Is solar still worth it without the federal tax credit?

Often yes, especially in states with high electricity rates, full retail net metering, or strong state incentives. Without the 30% Section 25D credit, payback periods lengthen, but rising electricity rates and cheaper equipment offset some of the loss. In many states solar still pays back in well under 15 years on energy savings alone.

Do leases and PPAs still get a federal tax credit in 2026?

Yes, indirectly. The installer or developer claims the 30% Section 48E credit on a lease or PPA and passes part of the value to the homeowner through lower monthly payments, provided construction began before July 4, 2026. The homeowner does not claim the credit directly.

Can You Still Save With Solar After the Tax Credit Expired?

The most-asked solar question of 2026 is also the simplest:now that the federal tax credit is gone, does solar still pay off? The honest answer is yes — but not everywhere, and not the same way it used to. Losing the 30% Section 25D credit made owned solar more expensive, yet two things quietly picked up the slack: residential electricity rates are up sharply since 2024, and the lease/PPA path still captures a federal credit indirectly. Here's the math, with no inflated savings projections.

The Short Answer

Yes, solar can still save you money without the federal tax credit — particularly if you live in a high-rate state, have full retail net metering, or can access strong state or utility incentives. The savings are smaller and the payback is longer than in the 30%-credit era, but for many homeowners the numbers still work. The catch is that how you pay now matters as much aswhat you buy. This is the first in a series — for the full credit picture, start with ourcomplete 2026 tax-credit guide.

Why Losing the Credit Hurts — In Dollars

Section 25D was a 30% personal tax credit, so its value scaled directly with system cost. On a representative 7 kW system at roughly the 2026 national average of about $3.50 per watt (around $24,500 installed), the old credit was worth about $7,350. With 25D expired for systems placed in service after December 31, 2025, that $7,350 now stays in your cost (or gets financed into a loan), pushing the break-even point out by several years in most states.

But the loss is not the whole story. U.S. residential electricity rates reached about 18.56¢/kWh by March 2026 — up roughly 11.8% since 2024. Every kilowatt-hour your panels produce now offsets a more expensive utility kilowatt-hour, so the annual savings that replace the lost credit are larger than they were two years ago. In high-rate states, rising bills are quietly doing some of the work the tax credit used to.

A Worked Example: Payback Without the Credit

The numbers below are illustrative, using representative national averages — not a quote. Your real payback depends entirely on your local rate, usage, sun hours, roof, and incentives. Run your own figures with ourSolar ROI Calculator before deciding.

System: 7 kW rooftop array
Gross cost: ~$24,500 (~$3.50/W)
Federal credit (25D): $0 (expired for owned 2026 residential)
Net cost: ~$24,500
Annual production: ~10,000 kWh (varies by region)
Electricity rate: ~18.5¢/kWh
Annual bill offset: ~$1,850
Simple payback: roughly 13 years on energy savings alone, before state incentives

Compare that to the with-credit world: the same system at a net $17,150 after a 30% credit would have paid back in roughly 9 years. The credit shortened payback by about four years — meaningful, but not the difference between "works" and "doesn't." Add a state rebate, a property-tax exemption, or an SREC market, and the no-credit payback can drop back into the 8–10 year range in the best states. The fastest way to see where you actually land is theIs Solar Worth It in 2026?tool, which is built around the post-credit rules.

Model your payback with the real 2026 rules

Our ROI Calculator factors in your actual electricity rate, usage, and local sun hours (via NREL PVWatts) to estimate payback and 25-year savings with no expired credits assumed.

Calculate My Solar ROI →

How Leases and PPAs Change the Math

Here is the part most homeowners miss. When you lease or sign a PPA, you were never claiming the federal credit yourself anyway — the installer did. So the question "what changed for lease/PPA buyers after 25D expired?" has a surprising answer: not much, because 48E survived.

Under Section 48E, the installer or developer still claims a 30% federal credit on a leased or PPA-financed system for projects that began construction before July 4, 2026 (a Saturday; under IRC 7503 the effective deadline rolled to Monday, July 6, 2026 — now passed). They pass part of that value through to you as a lower monthly payment, typically around 10–20% below your utility bill. You file no tax forms. In effect, the lease/PPA path preserved the federal benefit that the ownership path lost — which is why Q1 2026 residential solar growth wasentirely funded by third-party ownership, while the cash-buyer segment contracted.

The trade-off is control and long-term economics. A lease or PPA means you do not own the equipment, the installer keeps the incentives and any SRECs, and a long contract (often 20–25 years) governs escalators, buyout terms, and what happens at sale of the home. Before signing, decode the contract with ourPPA Contract Decoder and compare all four financing paths side by side with theFinancing Comparison tool.

When Direct Ownership Still Wins

Despite the lost credit, owning outright can still beat a lease in the right conditions. Direct ownership tends to win when:

You live in a high-rate state with full retail net metering (every offset kWh is worth the full retail price).
Your state has a meaningful incentive — a rebate, a state tax credit, or an active SREC market — that partially replaces the lost federal credit.
You can use the system's depreciation value (only on a rental or business property, via 48E) or stack aproperty-tax exemption that protects the home's assessed value.
You plan to stay in the home well beyond the payback period, since owned systems keep producing free power long after they've paid for themselves.

Conversely, a lease or PPA often wins when your tax situation would not have let you use the credit anyway, when you want zero upfront cost, or when you value a single predictable monthly payment over maximum lifetime savings. There is no universal winner — only the math for your roof.

Solar did not become a bad investment when 25D expired; it became amore local one. The federal credit used to make the numbers work almost everywhere. Now the deal lives or dies on your electricity rate, your net-metering tariff, your state incentives, and — critically — whether you buy or lease. Run your own numbers with current rules, get quotes on both paths, and treat any projection that quietly assumes a 30% owned-residential credit as a red flag. The savings are still real for many homeowners. They just require more homework to find.

Continue Reading This Series

Solar Tax Credits in 2026: The Complete Guide to What Changed — the 25D vs 48E split and lease/PPA passthrough explained.
Battery Storage Tax Credits After 2025 — whether storage still qualifies, and under which ownership model.

Sources

Internal Revenue Service,Residential Clean Energy Credit (Section 25D) — December 31, 2025 expiration.
U.S. residential electricity rate data, EIA / March 2026 — ~18.56¢/kWh average, up ~11.8% since 2024.
Solar Energy Industries Association & Wood Mackenzie,U.S. Solar Market Insight, Q2 2026 — Q1 2026 TPO-funded residential growth.
System cost figures derived from EnergyTools state cost-per-watt data (2026). Illustrative example only — not a quote.