Without the 30% Federal Credit, a US-Average Solar Roof Pays Back in 10.7 Years Instead of 7.4

The federal credit is gone for 2026 installs

Until 2025, the 30% residential clean energy credit (IRC Section 25D) took about $6,000 off a typical system. The One Big Beautiful Bill Act ended it early: the IRS says it is not available for any property placed in service after December 31, 2025. A system that goes in during 2026 is paid for at full price, less whatever your state, city or utility offers.

That doesn’t make solar a bad idea. It makes payback longer, and it moves the cutoff for “worth it” toward roofs with good sun and expensive electricity.

What a Typical System Costs

A 7 kW residential system (enough for most homes) in 2026:

What It Saves and How Fast It Pays Back

Savings depend on three variables: how much sun you get, how much electricity costs, and how much you use. We ran four representative US scenarios through the Solar ROI calculator with electricity prices rising 3% a year and 0.5% a year of panel degradation. The 2026 net cost adds back the $6,000 the federal credit used to cover:

The spread was already 5×, and losing the credit stretches every row by roughly half. The cheap-power case now takes most of the panels’ 25-year warranty to pay back. The exact number for your roof depends almost entirely on your local rate and sun hours, not on national averages.

Solar panels are warrantied for 25 years and often produce for 30+. After payback, every year is essentially free electricity — the savings column above is what flows into your pocket once the system is paid off.

What Can Ruin the Math

Solar isn’t right for every home:

• Heavy tree shading reduces output by 20-50%
• North-facing roof (in the Northern Hemisphere) gets significantly less sun
• Low electricity rates (under $0.10/kWh) make the savings too small
• Planning to move soon: you’ll recoup some value in the home price, but the process adds friction
• HOA restrictions in some communities

Battery Storage: Worth Adding?

A battery system ($8,000-$12,000) stores excess solar for nighttime use. It makes financial sense if:

• Your utility charges time-of-use rates (expensive evenings)
• Net metering credits are poor in your area
• You want backup power during outages

For most homeowners with good net metering, batteries are optional — the grid acts as your free “battery.”

Where solar doesn’t pay back

Four conditions that flip the math:

• Cheap electricity (under $0.10/kWh). WA, much of TN. The savings per kWh are too small for the upfront cost to recoup in reasonable time.
• Shaded roof. Trees, neighboring buildings, or an unfavorable orientation can cut production 30-50%. Roof modeling matters before signing.
• Loan-financed at high rates. Solar loans at 7-9% can erode most of the savings. Cash-pay or low-rate HELOC dramatically improves the math.
• Short ownership horizon. Solar adds home value, but not 1:1 with system cost. If you’re moving in 3 years, the recovery is incomplete.

Where solar still wins

• High-electricity-rate states (CA, HI, NY, MA). $0.30+/kWh keeps payback under 5 years even without the federal credit.
• South-facing unshaded roof. Closer to NREL maximum production.
• Long ownership (10+ years). Pure savings after payback compound.
• Time-of-use utility rates with expensive evenings. Battery storage adds value here.

Open the Solar ROI Calculator → and run your specific roof + rate + incentives. The payback year is the answer; everything else is intermediate.