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The federal residential solar tax credit (Section 25D) expired on December 31, 2025. Homeowners who buy solar in 2026 get $0 in federal credits. That changes the equation — but it does not change the answer. Solar still pays for itself in 8-12 years in most states, and the gap between solar costs and rising utility rates gets wider every year.
This is our definitive, state-by-state analysis covering all 7 markets we serve. We compare cash purchase vs. lease/PPA, show exactly which state incentives replace the federal credit, and explain the July 4, 2026 Section 48 deadline that makes leases and PPAs the best deal they have been in years.
Last updated: March 10, 2026
Important: All calculations on this page reflect $0 federal tax credit for homeowner purchases. Section 25D expired December 31, 2025. State incentives are included where available. Lease/PPA calculations include the Section 48 ITC benefit passed through by the financing company.
Solar electricity costs roughly $0.06-0.08/kWh over 25 years. Your utility charges $0.26-0.33/kWh in the Northeast and raises rates 3-5% every year. Even without the federal credit, solar locks in your electricity cost at a fraction of what you are paying now — and the gap widens every year as utility rates climb.
The federal Section 25D residential Investment Tax Credit gave homeowners a 30% discount on solar purchases. It expired on December 31, 2025 under the One Big Beautiful Bill Act (OBBBA). That means a homeowner buying an $24,000 system today pays the full $24,000 — whereas in 2025, they would have paid roughly $16,800 after the $7,200 credit.
That is a real increase in out-of-pocket cost. But it does not make solar a bad investment. Here is why:
Based on a typical 8kW system (20 panels at 400W each). All costs reflect cash purchase with $0 federal credit. State incentives applied where available.
Click any state name to see the detailed state-specific analysis.
| State | Avg Rate | System Cost | State Incentive | Net Cost | Year 1 Savings | Payback | 25-Year Savings |
|---|---|---|---|---|---|---|---|
| Massachusetts | $0.33/kWh | $24,720 | -$1,000 | $23,720 | $3,168/yr | 7 yrs | $163,003 |
| Rhode Island | $0.29/kWh | $24,240 | -$5,000 | $19,240 | $2,784/yr | 7 yrs | $143,245 |
| Connecticut | $0.30/kWh | $23,280 | $0 | $23,280 | $2,820/yr | 8 yrs | $145,098 |
| New Jersey | $0.26/kWh | $23,440 | $0 | $23,440 | $2,600/yr | 8 yrs | $133,778 |
| New Hampshire | $0.27/kWh | $24,880 | $0 | $24,880 | $2,538/yr | 9 yrs | $130,588 |
| Maine | $0.27/kWh | $24,400 | $0 | $24,400 | $2,484/yr | 9 yrs | $127,810 |
| Texas | $0.15/kWh | $22,640 | $0 | $22,640 | $1,800/yr | 11 yrs | $92,616 |
Utility Rate
$0.33/kWh
Net Cost
$23,720
Year 1 Savings
$3,168
25-Year Savings
$163,003
Includes $1,000 state incentive
Utility Rate
$0.29/kWh
Net Cost
$19,240
Year 1 Savings
$2,784
25-Year Savings
$143,245
Includes $5,000 state incentive
Utility Rate
$0.30/kWh
Net Cost
$23,280
Year 1 Savings
$2,820
25-Year Savings
$145,098
Utility Rate
$0.26/kWh
Net Cost
$23,440
Year 1 Savings
$2,600
25-Year Savings
$133,778
Utility Rate
$0.27/kWh
Net Cost
$24,880
Year 1 Savings
$2,538
25-Year Savings
$130,588
Utility Rate
$0.27/kWh
Net Cost
$24,400
Year 1 Savings
$2,484
25-Year Savings
$127,810
Utility Rate
$0.15/kWh
Net Cost
$22,640
Year 1 Savings
$1,800
25-Year Savings
$92,616
Calculations assume 3% annual utility rate increase, 8kW system, 0.5%/yr panel degradation, and $0 federal tax credit. Actual results vary by roof orientation, shading, and local rate structures.
