The price of residential solar has never been more affordable. In 2026, the average cost to install a home solar system in the United States is $2.50 to $3.50 per watt before incentives — down from nearly $8/watt just a decade ago.
For a typical 7 kilowatt (kW) system, that translates to a gross cost of $17,500 to $24,500. Note: the federal residential ITC expired December 31, 2025. With available state and local incentives (which vary by state), effective costs may be lower — check dsireusa.org for incentives in your area.
In this comprehensive guide, we’ll break down solar panel costs by state, explain what factors influence your final price, and show you how to maximize your incentives.
Average Solar Panel Cost by System Size (2026)
Your solar system size is the biggest driver of cost. Here’s a quick breakdown:
| System Size | Gross Cost | After State Incentives (est.) |
|---|---|---|
| 4 kW | $10,000–$14,000 | $9,000–$12,600 |
| 6 kW | $15,000–$21,000 | $13,500–$18,900 |
| 8 kW | $20,000–$28,000 | $18,000–$25,200 |
| 10 kW | $25,000–$35,000 | $22,500–$31,500 |
| 12 kW | $30,000–$42,000 | $27,000–$37,800 |
“After State Incentives” estimates assume ~10% in state/local incentives. Actual savings vary significantly — some states offer up to $5,000 in credits while others offer none. Check dsireusa.org for your state.
The most common residential system size is 7–8 kW, which covers roughly 80–100% of an average American home’s electricity needs.
Solar Panel Cost by State
Solar costs vary significantly across the country. Here are average installed costs for a 7 kW system in major states:
| State | Avg. Cost (7 kW) | Cost/Watt | After State Incentives (est.) |
|---|---|---|---|
| California | $21,350 | $3.05 | ~$20,000 (sales tax exempt + rebates) |
| Texas | $18,900 | $2.70 | ~$18,900 (no state income tax/credit) |
| Florida | $19,250 | $2.75 | ~$18,750 (no state income tax/credit) |
| New York | $22,400 | $3.20 | ~$17,400 (25% credit, cap $5,000) |
| Arizona | $18,200 | $2.60 | ~$17,200 (25% credit, cap $1,000) |
| New Jersey | $22,750 | $3.25 | ~$20,750 (SuSI rebate ~$2,000) |
| Massachusetts | $24,500 | $3.50 | ~$23,500 (15% credit, cap $1,000) |
| Colorado | $20,300 | $2.90 | ~$18,550 (Xcel rebate ~$1,750) |
| Nevada | $18,550 | $2.65 | ~$18,050 (utility rebates ~$500) |
| Illinois | $19,950 | $2.85 | ~$18,500 (SREC program income) |
Why are some states more expensive? Labor costs, permitting fees, local utility requirements, and competition among installers all play a role. States like Massachusetts and New York have higher labor costs but also offer generous additional state incentives.
Ready to see what solar costs in your area? Get free quotes from vetted local installers — no commitment required.
What Factors Affect Solar Panel Cost?
1. System Size (Most Important Factor)
The larger your system, the more it costs — but larger systems often have a lower cost-per-watt due to economies of scale. Your ideal system size depends on:
- Your annual electricity consumption (find on your utility bill, measured in kWh)
- Your local electricity rate (higher rates = faster ROI)
- Available roof space and its orientation
- Local utility policies (net metering rules)
2. Panel Type and Brand
| Panel Tier | Efficiency | Cost | Best For |
|---|---|---|---|
| Premium (e.g., Maxeon, REC Alpha) | 20–23% | $0.50–$1.00/W extra | Limited roof space |
| Mid-range (e.g., Q Cells, REC) | 18–21% | Standard | Most homeowners |
| Budget | 15–18% | $0.30–$0.50/W less | Large roofs |
Look for Energy Star certified solar products when evaluating panel quality. For most homeowners, mid-range tier panels offer the best value. Premium panels make sense when roof space is limited.
3. Inverter Type
- String inverters: Least expensive ($1,000–$2,000), but performance drops if one panel is shaded
- Power optimizers + string inverter: Middle ground (~$1,500–$3,000 extra)
- Microinverters: Most expensive but best performance ($2,000–$4,000 extra for a typical system)
4. Roof Characteristics
- Roof age: If your roof is under 10 years old, no action needed. If older, reroofing before solar can add $5,000–$15,000 but is usually necessary
- Roof pitch and orientation: South-facing roofs at 30–45° tilt are optimal
- Structural reinforcement: Older homes may need roof structural work (+$500–$2,000)
5. Installation Company
Labor costs vary by 20–30% between installers. Getting multiple quotes is the single best way to lower your cost. Industry data shows homeowners who compare at least 3 quotes save an average of $5,000 compared to those who get only one.
6. Permits and Interconnection
The DOE Homeowner’s Guide to Going Solar covers the permitting process in detail. Solar installations require building permits and utility interconnection agreements. Permit costs range from $150 to $500 depending on your municipality. Some utilities charge interconnection fees of $100–$500.
