Solar panels in the US in 2026: life after the 30% tax credit

For three years the sales pitch was simple: install solar, take 30% off through the federal tax credit, and let net metering pay you retail rates for what you export. In 2026 only one part of that is still true in most places, and it is not the tax credit. If you are getting quotes this fall, the numbers have to work on their own.

What the 2025 law changed

The budget law signed on July 4, 2025 (Public Law 119-21, widely called the One Big Beautiful Bill) ended the Residential Clean Energy Credit, Section 25D, for expenditures made after December 31, 2025. The IRS FAQ published on August 21, 2025 is precise about timing: an expenditure counts as made when the original installation is completed. A system finished in January 2026 gets no credit, even if you signed and paid in 2025. Early commentary after the law passed suggested that paying in 2025 would be enough. The IRS reading is stricter, and it is the one that counts at tax time.

The same law ended the 25C credit for heat pumps, insulation and windows placed in service after December 31, 2025. So there is no federal credit for homeowner-owned solar, batteries or efficiency upgrades in 2026.

Leases and PPAs are the exception

If a company owns the panels on your roof and you pay it monthly (a lease or a power purchase agreement), the company can still claim the business credit under Section 48E. Under the 2025 law the key dates were July 4, 2026 as the last day to begin construction for the longer runway, and the end of 2027 as the placed-in-service deadline otherwise. New sourcing rules on foreign suppliers also started phasing in during 2026, which pv magazine reported could tighten equipment supply.

For you this means leases are now the only way to benefit indirectly from a federal credit. Read the contract carefully: payment escalators of a few percent a year, 20 to 25-year terms, and what happens if you sell the house.

What a system costs now

EnergySage’s marketplace data, updated on September 18, 2026, puts the national average quote at $2.60 per watt before incentives, or $31,135 for a typical 12 kW system. Per-watt averages in the states with retail choice:

• Texas $2.25
• Pennsylvania $2.59, Maryland $2.59, New Jersey $2.58
• Ohio $2.60
• Connecticut $2.67, New York $2.76
• Massachusetts $2.91, Illinois $2.96

Before 2026, a 30% credit on the $31,135 national average would have been worth about $9,340. That money is gone for buyers, so payback periods quoted in older articles are too short. Get at least three quotes, and ask each installer to show the payback without any federal credit.

Net metering decides the payback

The value of solar depends on what you save on power you use yourself (the full retail rate) and what you are paid for power you export. With retail-rate net metering, every kWh is worth the same. With net billing, exports earn much less.

California is the example everyone cites. Its Net Billing Tariff, often called NEM 3.0, applies to customers who applied to interconnect on or after April 15, 2023, and credits exports at values based on the utility’s avoided costs, far below the retail rate for most hours. Solar-only systems became much less attractive there, and batteries became the standard add-on because they let you use your own power in the evening.

Other states set their own rules, utility by utility in some cases. In Texas competitive areas, what you get paid for exports is part of your retail plan, so the buyback rate belongs on your comparison list next to the kWh price. Before you sign, ask your utility or provider three questions: at what rate are exports credited, is there a monthly minimum or fixed charge, and are credits settled monthly or annually.

A rough payback check

Take your annual usage (the US average is about 10,800 kWh) and your all-in rate. July 2026 residential averages ranged from 15.88¢/kWh in Texas to 21.72¢ in Pennsylvania and 29.90¢ in New York, per the EIA. The higher your rate, the more each self-used kWh saves. The EIA expects the national average to rise from 18.2¢ in 2026 to 18.6¢ in 2027, which helps the math a little, but not enough to replace a lost 30% credit.

Our solar calculator lets you plug in your own roof size, rate and system price. Use a conservative export rate unless your state still has retail net metering.

Permits and paperwork

Every system needs a local building and electrical permit and an interconnection agreement with your utility before it switches on. Installers normally handle both, but the timeline is out of your hands, so do not plan around a switch-on date the installer cannot guarantee. If you have an HOA, check its rules on panel placement before you sign, and tell your homeowner’s insurer.

Pitfalls

• Door-to-door solar sales. High-pressure pitches that promise “free solar” usually mean a lease or PPA. Ask for the full contract and the monthly payment in year 1 and year 20.
• Quotes still showing the 30% credit. For a purchased system installed in 2026 that credit is not available.
• Oversizing. If exports earn little, a bigger system does not pay back faster.
• Roof age. Replacing a roof after panels go up means paying to remove and reinstall them.

Should you still go solar?

In a high-rate state with net metering that still credits exports well, solar can still pay back within the system’s life. In a low-rate state or under net billing, the case is thinner without the credit, and a battery adds cost. If you are in a choice state, cut your rate first: compare supply offers so the payback math starts from what you really pay, and compare again when your contract ends.