The ITC expiration changes the lease-vs-buy equation significantly. Before 2026, buying was almost always better because homeowners captured the 30% credit themselves. Now, a lease or PPA is the only way to benefit from the federal ITC — because the financing company claims Section 48 and passes savings to you through lower monthly rates.
| Factor | Cash Purchase | Lease / PPA |
|---|---|---|
| Upfront cost | $20,000-$28,000 | $0 |
| Monthly savings start | After payback (8-15 yrs) | Month 1 |
| 25-year total savings | $50,000-$100,000+ | $15,000-$35,000 |
| Federal ITC benefit | $0 (25D expired) | 30% via Section 48 (through July 2026) |
| Home value increase | ~4% ($16,000+ on $400K home) | Minimal (lease transfers) |
| Maintenance responsibility | Homeowner | Solar company |
| Best for | Long-term owners (10+ yrs) | Moving in 5-8 yrs, limited capital |
The 2026 bottom line: Before the ITC expired, buying was nearly always the better financial decision because homeowners captured the 30% credit directly. Now, the lease/PPA path is more compelling than ever because it is the only way for homeowners to benefit from the federal ITC (through the financing company's Section 48 claim). For a detailed comparison, see our Solar Lease vs. Buy 2026 guide.
The federal ITC was worth about $6,000-$8,400 on a typical 8kW system (30% of $20,000-$28,000). Several states offer programs that replace a significant portion of that value — and some states actually provide more total value than the ITC ever did. Here is every state program, ranked by total financial impact.
Incentive Value
$0.03/kWh for 20 years
Annual Value (8kW)
~$288/yr on 8kW system
Total Lifetime Value
~$5,760 over 20 years
Solar Massachusetts Renewable Target pays a flat rate per kWh your system produces. Low-income adder: $0.06/kWh. Capacity cap: 600 MW for PY2026.
Full Massachusetts solar analysisIncentive Value
$85.90/MWh for 15 years
Annual Value (8kW)
~$859/yr on 8kW system
Total Lifetime Value
~$12,885 over 15 years
Administratively Determined Incentive pays per MWh produced. Rate rises to $95.23/MWh in EY2026-27. Replaces the old SREC market with predictable, guaranteed payments.
Full New Jersey solar analysisIncentive Value
$0.65/W + $0.27/kWh for 15-20yr
Annual Value (8kW)
~$2,592/yr from REG + ~$5,000 upfront from REF
Total Lifetime Value
~$43,000-$52,000 combined
Renewable Energy Fund provides $0.65/W upfront (capped at $5,000 + $2,000 battery adder). Renewable Energy Growth program pays $0.27/kWh guaranteed for 15-20 years. This is the strongest incentive stack in the country.
Full Rhode Island solar analysisIncentive Value
1:1 retail net metering + 6.35% sales tax exempt
Annual Value (8kW)
~$2,500-$3,200/yr in net metering credits
Total Lifetime Value
~$60,000-$80,000 over 25 years
RRES provides 1:1 retail net metering for systems up to 25 kW. Connecticut exempts solar from 6.35% sales tax (~$1,800 savings) and property tax (permanent exclusion). Smart-E Loans are available at 6.99-7.99% APR for solar through CT Green Bank (the 0.99% rate is for heat pumps only).
Full Connecticut solar analysisIncentive Value
~85% retail credit per kWh exported
Annual Value (8kW)
Savings via bill offset only
Total Lifetime Value
Rate-dependent
New Hampshire repealed its state solar rebate (SB 303, 2024). NEM 2.0 credits exports at 100% supply + 100% transmission + 25% distribution (~85% retail). No direct incentive, but locked through 2041.
Full New Hampshire solar analysisIncentive Value
1:1 retail credit for rooftop solar
Annual Value (8kW)
Savings via bill offset only
Total Lifetime Value
Rate-dependent
Maine provides 1:1 retail net metering for rooftop solar. CMP rate is ~$0.27/kWh, Versant ~$0.32/kWh. No direct state rebate. Property tax 100% exempt statewide.
Full Maine solar analysisIncentive Value
No state solar incentives
Annual Value (8kW)
N/A
Total Lifetime Value
N/A
Texas has no statewide solar incentive, net metering, or rebate program. Some municipal utilities (Austin Energy, CPS Energy) offer local programs. Deregulated ERCOT market means rates vary widely.
