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Section 25D expired December 31, 2025. No more 30% federal credit for homeowner purchases. But state incentives, falling panel costs, and third-party ownership keep solar viable in most markets.
10
States Analyzed
$0
Federal Credit
6-12yr
Payback Range
Still Active
Sec. 48 Status
Yes, solar is still worth it without the federal tax credit in most states — but the math has changed. States with high electricity rates ($0.25+/kWh) like Massachusetts, Connecticut, Rhode Island, and New Hampshire see payback periods of 6-10 years even without the ITC. Lower-rate states like Texas (14c/kWh) face longer paybacks of 10-12 years. The key shift: solar leases and PPAs are now more competitive than cash purchases because the third-party system owner still claims the commercial ITC under Section 48/48E.
The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, eliminated the Section 25D residential solar tax credit. Here is what that means for homeowners.
All figures based on a typical residential solar installation. States sorted by payback period (fastest first). Click any state for the full analysis.
| State | Avg Rate | System Cost | State Incentives | Net Cost | Payback | 25-Yr Savings |
|---|---|---|---|---|---|---|
| MAMassachusetts | $0.28/kWh | $26,160 | $10,000 | $16,160 | 6 yr | $98,003 |
| NJNew Jersey | $0.18/kWh | $26,016 | $15,000 | $11,016 | 6 yr | $66,939 |
| RIRhode Island | $0.29/kWh | $23,680 | $5,000 | $18,680 | 6.6 yr | $102,530 |
| CTConnecticut | $0.30/kWh | $26,544 | $6,000 | $20,544 | 7 yr | $107,190 |
| NYNew York | $0.23/kWh | $27,328 | $10,000 | $17,328 | 8 yr | $79,663 |
| NHNew Hampshire | $0.27/kWh | $24,070 | $0 | $24,070 | 9.5 yr | $92,510 |
| VTVermont | $0.21/kWh | $24,992 | $3,500 | $21,492 | 11 yr | $70,439 |
| MEMaine | $0.24/kWh | $24,448 | $0 | $24,448 | 11 yr | $81,377 |
| PAPennsylvania | $0.17/kWh | $24,768 | $5,000 | $19,768 | 11.5 yr | $61,981 |
| TXTexas | $0.14/kWh | $23,500 | $0 | $23,500 | 11.6 yr | $74,014 |
Massachusetts
$0.28/kWh avg rate
Net Cost
$16,160
Incentives
$10,000
25-Yr Savings
$98,003
New Jersey
$0.18/kWh avg rate
Net Cost
$11,016
Incentives
$15,000
25-Yr Savings
$66,939
Rhode Island
$0.29/kWh avg rate
Net Cost
$18,680
Incentives
$5,000
25-Yr Savings
$102,530
Connecticut
$0.30/kWh avg rate
Net Cost
$20,544
Incentives
$6,000
25-Yr Savings
$107,190
New York
$0.23/kWh avg rate
Net Cost
$17,328
Incentives
$10,000
25-Yr Savings
$79,663
New Hampshire
$0.27/kWh avg rate
Net Cost
$24,070
Incentives
$0
25-Yr Savings
$92,510
Vermont
$0.21/kWh avg rate
Net Cost
$21,492
Incentives
$3,500
25-Yr Savings
$70,439
Maine
$0.24/kWh avg rate
Net Cost
$24,448
Incentives
$0
25-Yr Savings
$81,377
Pennsylvania
$0.17/kWh avg rate
Net Cost
$19,768
Incentives
$5,000
25-Yr Savings
$61,981
Texas
$0.14/kWh avg rate
Net Cost
$23,500
Incentives
$0
25-Yr Savings
$74,014
High electricity rates and strong state incentive programs are the two factors that matter most now that the federal credit is gone.
Payback under 8 years
High electricity rates ($0.25+/kWh) combined with strong state incentive programs deliver payback faster than most stock market investments.
Payback 8-10 years
Moderate rates and decent state programs still deliver strong long-term ROI. Lease/PPA options are especially attractive in these states.
Payback 10+ years
Lower electricity rates mean slower payback, but 25-year savings still exceed $60,000. Lease/PPA with Section 48 ITC is the recommended path.
The impact varies dramatically by state. States with strong incentive programs barely felt it. States that relied on the federal credit saw payback periods nearly double.
2025 Payback
3yr
w/ 30% ITC
2026 Payback
6yr
no ITC
2025 Payback
1.5yr
w/ 30% ITC
2026 Payback
6yr
no ITC
2025 Payback
4.1yr
w/ 30% ITC
2026 Payback
6.6yr
no ITC
2025 Payback
4.5yr
w/ 30% ITC
2026 Payback
7yr
no ITC
2025 Payback
4yr
w/ 30% ITC
2026 Payback
8yr
no ITC
2025 Payback
6.6yr
w/ 30% ITC
2026 Payback
9.5yr
no ITC
2025 Payback
7yr
w/ 30% ITC
2026 Payback
11yr
no ITC
2025 Payback
7.5yr
w/ 30% ITC
2026 Payback
11yr
no ITC
2025 Payback
7.5yr
w/ 30% ITC
2026 Payback
11.5yr
no ITC
2025 Payback
8.1yr
w/ 30% ITC
2026 Payback
11.6yr
no ITC
Before OBBBA, buying solar with cash was almost always the best financial move because you kept the 30% ITC. Now that the homeowner credit is gone, the math has flipped for many households.
Third-party owner claims Section 48/48E ITC
The lease or PPA company still gets the 30% commercial tax credit (base rate) on projects starting construction before July 4, 2026.
$0 down, savings from day one
No upfront cost means no payback period to worry about. Your monthly payment is typically 10-30% less than your current electric bill.
