Not all solar investments are created equal. Where you live has a major impact on how much electricity your panels produce, how quickly your investment pays off, and how many incentives are available to reduce your upfront cost.
We analyzed all 50 states across four key dimensions to rank the best states for going solar in 2026:
- Sunlight / Solar Resource — Peak sun hours per day (higher = more production)
- Electricity Rates — Higher rates mean faster payback
- Financial Incentives — Federal, state, and local incentives
- Net Metering Policy — How utilities compensate you for excess solar
Let’s count down the top 10.
Methodology
Each state was scored on a 1–10 scale in four categories:
- Average peak sun hours (based on NREL PVWatts data)
- Average residential electricity rate (EIA 2026 data)
- Quality and generosity of state/local incentives
- Strength of net metering policy
States were ranked by total weighted score (electricity rates weighted 1.5x due to their outsized impact on ROI).
#10 — Colorado
Score: 7.4/10
Colorado is often overlooked in solar discussions, but it’s a strong performer. Denver averages 5.5 peak sun hours/day — competitive with Arizona — and sits above 5,000 feet elevation where thinner air means more solar radiation.
Key facts:
- Avg. electricity rate: $0.14/kWh
- State incentive: Xcel Energy Solar*Rewards program (for Xcel customers) pays ~$0.05/kWh for excess production
- Net metering: Strong — retail rate credits for most utilities
- Avg. payback: 9–11 years
- Best for: Denver metro area homeowners, especially Xcel Energy customers
Colorado also passed a solar access law preventing HOAs from banning solar installations.
#9 — Florida
Score: 7.6/10
Florida lives up to its “Sunshine State” nickname with 5.5–6.0 peak sun hours/day statewide. The state’s political leanings have historically created some headwinds for solar policy, but in 2026 the fundamentals remain strong.
Key facts:
- Avg. electricity rate: $0.14/kWh
- State incentive: Sales tax exemption on solar equipment (saves ~$800–$1,500), property tax exemption on added home value
- Net metering: Available statewide, though rate structure has been in flux — check with your local utility
- Avg. payback: 9–11 years
- Best for: Homeowners with FPL (Florida Power & Light) or Duke Energy, especially in South Florida
Florida’s excellent sun resource and tax exemptions make it a solid solar market despite modest electricity rates.
#8 — Texas
Score: 7.7/10
Texas has become one of the fastest-growing solar markets in the country, driven by its massive solar resource and rapidly expanding installer network. Most of the state receives 5.5–6.5 peak sun hours/day.
Key facts:
- Avg. electricity rate: $0.13/kWh (below national average, but volatile in deregulated markets)
- State incentive: No state income tax (can’t claim state credit), but property tax exemption on solar home value increase
- Net metering: Weak point — Texas ERCOT utilities are not required to offer net metering; policies vary dramatically by utility
- Avg. payback: 9–12 years
- Best for: AEP Texas, Austin Energy, or CPS Energy customers; post-Winter Storm Uri demand for battery + solar combinations
Texas ranks #8 rather than higher primarily due to inconsistent net metering and below-average electricity rates in most areas.
Want to see if solar makes financial sense in your specific Texas zip code? Get a free quote and see your personalized payback period.
#7 — Arizona
Score: 7.9/10
Arizona has some of the best raw solar resources in the country — Phoenix averages 6.5 peak sun hours/day and Yuma tops 7. But its utility policy history has created headwinds.
Key facts:
- Avg. electricity rate: $0.13/kWh
- State incentive: 25% state tax credit (up to $1,000), sales tax exemption, property tax exemption
- Net metering: Available but Arizona’s major utilities (APS, SRP) have moved to less favorable “net billing” structures
- Avg. payback: 8–10 years
- Best for: Homeowners with older utility contracts or those adding battery storage to maximize self-consumption
Arizona’s incredible sun resource keeps it in the top 10 even with less favorable utility policies. Battery + solar combinations are particularly popular here.
