US Residential Solar Payback Period by State, 2026: Every State Ranked After the 30% Tax Credit Ended

Advertisement

Why it matters

On December 31, 2025, the 30% federal residential solar tax credit — Section 25D of the tax code — expired for homeowner-owned systems, a casualty of the “One Big Beautiful Bill.” For a typical $28,800 installation, that was $8,640 vanishing overnight. Overnight, the central math of American rooftop solar changed, and almost no public ranking has caught up. This study is that update: a 50-state, apples-to-apples payback ranking built for the post-credit era.

The stakes are not abstract. The EnergySage marketplace reported median quoted residential prices at a record-low $2.48/W in early 2025, and 92% of installers surveyed said losing the 30% credit would harm their business. Whether rooftop solar still makes financial sense in 2026 is now almost entirely a state-level question — answered by your utility rate, your sun, and whatever your state government still offers.

The data, in brief: we modeled an 8 kW rooftop system at the national median installed price of $3.60/W ($28,800 gross, per Berkeley Lab’s Tracking the Sun 2025), applied each state’s July 2026 residential electricity rate from the EIA’s Table 5.6.A, estimated annual production from NREL’s Annual Technology Baseline capacity factors, and subtracted the six states’ verifiable upfront incentives. The result: paybacks from 4.4 to 20.2 years, median 15.6.

The headline ranking

Hawaii (4.4 years) and California (6.3 years) remain in a league of their own. Hawaii pairs the nation’s highest residential rate — 48.00¢/kWh, up about 22% from a year earlier and the steepest increase in the nation — with excellent sun, so an 8 kW system there offsets roughly $6,492 a year. California’s 33.61¢ rate does similar work. These are the only two states under 7 years.

The next tier is New England, and this is where the study gets interesting. New York (7.8), Massachusetts (9.0), Maine (9.1), Rhode Island (10.0), New Hampshire (10.7), and Connecticut (11.7) all land in the top 10 — despite some of the weakest solar resource in the country. New York gets a genuine boost from its 25% state tax credit (up to $5,000), which cuts the modeled net cost to $23,800, the lowest of any state. Massachusetts benefits from both a 30.49¢ rate and its $1,000 state credit.

Advertisement

At the other end, North Dakota (20.2 years), Louisiana (20.1), Washington (20.1), Kentucky (19.6), and Tennessee (18.8) form the bottom five. Cheap power is the common thread: Louisiana’s 12.72¢ and Idaho’s 13.73¢ are among the lowest rates in the nation, so even decent sun can’t generate enough dollar savings. Washington is the instructive outlier — a 14.71¢ rate combined with the Northwest’s weak winter sun (13.9% capacity factor) produces the second-worst payback despite the state’s green reputation.

The national picture: 11 states pay back in under 12 years; 8 states take 18+ years. For context, most solar panels carry 25-year performance warranties — a 20-year payback leaves almost no margin for the unexpected.

Sunshine is overrated; your utility bill is everything

The most counterintuitive finding is how little sunshine matters relative to rates. Compare:

  • Massachusetts vs. Arizona: Arizona gets ~40% more sun per installed watt (19.6% vs. 14.5% capacity factor), yet Massachusetts pays back in 9.0 years versus Arizona’s 13.2 — because Bay Staters pay 30.49¢/kWh against Arizona’s 15.38¢.
  • Nevada vs. New Jersey: Nevada has the best sun in the continental US (19.6% CF) but a 12.77¢ rate → 16.4-year payback. New Jersey’s mediocre sun (15.2% CF) at 25.19¢ → 10.7 years.
  • Texas vs. Pennsylvania: Texas sunshine (17.0% CF) loses to Pennsylvania gloom (14.5% CF): 15.2 vs. 13.0 years, on rates of 15.88¢ vs. 21.72¢.

This isn’t a quirk of our model — it’s arithmetic. Annual savings = production × rate, and rates vary 3.8× across states (12.72¢ to 48.00¢) while solar resource varies only ~1.5× (12.7% to 19.6% capacity factor). As one analyst noted of EIA data, a Hawaii household pays roughly 3.5× the Idaho rate “for the identical kilowatt-hour.” That identical kilowatt-hour is worth 3.5× more when a solar panel makes it.

The policy implication is sharp: the end of the federal credit punishes cheap-power states most. When the 30% credit existed, it shaved ~30% off every state’s payback regardless of rates. Now, high-rate states still clear the bar on rates alone, while low-rate states lost their main equalizer.

