Is Home Solar Worth It? Cost, Savings, and Payback Period

A typical home solar system costs $15,000 to $21,000 for 6 kW before any incentives, and pays back through lower electric bills over roughly 9 to 19 years at the national average electricity rate, depending mostly on how much sun you get. Since the federal tax credit for homeowner-owned residential solar expired at the end of 2025, payback now takes longer than it did for systems installed in prior years — this guide walks through the math as it stands today.

What a system costs

Installed residential solar runs roughly $2.50 to $3.50 per watt in 2026, including panels, inverter, racking, labor, and permits. A 6 kW system — a common size for an average household — lands around $15,000–$21,000. A larger 10–12 kW system, sized for a bigger home or to cover an EV, runs roughly $25,000–$42,000. Adding battery storage raises the price considerably: Zonda's 2025 Cost vs. Value Report priced an 8 kW system with battery backup at $55,937.

What drives your savings

Two things determine how much a system saves you each year: how much electricity it produces, and what you'd otherwise pay per kWh. Production depends mostly on sun exposure — a system in the Desert Southwest produces meaningfully more per kW of capacity than the same system in the Pacific Northwest or New England. As a national rule of thumb:

Multiply your system size by the output for your region, then by your electricity rate, to estimate annual savings. The U.S. residential average was about $0.17 per kWh in 2025, according to the Energy Information Administration, so a 6 kW system at average sun exposure saves roughly $1,430 a year and pays back in about 11–15 years. The same system pays back in about 9–12 years with high sun exposure, and 13–19 years with low.

Why the federal credit no longer applies

The Section 25D Residential Clean Energy Credit let homeowners claim 30% of system cost back at tax time, with no cap. The One Big Beautiful Bill Act, signed in July 2025, ended the credit for expenditures after December 31, 2025, years ahead of its original schedule, which would have kept it at 30% through 2032 before phasing down. A system installed and finished in 2026 does not qualify, even if a deposit was paid in 2025. Some third-party-owned systems (leases or power purchase agreements) may still access a separate commercial credit indirectly through the installer, which is worth asking about if you're comparing ownership versus leasing.

What still affects whether it's worth it

• State and utility incentives. Several states still offer their own tax credits, rebates, or property tax exemptions for solar; these vary widely and aren't included in the national estimate above.
• Net metering rules. How much credit you get for electricity you export to the grid depends entirely on your utility's net metering policy, which can change the payback math substantially.
• How long you plan to stay. With a payback of roughly 9 to 19 years, solar makes the most financial sense if you expect to own the home for at least that long.
• Financing. A cash purchase has the shortest true payback; a loan adds interest cost that extends it.

Sources

• IRS — Residential Clean Energy Credit (Section 25D)
• EIA — Average price of electricity by state (Electric Power Monthly, Table 5.6.A)
• Cost vs. Value 2025 — Solar Power Installation (project scope)