Federal Solar Tax Credit: Expired for Homeowners
The federal Residential Clean Energy Credit (Section 25D — IRS official page) expired on December 31, 2025, following the passage of the One Big Beautiful Bill Act in mid-2025. Homeowners who purchased and installed solar before this date can still claim the 30% credit on their 2025 tax return. For systems installed in 2026 or later, no federal residential tax credit is available.
However, the commercial ITC (Section 48E) remains available for third-party owned systems — meaning solar leases and PPAs can still benefit from federal incentives indirectly.
See our full guide: Solar Tax Incentives in 2026: What Homeowners Need to Know.
State and Local Incentives (Your Primary Savings in 2026)
Although the federal residential ITC has expired, many states offer their own incentives:
- California: No state tax incentive, but strong net metering and no sales tax on solar equipment
- New York: 25% state tax credit (up to $5,000) + NYSERDA rebates
- Massachusetts: 15% state tax credit (up to $1,000) + SMART program incentives
- New Jersey: Strong net metering + SuSI rebate program
- Colorado: Xcel Energy solar rewards program
- Texas: No state income tax or state solar credit, but low installation costs and high sun exposure drive strong ROI
- Arizona: 25% tax credit (up to $1,000) + sales tax exemption
These state incentives can reduce your net cost by an additional $500–$5,000. Always check your state’s energy office website for the most current programs.
Solar Financing Options
You don’t have to pay $20,000+ upfront. The DOE’s solar financing overview covers all available options. Here are the main ways to finance solar:
Cash Purchase
- Pros: Lowest total cost, maximum ROI, no debt
- Cons: Requires significant upfront capital
- Best for: Homeowners with savings who want maximum long-term returns
Solar Loan
- Rates: 4–9% APR in 2026 (varies by credit score and loan term)
- Terms: 5–25 years
- Pros: Own the system, eligible for state incentives, $0 down options available
- Best for: Most homeowners
Solar Lease / PPA (Power Purchase Agreement)
- Pros: $0 down, no maintenance responsibility
- Cons: You do not own the system, no state incentive eligibility in most cases, complicates home sale
- Best for: Homeowners who prefer no upfront cost and no maintenance responsibility
With the federal residential ITC expired, solar leases and PPAs have become more competitive since the installer can still claim the commercial credit. For homeowners who prefer ownership, a solar loan remains a solid option — especially in states with their own tax credits.
How to Get the Best Price on Solar Panels
- Get at least 3 quotes — prices vary by 20–30% between installers
- Use a solar comparison platform to get competing bids in writing
- Ask about equipment choices — mid-range panels often offer better value than premium brands
- Time your purchase wisely — spring and fall often have better availability and promotions
- Check all incentives — federal, state, local utility, and manufacturer rebates
The cheapest quote isn’t always the best — also consider installer reputation, warranty terms, and equipment quality.
Get free, competing solar quotes in your area — no phone calls required until you’re ready.
How Much Can You Save Over 25 Years?
Here’s a realistic example for a homeowner in Texas with a $150/month electric bill:
- Monthly bill before solar: $150 ($1,800/year)
- 7 kW system cost: $18,900 (Texas has no state income tax, so no state solar credit)
- After State Incentives (est.): ~$18,200 (small utility rebates only)
- Annual savings: ~$1,350 (75% of bill, accounting for some grid use)
- 25-year savings (with 3% annual electricity inflation): ~$50,000+
- Payback period: ~13–14 years
- Net profit (savings minus net cost): ~$32,000
Use our Solar Savings Calculator to run the numbers for your specific situation.
Is Solar Worth It in 2026?
For the vast majority of homeowners with:
- A monthly electric bill over $100
- Reasonable sun exposure
- A roof less than 15 years old
- Good sun exposure and electricity rates above $0.12/kWh
…solar can still be a sound long-term investment in 2026. The combination of falling panel prices, rising electricity rates, and available state incentives continues to make solar worth serious consideration.
Related Articles
- Solar Incentives in 2026: What Homeowners Need to Know
- Best States for Solar Energy in 2026: Top 10 Ranked
- How to Switch to Solar: A Step-by-Step Guide for Homeowners
- Solar Panels vs. Traditional Energy: Which Saves You More Money?
- Solar Savings Calculator
Key Takeaways
- Average solar cost in 2026: $2.50–$3.50/watt (gross), before any state or local incentives
- A typical 7 kW system costs $17,500–$24,500 gross; net cost depends on your state’s incentives
- The federal residential ITC expired December 31, 2025 — it no longer applies to new installations
- State and local incentives vary widely — from nothing (TX, FL) to $5,000+ (NY) — check dsireusa.org
- Always compare at least 3 quotes to ensure you’re getting a competitive price
Sources: NREL Solar Installed System Cost Benchmark, Lawrence Berkeley Lab’s Tracking the Sun report, SEIA U.S. Solar Market Insight.