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The death of the residential tax credit changed the math. Here's how each financing option compares now — and which one works best for your state.
Before 2026, buying solar with cash or a loan was the clear winner for most homeowners. The 30% federal tax credit (Section 25D) slashed upfront costs by thousands, making ownership the obvious financial choice.
That credit expired on December 31, 2025. Homeowners who buy with cash or a loan now receive $0 in federal tax credits.
But here's what most people don't realize: solar lease and PPA companies still qualify for the 30% Investment Tax Credit under Section 48/48E, because the installer — not the homeowner — owns the system. They pass those savings through to you in the form of lower monthly rates, making third-party ownership significantly more competitive than it was before.
Each option has different trade-offs for upfront cost, monthly savings, and long-term return. Your state incentives determine which one wins.
| Feature | Cash | Solar Loan | Solar Lease | PPA |
|---|---|---|---|---|
| Upfront Cost | $20K–$30K | $0 down | $0 down | $0 down |
| Monthly Payment | $0 | $120–$200/mo | $80–$150/mo | Varies by usage |
| Federal Tax Credit | $0 (expired) | $0 (expired) | 30% to installer | 30% to installer |
| Who Owns System | You | You | Leasing company | PPA provider |
| Maintenance | You | You | Included | Included |
| 25-Year Savings | Highest | High | Moderate | Moderate |
| Home Value Impact | +4% | +4% | Minimal | Minimal |
| Best For | Homeowners who plan to stay 10+ years and want maximum lifetime savings. Best in states with strong incentives. | Homeowners who want ownership benefits without paying upfront. Look for 0% dealer fees and rates under 6%. | Homeowners who want savings with zero risk. The installer owns and maintains the system for the lease term. | Homeowners who want to pay only for the power produced, at a rate lower than the utility. Great in high-rate states. |
Best for: Homeowners who plan to stay 10+ years and want maximum lifetime savings. Best in states with strong incentives.
Best for: Homeowners who want ownership benefits without paying upfront. Look for 0% dealer fees and rates under 6%.
Best for: Homeowners who want savings with zero risk. The installer owns and maintains the system for the lease term.
Best for: Homeowners who want to pay only for the power produced, at a rate lower than the utility. Great in high-rate states.
State incentives are the deciding factor now that the federal credit is gone. Here's our recommendation for an 8 kW system in each state we serve.
Strong incentives offset the loss of the federal credit. Buying maximizes long-term savings.
Strong incentives offset the loss of the federal credit. Buying maximizes long-term savings.
Strong incentives offset the loss of the federal credit. Buying maximizes long-term savings.
Strong incentives offset the loss of the federal credit. Buying maximizes long-term savings.
Strong incentives offset the loss of the federal credit. Buying maximizes long-term savings.
Moderate incentives still favor ownership for long-term value, though the margin is thinner.
Moderate incentives still favor ownership for long-term value, though the margin is thinner.
No state incentives mean leasing lets the installer capture the 30% ITC and pass savings to you.
No state incentives mean leasing lets the installer capture the 30% ITC and pass savings to you.
No state incentives mean leasing lets the installer capture the 30% ITC and pass savings to you.
No state incentives mean leasing lets the installer capture the 30% ITC and pass savings to you.
* Recommendations are general guidance based on available state incentives. Your actual best option depends on electricity rates, roof orientation, credit score, and how long you plan to stay in your home. Get a personalized comparison with a free quote.
With homeowners no longer eligible for the federal tax credit, third-party ownership models have a structural advantage they didn't have before.
Because the leasing or PPA company owns the system, they claim the 30% Investment Tax Credit under Section 48/48E. This credit is unavailable to homeowners who buy (Section 25D expired), so only third-party owners can capture it.
The 30% ITC reduces the installer's cost basis, allowing them to offer lower monthly lease payments or per-kWh PPA rates than before. Many homeowners now pay 20-40% less than their utility bill from day one.
No upfront investment means no payback period to worry about. You save money from month one without taking on any financial risk. If you sell your home, the lease transfers or can be bought out.
The leasing company is responsible for all system maintenance, repairs, and replacements for the duration of the agreement. If an inverter fails or a panel cracks, it's their problem, not yours.
Most lease and PPA providers include 24/7 system monitoring as part of the agreement. They proactively detect issues and schedule service calls, so you never have to worry about production drops going unnoticed.
Worried about moving? Solar leases and PPAs can be transferred to the next homeowner at closing. Many buyers see solar as a plus because it means lower electricity bills from the day they move in.
Get a personalized side-by-side comparison of cash, loan, lease, and PPA pricing for your home. Free, no-obligation quotes from NuWatt Energy.