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Is Solar Worth It Without the Federal Tax Credit in 2026?
Solar ROI
Is Solar Worth It Without the Federal Tax Credit in 2026?
Last updated: May 2026 · MySolarLoanCompanion.com/learn/
Solar is still financially viable in 2026 without the federal tax credit for most homeowners in states with electricity rates above $0.14/kWh. The 30% Section 25D credit expired December 31, 2025 for cash and loan buyers. Rising utility rates, state incentives, and lease/PPA options that pass through the commercial Section 48E credit sustain positive ROI in most US markets.
Does Solar Pencil Without the Federal Tax Credit?
| Electricity Rate | Annual Savings (7kW) | System Cost | Payback Period | Verdict |
|---|
| $0.10/kWh (low) | ~$900–$1,100 | $25,000 | 20–25 yrs | Marginal — borderline |
| $0.14/kWh (national avg) | ~$1,260–$1,540 | $25,000 | 14–18 yrs | Marginal — state incentives needed |
| $0.18/kWh (above avg) | ~$1,620–$1,980 | $25,000 | 11–14 yrs | Yes — solid ROI |
| $0.24/kWh (high) | ~$2,160–$2,640 | $25,000 | 8–10 yrs | Yes — strong ROI |
| $0.32/kWh (very high) | ~$2,880–$3,520 | $25,000 | 6–8 yrs | Yes — excellent ROI |
Sources: A1SolarStore solar savings analysis April 2026; NuWatt Energy 2026 financing guide; SEIA/Wood Mackenzie Year in Review March 2026; EIA electricity rate data; state incentive databases
Key Details
- The tax credit shifted the math but did not reverse it — The 30% ITC reduced a $30,000 system to an effective $21,000 cost. Without it, you finance the full $30,000. Monthly loan payments rise by approximately $75–$100/month on a 15-year loan. In high-rate states this is still offset by electricity savings within 8–12 years.
- Lease and PPA buyers still access federal incentive benefits — The Section 48E commercial ITC remains active for solar companies that own third-party systems. These companies pass the credit through as lower monthly payments. In 2026, lease/PPA pricing is more competitive than it has ever been relative to loan ownership in states without strong state rebates.
- State incentives partially replace the federal credit — New Jersey: up to $7,200 on an 8 kW system. Massachusetts: SMART program payments, net metering at full retail, MassSave HEAT loans at 0%. Connecticut: $2,000 rebate plus 0%–6.99% Green Bank loans. Rhode Island: $2,800 rebate.
- Electricity rates have risen ~30% in five years — The US national average residential rate increased from ~$0.13/kWh in 2020 to $0.17–$0.18/kWh in 2026. If rates continue rising at 3–6% annually, solar economics improve each year without any system cost change.
- 25-year average savings remain ~$61,000 — A1SolarStore's 2026 US residential solar data shows average savings of ~$61,000 over 25 years, ranging from $37,000 to $154,000 depending on state, electricity rate, and system size. Even at the low end, the ROI exceeds most fixed-income alternatives over the same period.
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