Home solar payback calculator
Estimate home solar payback years, 25-year savings and ROI with production, rate increases, degradation and incentives. Updated for the 2026 tax-credit changes.
Results
| Simple payback period | 10.9 years |
|---|---|
| Net cost after incentives | $21,000 |
| Year-1 bill savings | $1,701 |
| Total savings over the period | $57,990 |
| Net gain over the period | $36,990 |
| Year-1 production | 9,450 kWh |
- Leases and PPAs work differently: the installer owns the system and may still claim a commercial credit. Compare the lease's monthly cost to your bill savings instead.
- This is an estimate, not financial advice. Financing interest, a roof replacement and changes to utility tariffs can all change the result.
About this calculator
Solar payback is the number of years it takes for bill savings to add up to what you paid for the system. In 2026 the math changed. The 30% federal residential clean energy credit (Section 25D) ended for systems installed after December 31, 2025, so homeowner-owned systems now pay back more slowly than many older calculators suggest.
This calculator works year by year. It accounts for falling panel output, rising electricity prices and how your utility values the power you export, then reports payback, total savings and net gain over the system's life.
How to use it
- Enter the system size and quoted price per watt. Divide the total quote by the system watts.
- Leave the tax credit at 0% unless your state offers one, and add any utility or state cash rebates.
- Set annual production for your location. NREL's free PVWatts tool gives a figure for your exact roof.
- Set how your utility credits solar. Use 100% for full retail net metering, or lower for net billing tariffs that pay less for exported power.
The formula
Net cost = size × 1000 × $/W × (1 − credit) − rebates.
Savings in year y = kW × yield × (1 − degradation)y−1 × price × (1 + escalation)y−1 × value share − maintenance.
Payback = the point where cumulative savings equal net cost, interpolated within the year.
Worked example (default values)
Inputs
| System size | 7 kW |
|---|---|
| Installed cost per watt | 3 $/W |
| Tax credit | 0 % |
| Cash rebates | 0 $ |
| Annual production per kW | 1350 kWh/kW/yr |
| Electricity price today | 0.18 $/kWh |
| Electricity price increase per year | 3 % |
| Value of solar kWh vs retail | 100 % |
| Panel degradation per year | 0.5 % |
| Maintenance per year | 0 $/yr |
| Analysis period | 25 years |
Results
| Simple payback period | 10.9 years |
|---|---|
| Net cost after incentives | $21,000 |
| Year-1 bill savings | $1,701 |
| Total savings over the period | $57,990 |
| Net gain over the period | $36,990 |
| Year-1 production | 9,450 kWh |
Tips and common mistakes
Net metering is the biggest variable. Under full net metering every solar kWh is worth the retail price. Under net billing, power exported at midday may earn a fraction of retail. That's why batteries are often bundled to shift solar into evening use. If you export most of your production, lower the value setting.
Quotes vary widely. Getting three or more quotes is the single best way to improve payback, since prices for the same system can differ by thousands of dollars.
Frequently asked questions
Is there still a federal solar tax credit in 2026?
Not for homeowner-owned systems. The Section 25D credit ended for expenditures after December 31, 2025, under the 2025 tax law (P.L. 119-21), and the IRS treats a system as placed in service when installation is complete. Leased systems and PPAs may still benefit indirectly. See IRS guidance for details.
What is a good solar payback period?
Under about 10 years is generally considered good, given panels warrant 25+ years of output. High-rate states with good sun can be faster, and low-rate states slower.
Does solar increase home value?
Owned systems often do. Leased systems can complicate a sale. This calculator doesn't include resale value.
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Estimates for planning only, based on the assumptions shown. Real-world performance varies with equipment, temperature and installation. Updated October 19, 2026. See our methodology.