The six states still cutting checks

With the federal credit gone, state incentives are the only upfront cost relief left — and only six states offer anything that directly reduces installed cost in 2026:

  • New York: 25% state income-tax credit, capped at $5,000 — the most valuable in the country on a percentage basis, cutting our model’s net cost to $23,800. It stacks with the NY-Sun rebate program (applications open through 2030).
  • South Carolina: 25% state credit with a $3,500/year claim cap and 10-year carryforward — effectively the full $7,200 on our modeled system, just claimed over time (2026 guide). This single incentive lifts South Carolina to 12.4 years, 14th nationally, despite a middling 15.47¢ rate.
  • New Mexico: 10% Solar Market Development Tax Credit, up to $6,000 — worth $2,880 on our system (DSIRE record).
  • Arizona, Massachusetts, Maryland: $1,000 each, via state tax credits or (Maryland) a direct grant (program roundup).

Correction: Montana’s $1,000 Alternative Energy credit — listed in the October 9 edition of this study — was repealed in 2021. It is no longer modeled here.

Notable absences: California, Texas, and Florida — the three largest solar markets — offer no state income-tax credit. California leans entirely on its 33.61¢ rates; Texas leans on utility rebates (AEP’s up to $6,000, Austin Energy’s $2,500) that vary by territory and aren’t statewide (2026 incentive survey). Iowa’s credit was defined as 50% of the federal credit (about 15% effective when the federal credit was 30%) — with the federal credit at $0, Iowa’s is effectively $0 too.

We deliberately excluded production-based incentives (Massachusetts’ SMART program at ~$0.03/kWh for 20 years; Rhode Island’s Renewable Energy Growth at ~$0.27/kWh) and SREC markets from the upfront cost — they pay out over time and would only improve the ranked paybacks shown. Our numbers are conservative for MA, RI, NJ, and PA.

Regional scorecard

  • New England (avg 10.5 yrs): The surprise champion region. Brutal rates (24–32¢) more than compensate for weak sun. Every New England state beats the national median.
  • Pacific (avg ~12.1 yrs, ex-Alaska): Hawaii and California carry the region; Oregon (17.7) and Washington (20.1) show what happens when Northwestern rates meet Northwestern clouds.
  • Mid-Atlantic (avg ~11.7 yrs): Solid across the board — NY’s credit and MD’s grant help; PA/NJ ride high rates.
  • Mountain West (avg 15.6 yrs): The paradox region: the best sun in America (AZ, NM, NV, UT, CO all ≥18% CF) neutralized by some of the cheapest power (NV 12.77¢, UT 13.12¢, NM 16.09¢).
  • South Atlantic & South Central (avg ~16.4 yrs): Cheap power dominates; South Carolina’s credit is the region’s lone bright spot.
  • West North Central (avg ~17.2 yrs): The toughest region — North Dakota (20.2) and Nebraska (18.5) still exceed 18 years on some of America’s lowest rates, though Missouri and Iowa improved sharply on higher July rates.

Methodology

Full methodology is documented in methodology.md; the essentials:

Limitations — read before quoting

  • 100% retail-rate offset assumed. Real households directly self-consume ~60–80% of production; the rest is exported under net metering, increasingly credited below retail. Our sensitivity test (70% self-consumption, exports at half retail) stretches the median payback to ~18.4 years.
  • Rates frozen at July 2026. EIA data shows residential rates rising ~5%/year nationally (EC Mag; June 2026 update). A 3%/yr escalation scenario shortens the median to ~13.0 years.
  • Cash purchase; no degradation, O&M, or inverter replacement. Loan-financed systems (median $4.50/W per LBNL) push the median past 19.5 years.
  • Capacity factors are estimated via state-to-NREL-class mapping; individual rooftops vary ±20%.
  • One rate per state. EIA state averages blend utilities — your utility’s rate is what matters.
  • July rates run seasonally high. The July 2026 U.S. average residential rate was 18.31¢, above the annual average — so modeled paybacks may run slightly shorter than a full-year average would give.
  • Connecticut’s rate cut is temporary. Connecticut’s 24.16¢ reflects PURA’s May 2026 interim rate decision cutting ~4.3–4.9¢/kWh from bills through April 2027; if the cut is not extended, Connecticut’s payback would lengthen again.
  • Lease/PPA excluded. Third-party-owned systems can still use the 48E commercial credit — a separate market with different math.