#6 — California
Score: 8.0/10
California was once the undisputed solar leader, but recent net metering changes (NEM 3.0, effective April 2023) reduced export compensation rates by ~75%, extending payback periods significantly. Despite this, California’s sky-high electricity rates keep the state firmly in the top tier.
Key facts:
- Avg. electricity rate: $0.30/kWh (highest in the continental US)
- State incentive: No state income tax credit, but SGIP battery incentive, Disadvantaged Communities Solar Initiative
- Net metering: NEM 3.0 significantly reduced export rates — self-consumption optimization (with battery) is now essential
- Avg. payback: 8–12 years (longer than pre-NEM 3.0, but still positive)
- Best for: High-electricity users, time-of-use optimization, battery + solar combinations
California drops from #1 to #6 due to NEM 3.0 changes — if you’re in California, adding a battery is more important than ever to maximize your ROI.
#5 — New Jersey
Score: 8.2/10
New Jersey punches well above its weight in solar. Despite being in the Northeast with moderate sun, it consistently ranks as one of the best solar markets due to high electricity rates, strong net metering, and excellent incentive programs.
Key facts:
- Avg. electricity rate: $0.18/kWh
- State incentive: SuSI (Successor Solar Incentive) program pays quarterly payments per kWh produced; no income limit
- Net metering: Excellent — retail rate credits
- Avg. payback: 7–8 years
- Best for: JCP&L, PSE&G, or Atlantic City Electric customers
New Jersey’s combination of $0.18/kWh rates, generous SuSI incentives, and strong net metering makes it a top-5 solar state.
#4 — New York
Score: 8.4/10
New York offers a compelling combination of high electricity prices, strong state-level incentives, and good net metering. Con Edison customers in NYC and Westchester are especially well-positioned.
Key facts:
- Avg. electricity rate: $0.22/kWh (rising fast)
- State incentive: 25% state tax credit (up to $5,000) + NY-Sun Megawatt Block incentive
- Net metering: Strong retail-rate net metering
- Avg. payback: 7–8 years
- Best for: Con Edison and National Grid customers; Long Island (PSEG-LI has LIPA smart solar programs)
New York’s $0.22/kWh average rate (exceeding $0.30/kWh in NYC) drives fast paybacks despite moderate sun. The state’s 25% credit (up to $5,000) on top of the federal 30% is among the most generous in the nation.
#3 — Hawaii
Score: 8.7/10
Hawaii may have the best case for residential solar of any US state. Electricity rates average a staggering $0.43/kWh — nearly three times the national average — and the state receives 6–7 peak sun hours/day.
Key facts:
- Avg. electricity rate: $0.43/kWh (highest in the US)
- State incentive: 35% state tax credit (up to $5,000)
- Net metering: Limited — most new systems go on Customer Self-Supply program (no export credits), making battery storage essential
- Avg. payback: 5–6 years (fastest in the nation)
- Best for: All homeowners — virtually everyone in Hawaii benefits enormously from solar
Hawaii’s uniquely high electricity rates mean solar systems pay back in just 5–6 years even with modest net metering. The combination of the 30% federal ITC, 35% state credit, and $0.43/kWh rates is unmatched anywhere in the US.
#2 — Massachusetts
Score: 8.8/10
Massachusetts consistently ranks #1 or #2 nationally for solar ROI. The state’s commitment to renewable energy, combined with high electricity rates and generous incentives, creates an exceptional solar market.
Key facts:
- Avg. electricity rate: $0.26/kWh and rising
- State incentive: 15% state tax credit (up to $1,000) + SMART program (pays additional ~$0.06–$0.15/kWh for 10 years)
- Net metering: Excellent — virtual net metering available statewide
- Avg. payback: 6–7 years (second fastest in the US)
- Best for: Eversource and National Grid customers; everyone in MA benefits from strong solar economics
Massachusetts’ SMART (Solar Massachusetts Renewable Target) program is particularly powerful — it pays you an ongoing per-kWh incentive for 10 years on top of your electricity savings. When combined with $0.26/kWh rates and the federal ITC, solar in Massachusetts is a compelling investment.