Full Texas solar analysisThe average Section 25D ITC was worth $6,000-$8,400 on a typical 8kW system. Here is how each state's programs compare:
RI: 600-800%
REF + REG far exceeds ITC
NJ: 150-200%
ADI matches or exceeds ITC
MA: 70-90%
SMART replaces most of ITC
CT: 25-40%
RRES + tax exemptions
NH: 0%
No direct replacement
ME: 0%
NEB only, no rebate
TX: 0%
No state program
The single most important factor in solar ROI is not the tax credit — it is the electricity rate you are avoiding. Rates have risen 3-5% annually on average, and this trend is accelerating due to grid modernization costs, fossil fuel volatility, and growing demand from EVs, heat pumps, and data centers.
Three scenarios based on historical 3%, 4%, and 5.5% annual rate increases
| Year | Low (3%/yr) | Mid (4%/yr) | High (5.5%/yr) | Solar Cost |
|---|---|---|---|---|
| 2026 | $0.27 | $0.27 | $0.27 | $0.07 |
| 2028 | $0.29 | $0.30 | $0.31 | $0.07 |
| 2030 | $0.31 | $0.33 | $0.36 | $0.07 |
| 2035 | $0.36 | $0.42 | $0.50 | $0.07 |
| 2040 | $0.42 | $0.54 | $0.72 | $0.07 |
| 2045 | $0.49 | $0.69 | $1.04 | $0.07 |
| 2050 | $0.57 | $0.88 | $1.50 | $0.07 |
A $200/month electric bill growing at 4%/year becomes $296/month in 10 years and $438/month in 20 years. That is $32,400 more in utility payments over 20 years than if rates stayed flat. Solar freezes your rate at $0.07/kWh forever.
Utilities are spending billions on infrastructure upgrades — transmission lines, grid hardening, substation replacements, and wildfire mitigation. These costs flow directly into your monthly bill. The American Society of Civil Engineers estimates $5+ trillion in grid investment needed by 2040.
Once installed, your solar electricity costs $0.06-0.08/kWh for 25+ years. That rate never increases. By 2035, when utility rates may hit $0.42-0.50/kWh, your solar will be saving you 6-7x what you would pay the utility. The longer you own the system, the more dramatic the savings.
A homeowner paying $250/month for electricity at $0.30/kWh will pay approximately $120,000 in electricity bills over the next 25 years (assuming just 4% annual increases). An 8kW solar system at $24,000 net cost produces that same electricity for a one-time investment of $24,000. The ITC saved $7,200 off that $24,000 — meaningful, but small compared to the $96,000 in net savings over 25 years. The ITC is a nice discount. The utility bill is the real cost.
For detailed rate trends by state, see our Rising Electricity Rates 2026 analysis.
Even though the homeowner ITC (Section 25D) is gone, the commercial ITC (Section 48/48E) is still alive — but only for projects that begin construction before July 4, 2026. This is the credit that powers solar leases and PPAs.
In a lease or PPA, the solar company (not you) owns the panels on your roof. Because they are a business, they qualify for the Section 48/48E commercial ITC. They claim a 30% credit (up to 70% with adders) on the system cost.
The financing company passes ITC savings to you through lower monthly lease payments or per-kWh PPA rates. A system that costs the company $24,000 effectively costs them $16,800 after the 30% credit — and your rate reflects that lower cost basis.
Once the Section 48 deadline passes, financing companies lose the 30% credit. Their cost basis rises, and lease/PPA rates will increase to reflect the higher cost. Locking in a lease or PPA before July 4, 2026 preserves the lower rate.
30% base ITC on a $24,000 system = $7,200 in savings the financing company passes through as lower monthly payments. Your lease payment might be $120-$150/month instead of $160-$190/month.
Domestic content adder (+10%) available for systems using FEOC-compliant panels (like Silfab, made in USA). This pushes the effective credit to 40%, further lowering your lease rate.
Over 20 years, the difference between a pre-deadline and post-deadline lease could be $5,000-$10,000 in total payments. Acting before July 4, 2026 locks in the lower rate for the entire lease term.
