utility bill) |
| FEOC Required | No | No | Yes (Silfab / Q CELLS) |
Cash
$0 (25D expired)
Loan
$0 (25D expired)
Lease/PPA
30% ITC via Section 48
Cash
$25,000–$35,000
Loan
$0 down
Lease/PPA
$0 down
Cash
$0
Loan
$150–$300 (6–8% APR)
Lease/PPA
$80–$150 (fixed)
Cash
You own
Loan
You own
Lease/PPA
TPO owns → transfer at term
Cash
You pay
Loan
You pay
Lease/PPA
TPO covers
Cash
$25,000–$35,000
Loan
$35,000–$50,000 (with interest)
Lease/PPA
$24,000–$45,000
Cash
No (paid upfront)
Loan
Maybe (depends on rate)
Lease/PPA
Yes (payment < utility bill)
Cash
No
Loan
No
Lease/PPA
Yes (Silfab / Q CELLS)
Most "lease vs. buy" comparisons use generic numbers. NuWatt partners with Propel Solar, so we show real Propel pricing: FEOC-compliant equipment (Silfab / Q CELLS panels), verified Section 48 eligibility, and state incentive stacking (SMART, ConnectedSolutions, ADI). Other comparison sites can't show you this because they don't have the data.
Section 48/48E requires that construction begins before July 4, 2026. After that date, lease and PPA also lose the federal incentive — and all financing paths get $0 federal. The next ~3.5 months are the most critical decision window for solar in a decade.
Before July 4, 2026
Lease/PPA = 30% ITC
TPO claims Section 48/48E. Your monthly payment reflects a ~30% federal subsidy. Cash/loan purchases still get $0 federal.
After July 4, 2026
ALL paths = $0 federal
Section 48/48E expires for new projects. Cash, loan, lease, PPA — nobody gets federal incentives. Monthly lease rates will rise 15–25%.
What "Begin Construction" Means
Physical work or 5% safe harbor
The IRS requires either physical work at the site or 5% of total project cost paid. Signing a lease/PPA and paying a deposit before July 4 may qualify — but don't wait.
If you're considering solar in 2026, the math is clear: lock in a lease/PPA before July 4 while the 30% ITC still exists for third-party owners. After that date, every financing option gets more expensive.
Get Your Quote Before the DeadlineHere's the real math for an 8kW system in Massachusetts ($0.28/kWh utility rate). These numbers show why the "best" option depends on your situation.
| Factor | Cash Purchase | Solar Loan (w/ dealer fee) | Solar Lease | PPA |
|---|---|---|---|---|
| Upfront Cost | $26,160 | $0 down | $0 down | $0 down |
| State Incentives | -$10,000 | -$10,000 * | N/A (system owner claims) | N/A (system owner claims) |
| Dealer Fee (hidden) | $0 | +$6,540 (25%) | N/A | N/A |
| Monthly Payment | $0/mo | ~$165/mo (20yr @ 1.49%) | ~$115/mo | ~$0.18/kWh |
| Total Paid Over 25 Years | $16,160 | $39,600 | $34,500 | $43,650 |
| Utility Cost Without Solar | $117,000+ (at 3% annual increases) | |||
| Net 25-Year Savings | $101,000 | $77,400 | $82,500 | $73,350 |
Upfront
$16,160 net
Monthly
$0/mo
Total Paid
$16,160
25-Year Savings
$101,000
Upfront
$0 down
Monthly
~$165/mo
Total Paid
$39,600
25-Year Savings
$77,400
Upfront
$0 down
Monthly
~$115/mo
Total Paid
$34,500
25-Year Savings
$82,500
Upfront
$0 down
Monthly
~$0.18/kWh
Total Paid
$43,650
25-Year Savings
$73,350
* Loan example assumes 20-year term at 1.49% APR with 25% dealer fee (common "low-rate" solar loan structure). In 2026, market-rate solar loans without dealer fees run 6–8% APR. Utility rates assume 3% annual increase from $0.28/kWh. PPA rate assumes $0.18/kWh with 2.9% annual escalator. Section 25D is expired — no federal tax credit for homeowner-owned systems.
