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The federal tax credit is gone. Here is the honest math on why solar is still one of the best financial decisions you can make.
$2.80-$3.20/W · 8-12yr payback · $50K-$100K+ lifetime savings
The federal Section 25D residential solar tax credit expired on December 31, 2025. Homeowners who buy solar with cash or a loan get $0 in federal credits. But solar is still worth it for most homeowners because:
Bottom line: An 8kW system in a high-rate state delivers $50,000-$100,000+ in 25-year savings. Even in low-rate states, payback is 12-15 years with decades of free electricity after.
The Inflation Reduction Act's Section 25D residential solar tax credit was repealed by the One Big Beautiful Bill Act (OBBBA), signed July 4, 2025. For homeowner-owned solar systems (cash or loan purchases), the federal credit is $0.
The honest take from an installer:
Yes, losing the 30% credit hurts. An $24,000 system now costs $24,000 instead of $16,800 net. But the credit was always a subsidy — it wasn't the reason solar worked financially. The real reason solar works is that utility electricity costs $0.15-0.33/kWh and rises every year, while solar electricity costs $0.06-0.08/kWh and stays flat for 25+ years.
Three fundamental forces make solar a strong investment even without the federal credit.
Utility rates have risen 3-5% annually. In the Northeast, rates hit $0.26-0.33/kWh in 2026. AI data centers, grid upgrades, and fuel costs are accelerating this trend.
The math: At $0.30/kWh rising 4%/year, you will pay $85,000+ for electricity over 25 years. Solar locks you in at $0.07/kWh.
In 2020, a residential system cost $3.50-$4.50/W. In 2026, it costs $2.80-$3.20/W. Manufacturing scale, improved efficiency, and competition have driven prices down permanently.
The math: An 8kW system in 2020 was ~$32,000. In 2026, it is ~$24,000. The price drop more than offsets the lost credit in many states.
States with strong programs (MA, NJ, RI, CT) offer production payments, rebates, and net metering credits that replace much of the federal ITC value. These programs predate the federal credit and remain funded.
Example: MA SMART 3.0 pays $0.03/kWh for 20 years. On an 8kW system producing 9,600 kWh/yr, that is $5,760 over the program life.
Based on an 8kW system with Hyundai 440W panels. Cash purchase, no federal credit. State incentives included where applicable.
| State | Utility Rate | Cost/W | Cash Payback | Key Incentive | 25yr Savings |
|---|---|---|---|---|---|
| Massachusetts | $0.33/kWh | $3.00-3.40 | 8-10 yrs | SMART 3.0: $0.03/kWh for 20 yrs | $70K-$100K+ |
| Connecticut | $0.30/kWh | $3.10-3.50 | 9-11 yrs | RRES: 1:1 net metering + tax exempt | $60K-$85K |
| Rhode Island | $0.29/kWh | $3.05-3.35 | 8-10 yrs | REF: $0.65/W + REG: $0.27/kWh | $65K-$90K |
| New Jersey | $0.26/kWh | $2.90-3.30 | 10-12 yrs | ADI: $85.90/MWh for 15 yrs | $50K-$75K |
| New Hampshire | $0.27/kWh | $3.03 | ~9.5 yrs | NEM 2.0 ~85% retail credit | $45K-$65K |
| Maine | $0.27/kWh | $2.91-3.19 | 12-17 yrs | Net Energy Billing: 1:1 retail | $40K-$60K |
| Vermont | $0.23/kWh | $3.10-3.40 | 11-14 yrs | Net metering + GMP battery program | $35K-$55K |
| Pennsylvania | $0.20/kWh | $2.85-3.25 | 11-14 yrs | SRECs + net metering | $35K-$55K |
| Texas | $0.15/kWh | $2.80-3.20 | 12-15 yrs | No state incentives | $30K-$50K |
Savings estimates assume 4% annual utility rate inflation and 0.5% annual panel degradation. Lease/PPA payback is immediate (Day 1 savings).
