Should you buy, finance, lease or sign a PPA in 2026?
The rules changed on January 1. The 30% federal credit that made buying an easy call is gone for homeowner purchases — but it still reaches leases and PPAs, indirectly, until the end of 2027. That single change reorders the answer for a lot of households.
Best option: Cash purchase — $4,611 net present value over 25 years, paying back in year 11.
| Option | Owns it | 30% credit | Upfront | 25-yr NPV | Payback | Cost/kWh |
|---|---|---|---|---|---|---|
| Cash purchase | You | None | $13,500 | $4,611 | Year 11 | $0.182 |
| Solar loan | You | None | $0 | -$657 | Year 23 | $0.236 |
| Lease | Provider | Indirect (§48E) | $0 | $3,588 | Year 1 | $0.192 |
| PPA | Provider | Indirect (§48E) | $0 | $2,886 | Year 1 | $0.200 |
What this calculation assumes, and where it can be wrong
Federal credit. The 30% federal residential credit (IRC §25D) expired for systems placed in service after December 31, 2025. A 2026 cash or loan purchase receives no federal credit. Leases and PPAs remain eligible indirectly: the third-party owner claims the commercial credit (IRC §48E) and reflects part of it in the price offered, provided the system is placed in service by December 31, 2027.
Estimated §48E value in a lease or PPA quote: about $2,025 for this system, assuming the provider passes through half the credit. That share is our estimate, not a published figure.
Export credit. NEM 3.0 compensates exports at avoided-cost rates far below retail.
State incentives. California has no statewide personal income tax credit or cash rebate for residential PV. Sales tax and property tax exemptions exist but are not cash incentives and are not modelled. SGIP pays roughly $200/kWh toward battery storage (far more for equity-resiliency customers) — that is storage, not PV, and belongs in the battery calculator rather than here. What actually decides California is NEM 3.0: exports earn a fraction of retail, which is already reflected in the export credit ratio.
- Cash purchase: No federal tax credit is applied: IRC §25D expired for systems placed in service after 2025-12-31.
- Cash purchase: Exported power is credited at 25% of retail, so savings depend heavily on using power as it is generated.
- Solar loan: Financed amount includes a 20% dealer fee, which is why a $0-down loan quote costs more than the same system bought outright.
- Solar loan: No federal tax credit is applied: IRC §25D expired for systems placed in service after 2025-12-31.
- Solar loan: Exported power is credited at 25% of retail, so savings depend heavily on using power as it is generated.
- Lease: Pricing assumes the system owner claims the §48E credit and reflects part of it in your quote. The system must be placed in service by 2027-12-31 to qualify.
- Lease: Exported power is credited at 25% of retail, so savings depend heavily on using power as it is generated.
- PPA: Pricing assumes the system owner claims the §48E credit and reflects part of it in your quote. The system must be placed in service by 2027-12-31 to qualify.
- PPA: Exported power is credited at 25% of retail, so savings depend heavily on using power as it is generated.
Sunlight data: 1616 kWh per installed kW per year (verified — NREL PVWatts v8). Retail rate: $0.333/kWh.
Where solar actually pays in 2026, ranked
A household spending $200 a month on electricity, with the array sized to cover its usage, at the default $3.00/W installed cost. This is the same case the calculator below opens on. The same case is run through the model in every state we have verified data for, so the differences below are differences in the state and nothing else. The order surprises people, because it tracks the price of the electricity you stop buying and the export rule — not the amount of sun.
