Use this free solar panel payback calculator to find out how many years it takes for solar panels to pay for themselves, and how much you could save over 25 years.
Home solar · 2026Solar Panel Payback Calculator
Assumes 80% system efficiency and 0.5% panel output loss per year. For an exact production estimate, use NREL’s PVWatts tool.
Our free solar panel payback calculator shows how long it takes for a home solar system to pay for itself. First, enter the system size and price. Then add your sun hours and electricity rate, and the calculator estimates your yearly savings, payback period and 25-year profit. In addition, it uses the 2026 federal tax credit rules.
How the Solar Panel Payback Calculator Works
The payback period is the time it takes for the money you save on electricity to equal what you paid for the system. Because electricity prices usually rise, your savings grow a little each year, so the calculator adds them up year by year.
First, it subtracts tax credits and rebates from the installed price.
Then it multiplies your expected kWh by your electricity rate.
Finally, it finds the year when total savings pass the net cost.
The simple formula
Payback (years) = Net cost ÷ Yearly savings
Solar Tax Credit Changes in 2026
For years, homeowners could claim a 30% federal tax credit on solar. However, under a 2025 law, the Residential Clean Energy Credit ended for systems installed after December 31, 2025.
- Buying in 2026: there is no federal credit, so your payback period will be longer than before.
- Installed in 2025: in contrast, systems in service by the end of 2025 still qualify for 30%.
- Leases and PPAs: meanwhile, solar companies can still claim a business credit through 2027 and may pass some savings on.
- State and utility rebates: finally, many states and utilities still offer their own incentives, so check before you buy.
Solar Panel Payback Calculator Examples
For example, here are three homes with the same 7 kW system. In each case, power prices rise 3% a year.
They pay $21,000 for a 7 kW system with no tax credit, at 4.5 sun hours and 17¢ per kWh.
- First: net cost $21,000
- Then: year 1 savings $1,564
- Finally: 25-year profit $32,307
Similarly, they bought the same system, but it was installed in 2025, so they claimed the 30% credit.
- First: net cost $14,700
- Then: year 1 savings $1,564
- Finally: 25-year profit $38,607
In contrast, this home gets 5.5 sun hours and pays 32¢ per kWh, with no tax credit.
- First: net cost $21,000
- Then: year 1 savings $3,597
- Finally: 25-year profit $101,642
Solar Panel Payback by Electricity Rate
Your electricity rate has the biggest effect on payback. This table uses a $21,000, 7 kW system with 4.5 sun hours. In other words, only the price of power changes.
| Electricity rate | Year 1 savings | Payback, no credit | Payback, 30% credit |
|---|---|---|---|
| 12¢ per kWh | $1,104 | 15.8 years | 11.6 years |
| 15¢ per kWh | $1,380 | 13.1 years | 9.6 years |
| 20¢ per kWh | $1,840 | 10.2 years | 7.4 years |
| 25¢ per kWh | $2,300 | 8.3 years | 6.0 years |
| 30¢ per kWh | $2,759 | 7.1 years | 5.1 years |
Assumes 3% yearly price rises and 0.5% yearly panel degradation.
What Affects Your Solar Payback?
- Electricity rates: the more you pay per kWh, the more each panel saves you, so payback is faster.
- Sunshine: similarly, sunny states such as Arizona produce far more power than cloudy northern states.
- Installation price: for example, a system at $2.50 per watt pays back much sooner than one at $3.50.
- Net metering: however, if your utility pays less for the power you send to the grid, your savings will be lower.
How to Shorten Your Payback Period
Get at least three quotes, because prices vary widely between installers. Also, look for state and utility rebates, and ask about time-of-use rates. Finally, consider adding a battery only if your utility pays little for exported power, since batteries add cost and lengthen payback.
How to Use the Solar Panel Payback Calculator
- First, enter your system size in kW and the total installed price.
- Next, choose the federal tax credit option and add any rebates.
- Then enter your peak sun hours and electricity rate from your bill.
- After that, set how fast you expect power prices to rise.
- Finally, press Calculate Payback to see your payback period and savings.
More Money Calculators
These tools also help you plan big home costs. Alternatively, browse all our financial calculators.
Solar Panel Payback Calculator FAQs
How long does it take for solar to pay for itself?
Many US homes see a payback period of roughly 8 to 15 years. For example, a 7 kW system costing $21,000 with no tax credit pays back in about 11.7 years at 17 cents per kWh, but much sooner where power is expensive.
Is the 30% solar tax credit still available?
No, not for homeowners who buy panels. The federal Residential Clean Energy Credit ended for systems installed after December 31, 2025. However, leases and power purchase agreements may still pass on a business credit through 2027.
How do I calculate solar panel payback?
First, subtract incentives from the installed cost. Then estimate yearly savings by multiplying your system’s yearly kWh by your electricity rate. Finally, divide the net cost by the yearly savings, or use this calculator to include rising prices.
Do solar panels increase home value?
Often, yes. Owned solar systems can make a home more attractive to buyers, because they lower electricity bills. In contrast, leased systems can complicate a sale, since the buyer must take over the lease.
How long do solar panels last?
Most panels come with a 25 year warranty and can work for 30 years or more. However, they slowly lose output, usually about 0.5% a year, and inverters often need replacing after 10 to 15 years.
Is solar worth it without the tax credit?
It can be, especially where electricity is expensive or there are good state rebates. For instance, at 32 cents per kWh and strong sun, the same $21,000 system pays back in about 5.5 years even without the credit.
Disclaimer: This calculator gives an estimate for general information only and is not financial or tax advice. Real production depends on your roof, shading and local weather. Moreover, incentives change often, so confirm them with your installer and a tax professional.