How Much Do Solar Panels Cost in 2026? Complete Pricing Breakdown

Solar panel pricing is more transparent than ever, but there's still significant variation based on where you live, which company you choose, what equipment is used, and how you finance the system. Here's what homeowners are actually paying in 2026.

Average Cost by System Size

Solar systems are measured in kilowatts (kW). The average American home needs a 7-10 kW system to offset most of their electricity usage. A 5 kW system (smaller homes, low usage) costs $12,500-$17,500 before incentives and $8,750-$12,250 after the 30% federal tax credit. A 7 kW system (average home) costs $17,500-$24,500 before incentives and $12,250-$17,150 after the credit. A 10 kW system (larger homes, high usage) costs $25,000-$35,000 before incentives and $17,500-$24,500 after the credit. A 12 kW system (large homes, EVs, pools) costs $30,000-$42,000 before and $21,000-$29,400 after.

Cost Per Watt by Brand

The cost per watt is the best way to compare pricing across different system sizes and companies. Budget tier ($2.40-$2.80/watt): Canadian Solar, Trina Solar, LONGi. Good panels with standard warranties. Mid tier ($2.80-$3.20/watt): Q CELLS, REC Solar, Panasonic. Strong efficiency and warranties at reasonable prices. Premium tier ($3.20-$3.80/watt): SunPower/Maxeon, LG (discontinued but still installed from remaining stock). Highest efficiency, longest warranties, best aesthetics.

State-by-State Pricing

Solar costs vary significantly by state due to labor costs, permitting requirements, and market competition. The cheapest states for solar include Arizona ($2.40-$2.80/watt), Texas ($2.50-$2.90/watt), and Florida ($2.50-$2.90/watt). The most expensive states include New York ($3.20-$3.80/watt), Massachusetts ($3.30-$3.90/watt), and California ($3.00-$3.50/watt). However, expensive states often have higher electricity rates and better incentives, so the financial return can still be excellent despite higher installation costs.

The Federal Tax Credit: Your Biggest Savings

The Investment Tax Credit (ITC) under the Inflation Reduction Act covers 30% of total installation costs through 2032. This is a dollar-for-dollar tax credit, not a deduction. If your system costs $25,000, you get $7,500 off your federal tax bill. The credit applies to all installation costs including panels, inverters, mounting hardware, electrical work, labor, permitting, and battery storage if installed with solar. You must owe enough federal income tax to use the credit, but unused portions can be carried forward to the next tax year.

Additional Incentives

Beyond the federal credit, additional savings may include state tax credits (Arizona, South Carolina, and others offer state-level credits), state rebates (upfront cash rebates in some states), Solar Renewable Energy Certificates (SRECs) worth $50-$300+/year in qualifying states, property tax exemptions (most states exempt solar from property tax increases), and sales tax exemptions (many states exempt solar equipment from sales tax). Stacking all available incentives can reduce the effective cost by 40-60% in the best markets.

Solar Payback Period

The payback period is how long it takes for energy savings to equal your investment. National average payback period: 7-10 years for purchased systems. In states with high electricity rates and strong incentives (California, Massachusetts, New York, New Jersey), payback can be as fast as 5-7 years. In states with low electricity rates and fewer incentives, payback may take 10-14 years. After payback, every dollar of energy savings is pure profit for the remaining 15-20+ years of system life.