| State | Retail rate | Exports earn | 25-yr value, cash | Payback |
|---|---|---|---|---|
| New York | $0.299 | 100% of retail | $24,327 | Year 7 |
| New Jersey | $0.233 | 100% of retail | $24,232 | Year 8 |
| Illinois | $0.239 | 100% of retail | $24,222 | Year 8 |
| Massachusetts | $0.288 | 100% of retail | $23,830 | Year 7 |
| Rhode Island | $0.295 | 100% of retail | $20,152 | Year 8 |
| Maine | $0.286 | 100% of retail | $20,128 | Year 8 |
| Hawaii | $0.520 | 38% of retail | $15,565 | Year 5 |
| Maryland | $0.218 | 100% of retail | $15,250 | Year 10 |
| Pennsylvania | $0.216 | 100% of retail | $14,389 | Year 10 |
| New Hampshire | $0.273 | 85% of retail | $13,814 | Year 10 |
| New Mexico | $0.141 | 100% of retail | $13,191 | Year 11 |
| Connecticut | $0.274 | 100% of retail | $13,040 | Year 10 |
| Delaware | $0.194 | 100% of retail | $11,826 | Year 11 |
| Wisconsin | $0.197 | 100% of retail | $11,691 | Year 11 |
| South Carolina | $0.162 | 100% of retail | $11,640 | Year 11 |
| Colorado | $0.162 | 100% of retail | $11,110 | Year 11 |
| Vermont | $0.249 | 78% of retail | $9,170 | Year 11 |
| Virginia | $0.176 | 100% of retail | $8,874 | Year 12 |
| Florida | $0.152 | 100% of retail | $8,388 | Year 12 |
| Kansas | $0.151 | 100% of retail | $7,883 | Year 14 |
| Wyoming | $0.148 | 100% of retail | $7,351 | Year 14 |
| Minnesota | $0.170 | 100% of retail | $7,167 | Year 14 |
| Arizona | $0.152 | 75% of retail | $6,037 | Year 14 |
| North Carolina | $0.151 | 100% of retail | $5,305 | Year 14 |
| California | $0.333 | 25% of retail | $4,611 | Year 11 |
| Oklahoma | $0.134 | 100% of retail | $4,113 | Year 15 |
| West Virginia | $0.168 | 100% of retail | $3,883 | Year 15 |
| Arkansas | $0.144 | 100% of retail | $2,556 | Year 15 |
| Montana | $0.147 | 100% of retail | $2,555 | Year 15 |
| Missouri | $0.137 | 100% of retail | $2,332 | Year 15 |
| Nebraska | $0.136 | 100% of retail | $1,823 | Year 15 |
| Nevada | $0.136 | 75% of retail | $1,820 | Year 15 |
| Iowa | $0.141 | 100% of retail | $1,801 | Year 15 |
| Michigan | $0.220 | 55% of retail | $1,050 | Year 16 |
| Oregon | $0.163 | 100% of retail | -$413 | Year 16 |
| North Dakota | $0.136 | 100% of retail | -$1,831 | Year 17 |
| Texas | $0.164 | 60% of retail | -$1,879 | Year 17 |
| Washington | $0.150 | 100% of retail | -$5,218 | Year 18 |
| Alaska | $0.282 | 35% of retail | -$6,919 | Year 20 |
| Georgia | $0.158 | 46% of retail | -$8,175 | Year 20 |
| Mississippi | $0.162 | 40% of retail | -$9,371 | Year 21 |
| South Dakota | $0.157 | 40% of retail | -$10,315 | Year 21 |
| Ohio | $0.195 | 23% of retail | -$11,106 | Year 23 |
| Idaho | $0.124 | 60% of retail | -$11,901 | Year 21 |
| Alabama | $0.168 | 30% of retail | -$12,110 | Year 23 |
| Indiana | $0.182 | 24% of retail | -$12,130 | Year 24 |
| Louisiana | $0.142 | 35% of retail | -$13,700 | Year 23 |
| Utah | $0.130 | 39% of retail | -$15,599 | Year 24 |
| Kentucky | $0.150 | 30% of retail | -$16,421 | Year 25 |
| Tennessee | $0.145 | 35% of retail | -$16,447 | Year 25 |
On these assumptions, North Dakota, Texas, Georgia, Mississippi, South Dakota, Ohio, Idaho, Alabama, Indiana, Louisiana, Utah, Kentucky, and Tennessee are states where no option we model — cash, loan, lease or PPA — returns its cost. We would rather say that than pad the table.
Why every other solar calculator is now wrong
Almost every solar calculator online still applies a 30% federal tax credit to a cash or financed purchase. For a system placed in service in 2026, that credit does not exist. IRC §25D expired for systems placed in service after December 31, 2025, and nothing replaced it for homeowners who buy.
A calculator that still subtracts 30% from the purchase price is overstating the case for buying by thousands of dollars. This one applies zero, and says so in the output.
Where the 30% still applies
IRC §48E — the commercial credit — is alive. When a financier owns the system and you sign a lease or a power purchase agreement, that company claims the credit and reflects part of it in the price it quotes you. The system has to be placed in service by December 31, 2027 to qualify.
That is why third-party ownership went from a niche product to the majority of the market inside a year. It is also why a lease can now beat a purchase on paper for a household that would previously have been told to buy.
What this calculator does differently
- No federal credit on purchases. Because there isn't one.
- Dealer fees on loans are modelled. A low-APR solar loan typically carries a fee of 15–30% of system cost, folded into the financed amount. Leave it out and every loan looks better than it is.
- Exported power is not valued at retail unless your state actually does that. Under California's NEM 3.0, exports earn a fraction of the retail rate.
- Owner costs are included — maintenance and one inverter replacement inside 25 years. Lease and PPA customers do not pay these; that difference is part of the comparison.
- Future dollars are discounted. A "$40,000 lifetime savings" headline that ignores the time value of money is a marketing number.
- It will tell you not to do it. If no option clears zero on your inputs, that is what the result says.
The 2027 deadline
§48E requires the system to be placed in service by December 31, 2027 — not merely signed. Installation queues, permitting and interconnection all sit between a signature and that date. If a lease or PPA is the option that works for you, the timeline matters more than it looks.
Every assumption behind these numbers, and every data source, is listed on the methodology page.