Read the full guide: Section 48E Homeowner Guide: How Third-Party Ownership Preserves the ITC
Here is what solar looks like for homeowners in three very different markets — all calculated with $0 federal tax credit and NuWatt's actual 2026 pricing.
Highest utility rates + SMART 3.0 production income
System Cost
$24,720
State Incentive
-$1,000
Net Cost
$23,720
Utility Rate
$0.33/kWh
Cash Payback: 7 years
Excellent return — well within panel warranty period
ADI production income ($85.90/MWh for 15 years)
System Cost
$23,440
State Incentive
$0
Net Cost
$23,440
Utility Rate
$0.26/kWh
Cash Payback: 9 years
Solid return — a lease/PPA gives faster savings
No state incentive, but high solar production
System Cost
$22,640
State Incentive
$0
Net Cost
$22,640
Utility Rate
$0.14/kWh
Cash Payback: 12 years
Solid return — a lease/PPA gives faster savings
Calculations assume 3% annual utility rate increase, 8kW system, 0.5%/yr panel degradation, and $0 federal tax credit. Actual results vary by roof orientation, shading, and local rate structures.
Many homeowners see the upfront price of solar and hesitate. But doing nothing has a cost too — and it compounds every single year. Use the interactive chart below to see what waiting costs for your specific electric bill.
Historical average: 3-5% annually
At $200/mo with 4% annual rate increases
$2,400
Year 1
$12,999
Year 5
$28,815
Year 10
$48,057
Year 15
$99,950
Year 25
Total utility cost over 25 years: $99,950
Solar system cost: ~$20,000
You save $79,950 by going solar
5-Year Utility Cost
$12,999
10-Year Utility Cost
$28,815
Money Lost vs Solar
$79,950
Every year you wait, you pay the full utility rate — which increases 3-5% annually. Over 5 years at 4% annual increases, a $250/month bill becomes $304/month. That is an extra $650/year just from rate hikes, and it keeps compounding. Over 5 years of waiting, you pay roughly $16,500+ in utility bills that solar would have eliminated.
State incentive programs have fixed budgets and declining rate structures. New Jersey's ADI rates decline each energy year. Rhode Island's Renewable Energy Fund has a capped budget. Massachusetts' SMART program has capacity limits. NH already lost its state rebate (SB 303, 2024). The federal ITC proved that programs end without warning.
The commercial ITC (Section 48/48E) that makes lease/PPA rates competitive expires for new projects after July 4, 2026. If you are considering a lease or PPA, waiting past this deadline means higher monthly payments for the entire 20-25 year term. That could cost $5,000-$10,000 more over the lease.
A typical homeowner paying $250/month spends over $16,500 on electricity in just 5 years (with 4% rate increases). An 8kW solar system typically costs $20,000-$27,000 after state incentives. The system pays for itself — the utility bills do not. Every year you wait is a year of savings you never get back, plus you face higher panel prices, fewer incentives, and worse lease terms after the Section 48 deadline.
Solar panels do not just save money on electricity — they increase the value of your home. This is often the overlooked part of the ROI calculation.
~4% Average Home Value Increase
National studies from Zillow, Lawrence Berkeley National Laboratory, and the Appraisal Journal consistently find that solar adds approximately 4% to a home's sale price. On a $400,000 home, that is roughly $16,000 in added value.
$4-$6 Per Watt Installed
Research indicates home value increases of approximately $4-$6 per watt. An 8kW system could add $32,000-$48,000 in value — often exceeding the net cost of the system entirely.
Faster Sales
Homes with owned solar panels sell faster on average. Buyers increasingly seek energy-efficient homes, and solar is a visible, quantifiable upgrade that lowers their anticipated utility costs immediately.
Owned Systems Only
The 4% home value increase applies to owned solar systems. Leased systems have minimal impact on appraisal value because the lease obligation transfers to the buyer. Some buyers view a transferred lease as a complication.
Appraisal Challenges
Not all appraisers account for solar properly. Ask if they use the PV Value tool or have solar appraisal experience. In some markets, solar value may not fully reflect without comparable sales data.