#1 — New Mexico
Score: 8.9/10
New Mexico claims the top spot in 2026 by combining America’s best solar resource with improved incentive programs and electricity rates that have risen significantly in recent years.
Key facts:
- Peak sun hours: 6.5–7.5/day (best in the continental US)
- Avg. electricity rate: $0.14/kWh (and rising faster than national average)
- State incentive: 10% state tax credit (up to $9,000 — highest cap nationally) + net metering
- Net metering: Strong retail-rate net metering
- Avg. payback: 7–8 years
- Best for: All homeowners; Albuquerque, Santa Fe, and Las Cruces metro areas
New Mexico’s extraordinary sun resource means a solar system produces 40% more electricity than the same system in Massachusetts — making every dollar invested more productive. The state’s $9,000 tax credit cap means larger systems get substantial state-level support.
Honorable Mentions
Maryland (#11): $0.17/kWh rates, CleanEnergy Jobs Act incentives, strong net metering Illinois (#12): $0.15/kWh, Illinois SHINES program pays incentives via SRECs Minnesota (#13): Strong Value of Solar tariff, cold climate (but panels love cold weather for efficiency) Oregon (#14): Oregon Solar + Storage Rebate Program, $0.13/kWh but growing incentive stack
States Where Solar Is Most Challenging
Some states present a tougher economic case for residential solar:
- Louisiana ($0.10/kWh, weak net metering)
- Idaho ($0.10/kWh, low rates)
- West Virginia ($0.11/kWh, limited incentives)
- Wyoming ($0.11/kWh, limited incentives)
- North Dakota ($0.11/kWh, poor solar resource)
Low electricity rates extend payback periods significantly in these states, though the 30% federal ITC still makes solar worth considering for many homeowners.
Key Factors That Make a State Great for Solar
- High electricity rates: The bigger your current bill, the faster solar pays back
- Strong net metering: Getting full retail-rate credit for exported power accelerates ROI
- State incentives: Tax credits, rebates, and SREC markets add thousands in value
- Good sun resource: More production = more savings
- Competitive installer market: More installers = lower prices and better service
Is Solar Worth It in Your State?
Even if your state isn’t in the top 10, solar may still make excellent financial sense — especially with the 30% federal tax credit available through 2032.
The best way to know is to get actual quotes from local installers and see the real numbers for your home and situation.
Get free, customized solar quotes for your specific location. See your estimated savings, payback period, and system cost — no commitment required.
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- Solar Savings Calculator
Top 10 Best States for Solar — Summary Table
| Rank | State | Peak Sun Hrs | Avg. Rate | Best Incentive | Avg. Payback |
|---|---|---|---|---|---|
| 1 | New Mexico | 7.0 | $0.14 | 10% state credit ($9K cap) | 7–8 yrs |
| 2 | Massachusetts | 4.2 | $0.26 | SMART + 15% credit | 6–7 yrs |
| 3 | Hawaii | 6.5 | $0.43 | 35% state credit | 5–6 yrs |
| 4 | New York | 4.2 | $0.22 | 25% credit ($5K cap) | 7–8 yrs |
| 5 | New Jersey | 4.5 | $0.18 | SuSI program | 7–8 yrs |
| 6 | California | 5.7 | $0.30 | SGIP battery rebate | 8–12 yrs |
| 7 | Arizona | 6.5 | $0.13 | 25% credit ($1K cap) | 8–10 yrs |
| 8 | Texas | 5.8 | $0.13 | Property tax exemption | 9–12 yrs |
| 9 | Florida | 5.7 | $0.14 | Sales tax exemption | 9–11 yrs |
| 10 | Colorado | 5.5 | $0.14 | Xcel Solar*Rewards | 9–11 yrs |
Data based on NREL, EIA, and state energy office publications as of Q1 2026.
Sources: National Renewable Energy Laboratory (NREL) PVWatts State Solar Resources, U.S. Energy Information Administration Electric Power Monthly 2026, Solar Energy Industries Association (SEIA) State Solar Policies, EnergySage Market Intelligence Report Q1 2026.