Maintenance included
The system owner handles monitoring, repairs, and panel cleaning for the duration of the agreement.
Still competitive long-term
While buying still wins over 25 years, the gap has narrowed from $30,000+ to $10,000-15,000 in many states.
Without the federal credit acting as a universal equalizer, these state-level factors now drive the entire financial equation.
The single most important factor. At $0.30/kWh (Connecticut), solar saves $2,940/yr on an 8kW system. At $0.14/kWh (Texas), the same system saves $2,030/yr on 10kW. Higher rates = faster payback.
States like NJ ($15,000 SuSI), MA ($10,000 SMART + rebates), and RI ($5,000 REF) dramatically reduce net cost. States with $0 in incentives (NH, ME, TX) rely entirely on bill savings.
Texas produces 14,500 kWh/yr on a 10kW system vs. 9,200 kWh/yr in Vermont on 8kW. More sun means more savings per dollar invested, partially offsetting lower electricity rates.
States with 1:1 retail rate net metering (MA, CT, NJ) maximize the value of every kWh exported. States with lower credit rates (NH at ~85%, TX solar buyback plans) reduce effective savings.
Property and sales tax exemptions are hidden value. NH has no sales tax. TX offers 100% property tax exemption. These save $500-2,000+ over the system lifetime without affecting payback calculations.
Get a personalized analysis based on your address, utility, and energy usage.
Get Free EstimateYes, in most states. The economics have shifted but solar remains a strong investment, especially in states with high electricity rates ($0.25+/kWh) and robust state incentive programs. States like Massachusetts, Connecticut, Rhode Island, and New Jersey see payback periods of 6-7 years even without the federal ITC. The key factor is your electricity rate: the higher it is, the faster solar pays for itself regardless of federal incentives.
No. The Section 25D residential solar Investment Tax Credit (ITC) expired on December 31, 2025 as part of the One Big Beautiful Bill Act signed July 4, 2025. Homeowners who purchase solar with cash or a loan receive $0 in federal tax credits. However, Section 48/48E (the commercial ITC) is still available for third-party system owners, meaning lease and PPA companies can still claim the credit and pass savings to homeowners through lower monthly payments.
Section 48/48E is the commercial/investment tax credit that is still available for projects beginning construction before July 4, 2026. When you lease solar panels or sign a Power Purchase Agreement (PPA), the financing company owns the system and claims the 30% ITC. They pass some of that savings to you through lower monthly payments. This makes leases and PPAs more financially competitive than cash purchases in 2026 — a reversal from previous years when buying was almost always better.
New Jersey leads with the SuSI/ADI program worth approximately $15,000 over 15 years. Massachusetts offers the SMART production incentive plus Mass Save rebates totaling around $10,000. Rhode Island provides the REF rebate ($0.65/W up to $5,000) plus the REG production program. Connecticut has the RSIP rebate at $0.25/W. New York offers a 25% state tax credit (up to $5,000) plus the NY-Sun rebate. These states achieve 6-8 year payback periods even without the federal credit.
In 2026, leasing and PPAs have become more competitive relative to buying because the third-party system owner can still claim the Section 48/48E commercial ITC (30% credit). With a lease or PPA, you get $0 down and immediate savings on day one. Buying still offers higher long-term savings over 25 years, but the gap has narrowed significantly now that buyers cannot claim the federal credit. The best choice depends on your financial situation, how long you plan to stay in your home, and your state's incentive structure.
Payback periods range from 6 to 12 years depending on your state. States with high electricity rates and strong incentives (MA, CT, RI, NJ) see 6-7 year payback. States with moderate rates (NH, NY, ME, VT) see 8-11 years. States with lower rates and fewer incentives (PA, TX) see 11-12 years. All states still achieve positive ROI within the 25-year panel warranty period, with total savings ranging from $62,000 to $107,000.
Each state page includes detailed incentive breakdowns, utility comparisons, net metering rules, and local FAQs.
Net Cost
$16,160
Payback
6 years
Top incentive:
SMART Program — Variable rate per kWh
Net Cost
$11,016
Payback
6 years
Top incentive:
SuSI/ADI Program — $0.90/W over 15 years
Net Cost
$18,680
Payback
6.6 years
Top incentive:
REG Program — Above-market rate per kWh
Net Cost
$20,544
Payback
7 years
Top incentive:
RSIP Rebate — $0.25/W
Net Cost
$17,328
Payback
8 years
Top incentive:
NY-Sun Rebate — $0.20/W (up to $5,000)
Net Cost
$24,070
Payback
9.5 years
Top incentive:
Net Metering (NEM 2.0) — ~75-95% of retail rate
Net Cost
$21,492
Payback
11 years
Top incentive:
Clean Energy Development Fund — $0.10/W (capped at $3,500)
Net Cost
$24,448
Payback
11 years
Top incentive:
Net Energy Billing — Full retail rate
Net Cost
$19,768
Payback
11.5 years
Top incentive:
SREC Program — ~$30-45/MWh
Net Cost
$23,500
Payback
11.6 years
Top incentive:
Property Tax Exemption — 100% of added value
While homeowners lost Section 25D, the commercial ITC under Section 48/48E remains active and directly impacts your solar options.
Base ITC
Standard commercial credit
Domestic Content Bonus
US-made panels/inverters
Energy Community Bonus
Former fossil fuel areas
Low-Income Bonus
Qualifying census tracts
Maximum Possible ITC
Up to 70%Available for projects beginning construction before July 4, 2026. The third-party system owner (financing company) claims the credit, not the installer or homeowner.
Get a personalized estimate that accounts for your state incentives, utility rate, roof orientation, and financing options. No obligation, no pressure.
NABCEP certified installers. 2,500+ installations. Serving 10 states.