There is no one-size-fits-all answer. Here's how three families in different states made their decision — and why each choice was right for their situation.
Montclair, New Jersey
"Used savings from a home refinance to buy outright. NJ's ADI (SREC-II) payments of ~$85.90/MWh over 15 years made the upfront cost manageable even without the federal ITC."
Highest long-term savings. Best for homeowners who plan to stay and have capital.
Plano, Texas
"With no state incentive and $0 federal credit for purchases, a lease at $115/month gave them instant savings without the large upfront commitment."
Immediate savings with zero risk. Best when state incentives are unavailable.
Stamford, Connecticut
"Chose a PPA at $0.18/kWh instead of buying because they plan to move in 6 years. They save roughly $0.12/kWh from day one with no payback period risk."
Pay only for what you produce. Best for homeowners who may relocate.
Lease/PPA payments are estimates based on typical market rates. Actual terms vary by provider. All purchase calculations assume $0 federal tax credit (Section 25D expired) and 3% annual rate increases.
In states with strong state incentives, buying solar still produces the highest long-term returns. Here's what state incentives look like on a typical 8kW system:
Rhode Island
$5,000
$0.65/W incentive
Massachusetts
$1,000
$0.15/W incentive
New Jersey
$0
$0.00/W incentive
Connecticut
$0
$0.00/W incentive
Pennsylvania
$0
$0.00/W incentive
Vermont
$0
$0.00/W incentive
Thinking of financing your purchase with a solar loan? Watch out for dealer fees — the hidden markup that can add 15–25% to your system cost without you even realizing it.
When a solar installer offers you a "low-interest" or "0% APR" loan, the interest cost doesn't disappear — it gets bundled into the loan amount as a "dealer fee." This fee, typically 15–25% of the system price, is added to your loan balance before your first payment.
Ask for the cash price separately
Get the total price if you paid cash, then compare to the financed amount. If the financed amount is higher, the difference is the dealer fee.
Compare "0% APR" to market-rate loans
A 0% APR loan with a 25% dealer fee often costs more than a 5–7% APR loan with no dealer fee. Run the total cost of each over the full term.
Use a home equity loan or HELOC
Home equity loans at 6–8% with no dealer fee can be cheaper than solar-specific loans. Plus, the interest may be tax-deductible.
Negotiate directly
Tell the installer you want to finance through your own lender and ask for the cash price. This removes the dealer fee entirely.
When comparing buying vs. leasing, many homeowners look at the "monthly payment" of a solar loan and compare it to a lease. But if that loan includes a 20–25% dealer fee, the total cost of ownership is inflated well beyond the actual system value. In some cases, a solar loan with dealer fees makes buying more expensive than leasing over the life of the agreement. Always compare total cost (principal + interest + fees) against total lease payments, not just the monthly amount.
With Section 25D dead, lease/PPA is the only path to federal solar incentives for residential projects. The financing company claims 30% under Section 48/48E and passes savings to you — but only for projects that begin construction before July 4, 2026.
New Hampshire
$0
No state incentive
Maine
$0
No state incentive
Texas
$0
No state incentive
Georgia
$0
No state incentive
What happens to solar when you sell your home is one of the biggest differences between owning and leasing — and it can significantly affect your sale.
If you buy and sell before full payback, your return comes from a combination of the electricity savings you earned plus the added home value. In most high-rate states, a purchased system begins returning value within 3–5 years when you include the home value premium.
If you lease and plan to sell, you save money every month from day one with no payback risk. When you sell, the lease transfers to the buyer (most leasing companies make this straightforward). You leave the home having saved money every month without any upfront investment.
Yes (NJ, RI, CT, PA, MA, VT)
Buying likely wins. State incentives offset the lost federal credit.
No (NH, ME, TX, GA)
Lease/PPA has a strong case. You get the 30% ITC benefit indirectly.
Yes
Buying maximizes your 25-year savings and adds home value.
No
Lease/PPA gives you savings from day 1 with $0 down.
10+ years
Buying wins. You'll be past payback and saving thousands per year.