Solar is not for everyone. Here are the situations where we would recommend waiting or choosing an alternative.
At low usage, the payback period stretches beyond 15 years. A lease/PPA might still work, but the savings are modest.
Trees or buildings blocking 40%+ of your roof year-round cut production so much that solar economics don't work. Consider tree trimming or a ground-mount system.
Cash-purchase solar needs 8-12 years to pay back. If you're moving soon, a lease transfer adds friction. However, solar does increase home sale price by $15K-$25K.
If your roof has less than 10 years of life, re-roof first. Removing and reinstalling panels costs $2,000-$5,000.
Very low electricity rates (rare in our service area) make the payback 15+ years. But rates are rising — even $0.12/kWh states will hit $0.18+ within a decade.
The biggest shift in 2026 solar economics is this: homeowners lost the 30% tax credit, but financing companies kept theirs. Under Section 48/48E, third-party system owners (lease and PPA companies) can still claim the 30% commercial ITC on projects beginning construction before July 4, 2026. They pass that savings to you through lower monthly rates.
They own the panels and claim the 30% Section 48 ITC. On a $24,000 system, that is $7,200 in credits they use to lower your rate.
Your rate is 10-30% below your utility rate from Day 1. No upfront cost. No maintenance costs. Production guaranteed.
No 8-12 year payback period. Your total electricity cost drops from month one.
Section 48/48E requires “beginning of construction” before July 4, 2026. After that date, lease/PPA rates will likely increase. Act before the deadline to lock in the best rates.
If the upfront cost is holding you back, there's an option that combines the best of leasing and buying.
We'll notify you when Propel launches in your state — no spam, no pressure.
Battery storage has shifted from a luxury to a financial asset. With time-of-use rates, demand response programs, and increasing grid instability, a battery can generate $200-$500/year in additional revenue on top of backup power protection.
Keep your lights, fridge, and internet running during outages. Critical in NE ice storms and TX grid events.
Store cheap solar energy during the day, use it during expensive peak hours. Saves $100-$300/year in TOU markets.
Programs like ConnectedSolutions (MA/RI/CT) pay $225-$275/kW/summer. A 10kWh battery earns $1,000-$1,400/year.
Our recommendation: If you are in a state with demand response programs (MA, RI, CT) or time-of-use rates, adding a battery can cut your payback by 1-3 years and generate ongoing income. In TX, a battery is essential for grid reliability during extreme weather events. See our best home battery 2026 guide for specific recommendations.
Some homeowners wait for the “right time” to go solar. Here is what waiting actually costs you.
$1,500-$3,000
Lost savings per year of delay (high-rate state)
$800-$1,500
Lost savings per year of delay (low-rate state)
July 4, 2026
Section 48 lease/PPA deadline
Panel manufacturing costs have largely hit their floor. The 2024-2025 tariff increases (14.25% on imported panels) are now permanent. Solar module prices are not expected to drop further in 2026-2027. Meanwhile:
Rate: $0.33/kWh, 4% annual increase, 9,600 kWh/yr production
Rate: $0.26/kWh, ADI $85.90/MWh x 15yr, 10,000 kWh/yr
Rate: $0.15/kWh, no state incentives, 12,000 kWh/yr
How does a solar investment compare to other places you could put $24,000?
| Investment | Annual Return | Risk | Tax Treatment | 25yr Value |
|---|---|---|---|---|
| Solar (high-rate state) | 8-12% equivalent | Very low | Tax-free savings | $70K-$100K+ |
| S&P 500 Index | ~10% (historical avg) | Medium-high | Capital gains taxed | $60K-$100K (pre-tax) |
| High-Yield Savings | ~4.5% | Very low | Interest taxed | $40K-$50K (pre-tax) |
| Bonds (Treasury) | ~4% | Low | Interest taxed | $38K-$45K (pre-tax) |
Solar returns are tax-free (you avoid paying for electricity vs. earning taxable investment income). Real after-tax comparison favors solar even more.
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