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. After applying the 30% federal Investment Tax Credit (ITC), homeowners can expect to pay a net cost of $12,250 to $17,150.
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 30% ITC |
|---|---|---|
| 4 kW | $10,000–$14,000 | $7,000–$9,800 |
| 6 kW | $15,000–$21,000 | $10,500–$14,700 |
| 8 kW | $20,000–$28,000 | $14,000–$19,600 |
| 10 kW | $25,000–$35,000 | $17,500–$24,500 |
| 12 kW | $30,000–$42,000 | $21,000–$29,400 |
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 ITC |
|---|---|---|---|
| California | $21,350 | $3.05 | $14,945 |
| Texas | $18,900 | $2.70 | $13,230 |
| Florida | $19,250 | $2.75 | $13,475 |
| New York | $22,400 | $3.20 | $15,680 |
| Arizona | $18,200 | $2.60 | $12,740 |
| New Jersey | $22,750 | $3.25 | $15,925 |
| Massachusetts | $24,500 | $3.50 | $17,150 |
| Colorado | $20,300 | $2.90 | $14,210 |
| Nevada | $18,550 | $2.65 | $12,985 |
| Illinois | $19,950 | $2.85 | $13,965 |
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., SunPower, LG) | 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 |
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. EnergySage 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
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.
The 30% Federal Solar Tax Credit
The Investment Tax Credit (ITC) is the most powerful solar incentive available to US homeowners. For any solar system installed in 2026, you can claim a 30% credit on your federal income taxes.
Here’s how it works:
- Install a $25,000 solar system
- File IRS Form 5695 with your tax return
- Receive a $7,500 credit reducing your tax bill
- If the credit exceeds your tax liability, it carries over to the following year
The ITC is scheduled to remain at 30% through 2032, then step down to 26% (2033) and 22% (2034) before expiring for residential installations. See our full guide: Solar Tax Credit 2026: How to Claim the 30% Federal ITC.
State and Local Incentives on Top of the Federal ITC
In addition to the 30% federal credit, many states offer additional 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 (can’t claim state credit), but strong federal incentives still apply
- 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. 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, claim tax credit, $0 down options available
- Best for: Most homeowners
Solar Lease / PPA (Power Purchase Agreement)
- Pros: $0 down, no maintenance responsibility
- Cons: You don’t own the system, can’t claim tax credit, complicates home sale
- Best for: Homeowners who can’t use the tax credit or don’t want ownership
For most homeowners who qualify for the 30% ITC, a solar loan provides the best combination of low monthly payments and full access to incentives.
How to Get the Best Price on Solar Panels
- Get at least 3 quotes — prices vary by 20–30% between installers
- Use a comparison marketplace like EnergySage 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
- After 30% ITC: $13,230 net cost
- Annual savings: ~$1,350 (75% of bill, accounting for some grid use)
- 25-year savings (with 3% annual electricity inflation): ~$50,000+
- Payback period: ~10 years
- Net profit (savings minus net cost): ~$37,000
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
- Federal tax liability to use the ITC
…solar is an excellent investment in 2026. The combination of falling panel prices, the 30% tax credit, and rising electricity rates creates an unusually strong case for going solar now rather than waiting.
Learn more: How to Switch to Solar: A Step-by-Step Guide for Homeowners
Key Takeaways
- Average solar cost in 2026: $2.50–$3.50/watt (gross), or $1.75–$2.45/watt after the 30% ITC
- A typical 7 kW system costs $12,000–$17,000 net after the federal tax credit
- Prices vary by state — get local quotes for accurate pricing
- The 30% federal ITC runs through 2032 — now is a great time to lock it in
- Always compare at least 3 quotes to ensure you’re getting a competitive price
Sources: National Renewable Energy Laboratory (NREL) Solar Cost Benchmark, Lawrence Berkeley National Laboratory Tracking the Sun, EnergySage Market Intelligence Report 2026, SEIA U.S. Solar Market Insight.