Is Solar Still Worth It in 2026 After the Federal Tax Credit Expired?
For over fifteen years, the 30% federal Investment Tax Credit (ITC / Section 25D) anchored residential solar sales in the United States. Following its expiration on December 31, 2025, the economics of rooftop solar have fundamentally transformed from a government-subsidized sprint into a direct hedge against rising electric utility tariffs.
How the Math Changes: 7-Year vs. 12-Year Payback
Consider a typical 7 kW rooftop installation priced at the national average of $2.95 per watt ($20,650 gross cost):
- In 2025 (With 30% Credit): Homeowners claimed a $6,195 tax credit, reducing their net cash investment to $14,455. Generating $1,620 in Year 1 utility savings yielded a rapid payback of 8.9 years.
- In 2026 (Without Credit): The full $20,650 must be paid directly. The simple payback extends to 12.7 years.
Why Solar Remains a Strong 25-Year Investment
Even without federal tax credits, modern monocrystalline solar panels carry 25-year manufacturer warranties. Over a 25-year lifespan, an un-subsidized 7 kW array in California, Texas, or Florida generates over $50,000 in cumulative avoided utility bills, yielding a net profit of $30,000+ and an internal rate of return (ROI) exceeding 150%.