Frequently asked questions

Calculate your payback

Solar Payback Calculator

Estimate your payback using the same model as our 50-state study.




Model: (system kW × $/W − state incentive) ÷ (system kW × 8,760 × capacity factor × retail rate).
Uses EIA July 2026 residential rates, NREL capacity factors, no federal credit. Estimate only — your roof, rate plan, and net metering terms will differ.

The full 50-state table

Click any column header to sort. Use the search box to filter states.

Rank ▼ State Payback (yrs) Rate (¢/kWh) Annual kWh Annual savings State incentive Net cost
1 Hawaii 4.4 48.00 13,525 $6,492 — $28,800
2 California 6.3 33.61 13,525 $4,546 — $28,800
3 New York 7.8 29.90 10,162 $3,038 $5,000 $23,800
4 Massachusetts 9.0 30.49 10,162 $3,098 $1,000 $27,800
5 Maine 9.1 32.41 9,741 $3,157 — $28,800
6 Rhode Island 10.0 28.29 10,162 $2,875 — $28,800
7 New Hampshire 10.7 26.60 10,162 $2,703 — $28,800
8 New Jersey 10.7 25.19 10,652 $2,683 — $28,800
9 Alaska 11.2 28.83 8,900 $2,566 — $28,800
10 Connecticut 11.7 24.16 10,162 $2,455 — $28,800
11 New Mexico 11.7 16.09 13,736 $2,210 $2,880 $25,920
12 Maryland 12.2 21.41 10,652 $2,281 $1,000 $27,800
13 Michigan 12.3 23.05 10,162 $2,342 — $28,800
14 South Carolina 12.4 15.47 11,283 $1,745 $7,200 $21,600
15 Vermont 12.5 23.75 9,741 $2,313 — $28,800
16 Pennsylvania 13.0 21.72 10,162 $2,207 — $28,800
17 Arizona 13.2 15.38 13,736 $2,113 $1,000 $27,800
18 Colorado 13.4 17.00 12,614 $2,144 — $28,800
19 Illinois 14.1 19.22 10,652 $2,047 — $28,800
20 Ohio 14.6 19.45 10,162 $1,977 — $28,800
21 Delaware 14.6 18.48 10,652 $1,968 — $28,800
22 Virginia 14.7 17.55 11,143 $1,956 — $28,800
23 Wisconsin 14.9 19.06 10,162 $1,937 — $28,800
24 Texas 15.2 15.88 11,914 $1,892 — $28,800
25 Alabama 15.6 16.40 11,283 $1,850 — $28,800
26 Georgia 15.7 16.27 11,283 $1,836 — $28,800
27 Kansas 15.8 15.27 11,914 $1,819 — $28,800
28 Missouri 16.1 16.09 11,143 $1,793 — $28,800
29 Florida 16.1 15.03 11,914 $1,791 — $28,800
30 Minnesota 16.2 17.45 10,162 $1,773 — $28,800
31 Indiana 16.2 16.73 10,652 $1,782 — $28,800
32 Nevada 16.4 12.77 13,736 $1,754 — $28,800
33 South Dakota 16.8 15.37 11,143 $1,713 — $28,800
34 North Carolina 16.8 15.16 11,283 $1,711 — $28,800
35 Wyoming 16.8 14.36 11,914 $1,711 — $28,800
36 Oklahoma 16.8 14.35 11,914 $1,710 — $28,800
37 Iowa 16.9 15.99 10,652 $1,703 — $28,800
38 Montana 17.2 14.99 11,143 $1,670 — $28,800
39 Utah 17.4 13.12 12,614 $1,655 — $28,800
40 Mississippi 17.6 14.54 11,283 $1,641 — $28,800
41 Oregon 17.7 15.97 10,162 $1,623 — $28,800
42 Arkansas 17.8 14.33 11,283 $1,617 — $28,800
43 West Virginia 18.0 15.78 10,162 $1,604 — $28,800
44 Nebraska 18.5 13.78 11,283 $1,555 — $28,800
45 Idaho 18.6 13.73 11,283 $1,549 — $28,800
46 Tennessee 18.8 13.71 11,143 $1,528 — $28,800
47 Kentucky 19.6 13.81 10,652 $1,471 — $28,800
48 Washington 20.1 14.71 9,741 $1,433 — $28,800
49 Louisiana 20.1 12.72 11,283 $1,435 — $28,800
50 North Dakota 20.2 13.41 10,652 $1,428 — $28,800

Data & reuse

The complete 50-state table is below and downloadable as CSV. Journalists and researchers are welcome to cite this study with attribution to Joule Post and a link to this page. Underlying inputs: EIA Electric Power Monthly Table 5.6.A (July 2026), LBNL Tracking the Sun 2025, NREL Annual Technology Baseline 2024, DSIRE-indexed state programs.