Under 10 years
Lease/PPA avoids the payback risk. Savings are immediate.
Based on state incentives, utility rates, and payback periods for a typical 8kW system, here is our recommendation for each state we serve.
| State | Utility Rate | State Incentive | Purchase Payback | Recommendation | Reasoning |
|---|---|---|---|---|---|
| Rhode Island | $0.27/kWh | $5,000 | 7 yrs | Buy | Strong state incentive ($5,000) + 7-year payback make ownership the clear winner for long-term residents. |
| New Jersey | $0.18/kWh | $0 | 11 yrs | Either | No state incentive, but high utility rates mean decent payback for purchases. A lease also works well for immediate savings. |
| Connecticut | $0.30/kWh | $0 | 8 yrs | Either | No state incentive, but high utility rates mean decent payback for purchases. A lease also works well for immediate savings. |
| Pennsylvania | $0.17/kWh | $0 | 12 yrs | Either | No state incentive, but high utility rates mean decent payback for purchases. A lease also works well for immediate savings. |
| Massachusetts | $0.28/kWh | $1,000 | 8 yrs | Either | Moderate state incentive helps purchases, but a lease is competitive. Choose based on how long you plan to stay. |
| Vermont | $0.21/kWh | $0 | 11 yrs | Either | No state incentive, but high utility rates mean decent payback for purchases. A lease also works well for immediate savings. |
| New Hampshire | $0.22/kWh | $0 | 11 yrs | Either | No state incentive, but high utility rates mean decent payback for purchases. A lease also works well for immediate savings. |
| Maine | $0.20/kWh | $0 | 12 yrs | Either | No state incentive, but high utility rates mean decent payback for purchases. A lease also works well for immediate savings. |
| Texas | $0.14/kWh | $0 | 12 yrs | Lease/PPA | No state incentive and lower utility rates mean a long payback period for purchases. A lease provides immediate savings with the financing company’s 30% ITC benefit. |
| Georgia | $0.14/kWh | $0 | 13 yrs | Lease/PPA | No state incentive and lower utility rates mean a long payback period for purchases. A lease provides immediate savings with the financing company’s 30% ITC benefit. |
Rate
$0.27
Incentive
$5,000
Payback
7 yrs
Strong state incentive ($5,000) + 7-year payback make ownership the clear winner for long-term residents.
Rate
$0.18
Incentive
$0
Payback
11 yrs
No state incentive, but high utility rates mean decent payback for purchases. A lease also works well for immediate savings.
Rate
$0.30
Incentive
$0
Payback
8 yrs
No state incentive, but high utility rates mean decent payback for purchases. A lease also works well for immediate savings.
Rate
$0.17
Incentive
$0
Payback
12 yrs
No state incentive, but high utility rates mean decent payback for purchases. A lease also works well for immediate savings.
Rate
$0.28
Incentive
$1,000
Payback
8 yrs
Moderate state incentive helps purchases, but a lease is competitive. Choose based on how long you plan to stay.
Rate
$0.21
Incentive
$0
Payback
11 yrs
No state incentive, but high utility rates mean decent payback for purchases. A lease also works well for immediate savings.
Rate
$0.22
Incentive
$0
Payback
11 yrs
No state incentive, but high utility rates mean decent payback for purchases. A lease also works well for immediate savings.
Rate
$0.20
Incentive
$0
Payback
12 yrs
No state incentive, but high utility rates mean decent payback for purchases. A lease also works well for immediate savings.
Rate
$0.14
Incentive
$0
Payback
12 yrs
No state incentive and lower utility rates mean a long payback period for purchases. A lease provides immediate savings with the financing company’s 30% ITC benefit.
Rate
$0.14
Incentive
$0
Payback
13 yrs
No state incentive and lower utility rates mean a long payback period for purchases. A lease provides immediate savings with the financing company’s 30% ITC benefit.
Recommendations assume a 10+ year stay, good roof orientation, and average electricity consumption. Individual circumstances may shift the recommendation. Get a personalized analysis with our free quote.
We'll provide a detailed comparison of purchase vs. lease/PPA pricing for your specific home, roof, and energy usage. No commitment.