Real Time Solar

Solar Payback Calculator

Work out how long solar takes to pay for itself in 2026, with the federal tax credit correctly set to zero after it expired on 31 December 2025.

The federal credit is gone

The 30% federal residential solar credit (Section 25D) ended for expenditures after 31 December 2025. Homeowners buying in 2026 receive no federal credit. Businesses are treated differently under Section 48E.

In short: Solar payback is the net system cost divided by annual bill savings. With no federal credit in 2026, typical US payback runs roughly 9 to 16 years depending on state electricity rates and sun hours.

Payback period

13.8 years

Net system cost

$24,000

Savings per year

$1,734

Production per year

10,512 kWh

Federal tax credit applied: $0 — the residential credit ended 31 December 2025. Assumes 80% system efficiency and that you use or export everything you generate. State figures are averages (2025 averages, reviewed October 2026) and are a starting point — your own bill is the better number.

How this is worked out

Payback is net cost divided by what you save in a year. Net cost is the system price minus any incentives — and in 2026 that no longer includes a federal credit. Annual savings are your production multiplied by what you currently pay per kilowatt-hour.

annual kWh      = size_kW × peak_sun_hours × 365 × 0.80
annual savings  = annual_kWh × rate
net cost        = (size_kW × 1000 × cost_per_watt) − incentives
payback (years) = net cost ÷ annual savings

The 0.80 is system efficiency — real arrays lose output to inverter conversion, wiring, heat, dust and imperfect orientation. NREL's PVWatts defaults to 86%; we use 80% because it is closer to what installers quote, and because a calculator that flatters the result is the problem this one exists to fix.

Your electricity rate matters more than your sunshine

This surprises people. Massachusetts gets roughly 4.2 peak sun hours a day and pays about 30 cents a kilowatt-hour. Florida gets 5.2 hours and pays about 15. The Florida system produces around 24% more electricity — but each unit is worth half as much, so the Massachusetts system pays back roughly five years sooner.

If you are working out whether solar makes sense where you live, look at your bill before you look at the sky.

What this does not include

Questions

Does the 30% federal solar tax credit still apply in 2026?

No. The residential clean energy credit under IRC Section 25D ended for expenditures after 31 December 2025, with no phase-out — 30% straight to zero. Most calculators online still apply it, which makes their payback periods several years too optimistic. Businesses are treated separately under Section 48E.

What matters more, my electricity rate or how sunny it is?

Your rate, usually by a wide margin. Massachusetts averages about 4.2 peak sun hours a day and pays about 30 cents a kilowatt-hour; Florida gets 5.2 hours at about 15 cents. The Florida system produces roughly 24% more electricity, but each unit is worth half as much, so the Massachusetts system pays back around five years sooner.

Why do you assume 80% system efficiency rather than 86%?

NREL's PVWatts defaults to 86%. We use 80% because it is closer to what installers actually quote, and because a calculator that flatters the result is the problem this one exists to correct. Real arrays lose output to inverter conversion, wiring, heat, dust and imperfect orientation.

What is not included in this payback figure?

Electricity price rises, which shorten payback. Panel degradation of roughly 0.5% a year, which lengthens it. Net metering rules, which decide what exported power is worth and vary by utility. Financing costs, since paying cash and taking a loan are very different propositions. And roof work, if yours needs replacing first.

Payback by state

Pre-filled with local rates and sun hours.

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