Purpose

Estimate the simple payback period for a typical residential rooftop solar system in each US state under 2026 conditions — i.e., after the expiration of the 30% federal residential solar tax credit (Section 25D) on December 31, 2025.

Model specification

State incentive values used (2026)

Programs deliberately excluded from the cost model (noted as limitations):

  • Production-based incentives (MA SMART ~$0.03/kWh/20yr; RI Renewable Energy Growth ~$0.27/kWh) — real value, but paid over time, not upfront; excluding them is conservative for MA/RI payback.
  • SREC markets (NJ, PA, MD, OH) — volatile, annual income, not upfront cost reduction.
  • Utility rebates (TX AEP, NC Duke PowerPair, OR Energy Trust) — vary by utility territory, not statewide.
  • Sales/property tax exemptions — reduce lifetime cost, not modeled in simple payback.
  • Net metering terms — affect savings realization, modeled separately as a sensitivity.

Capacity factor estimation method

NREL’s Annual Technology Baseline (2024) publishes population-weighted residential PV capacity factors for 10 resource classes binned by mean global horizontal irradiance (GHI): 19.6% (class 1, GHI >5.75) down to 12.7% (class 10, GHI <3.75), US mean 15.7%.

Each state was assigned a resource class based on its approximate population-weighted average GHI from NREL solar resource geography:

  • Class 1 (19.6%): AZ, NM, NV
  • Class 2 (19.3%): CA, HI
  • Class 3 (18.0%): CO, UT
  • Class 4 (17.0%): FL, KS, OK, TX, WY
  • Class 5 (16.1%): AL, AR, GA, ID, LA, MS, NC, NE, SC
  • Class 6 (15.9%): MO, MT, SD, TN, VA
  • Class 7 (15.2%): DE, IA, IL, IN, KY, MD, ND, NJ
  • Class 8 (14.5%): CT, MA, MI, MN, NH, NY, OH, OR, PA, RI, WI, WV
  • Class 9 (13.9%): ME, VT, WA
  • Class 10 (12.7%): AK

Confidence: Medium. State-average GHI assignments are approximate; actual rooftop production varies ±20% with roof orientation, tilt, shading, and local weather. Rankings are driven primarily by electricity rates (3.8× spread) rather than capacity factor (1.5× spread), so class-assignment error rarely moves a state more than 2–3 ranks.

Key assumptions and limitations

1. 100% retail-rate offset. The model values every generated kWh at the full residential retail rate. In practice, households self-consume ~60–80% directly; excess exports are credited under net metering (often at retail, sometimes at avoided-cost). States weakening net metering will see longer real paybacks.

2. No rate escalation. Utility rates are held at July 2026 levels. EIA data shows residential rates rising ~5%/yr nationally; including escalation would shorten all paybacks.

3. No degradation, O&M, or financing. Panels degrade ~0.5%/yr; inverters may need replacement; loan interest adds cost. Cash-purchase basis assumed.

4. No federal credit. Correct for homeowner-purchased systems installed in 2026+. Third-party-owned (lease/PPA) systems may still access the 48E commercial credit — a different market not modeled here.

5. State incentives as modeled are upfront-equivalent; SC’s carryforward timing and MA’s SMART production payments are noted but not time-discounted.

6. Single rate per state. EIA state averages blend utilities; individual bills vary widely (e.g., California IOU vs. municipal rates).

Sensitivity analysis

Data confidence

  • Electricity rates: High. EIA Form EIA-861M, preliminary July 2026. Official, comprehensive.
  • Installed cost: High. LBNL Tracking the Sun, national median $3.60/W for host-owned residential (2025 data).
  • State incentives: Medium-high. Verified against 2026-dated secondary sources; programs can change mid-year.
  • Capacity factors: Medium. NREL ATB classes are authoritative; state-to-class mapping is estimated.
  • Overall ranking confidence: Medium-high. Rate-driven; robust to ±1 class error in most states.

Reproducibility

Raw inputs and per-state outputs: `data.csv`. Calculation script logic documented above; any analyst with the cited public sources can reproduce the ranking within rounding.