System Age Matters
Newer systems add more value. A 5-year-old system with 20+ years of warranty remaining is more attractive than a 15-year-old system. Panels degrade about 0.5% per year but still produce at 87.5%+ capacity at year 25.
Consider a homeowner in Massachusetts who installs an 8kW system for a net cost of $23,720. Over 10 years, the system saves them approximately $$13,311 in electricity costs. When they sell, the home appraises for roughly $16,000-$32,000 more than comparable homes without solar. The combination of electricity savings plus added home value means solar delivers a positive return even if you sell before the full payback period. For homeowners planning to stay 5+ years, a purchased solar system functions as both an energy cost hedge and a home improvement investment. For more details, see our Solar Panels and Selling Your House 2026 guide.
We believe in honest advice. Solar is a great investment for most homeowners, but there are situations where it may not make sense — or where a lease/PPA is a better path than buying.
If you pay less than $0.12/kWh, solar payback stretches to 15+ years for a cash purchase. The savings are real but small relative to the upfront investment.
Exception: A $0-down lease or PPA can still save you money from day one — the financing company's Section 48 credit makes the math work even at low rates.
Significant shading from trees, buildings, or other obstructions can reduce production by 30-50%. If most of your roof is shaded year-round, the system may not produce enough to justify the investment.
Get a shade analysis. Modern design tools (Aurora, Helioscope) model shade hour-by-hour. Partial shade does not disqualify your roof — sometimes optimizers or microinverters recover most of the loss.
If you plan to sell within 3 years, you will not reach payback on a purchased system. Home value increases (~4%) partially offset the cost, but you may not recoup the full investment.
Consider a lease. A lease delivers savings from month one with no payback period. The lease transfers to the buyer when you sell.
If your roof is over 15 years old or has visible damage, you should re-roof before installing solar. Removing and reinstalling panels for a later re-roof costs $2,000-$5,000 and voids some warranties.
Bundle the projects. Many solar installers coordinate with roofers. A new roof plus solar is a better long-term investment than either alone. See our re-roof guide.
If your monthly electric bill is consistently under $75, the total savings from solar may not justify even a lease. Your annual electricity cost is under $900 — a small system would save you $500-$700/year.
But consider the future. If you are planning an EV, heat pump, or home expansion, your usage (and savings potential) will increase significantly.
A purely north-facing roof in the Northeast produces 20-30% less than a south-facing roof. Combined with other factors (shade, low usage), this can push payback beyond 15 years.
East/west roofs work fine. East and west-facing roofs produce 85-90% of south-facing output. Only pure north exposure is problematic.
For the vast majority of homeowners in the states we serve — paying $0.26-$0.33/kWh, with adequate south/east/west roof exposure and 5+ year ownership plans — solar is a strong investment even without the federal tax credit. If any of the above situations apply to you, a $0-down lease or PPA usually still makes sense because the financing company absorbs the risk and passes ITC savings through.
Enter your state and monthly electric bill to see a personalized estimate. All calculations reflect $0 federal tax credit for homeowner purchases.
See your estimated solar payback — with $0 federal credit
Net Cost
$25,160
after incentives
Payback
8.5 yrs
to break even
Monthly Savings
$224
year 1
25-Year Savings
$93,262
projected
Estimates based on average utility rates, 3% annual rate increase, and typical solar production for Massachusetts. Actual results vary by roof, shading, and utility.
A $250/month bill becomes $370/month in 10 years at 4% increases. Solar locks in your rate at $0.07/kWh forever.
Solar is the only way to fix your electricity cost for 25+ years. No other home improvement provides guaranteed, inflation-proof savings.
RI REG, NJ ADI, MA SMART, and CT Smart-E replace 30-800% of the ITC value through upfront rebates, production payments, or low-rate financing.
Third-party ownership preserves the 30% ITC through Section 48. $0 down, savings from day one. Available through July 4, 2026.
The numbers above are averages. Your savings depend on your specific roof, usage pattern, utility rate, and available incentives. Our solar calculator gives you a precise, state-specific estimate in under 2 minutes.
Section 48 deadline: July 4, 2026. If you are considering a lease or PPA, acting before this date locks in the lowest available rates.