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Calculate your solar savings
Enter your details to see your solar estimate
Solar return on investment (ROI) measures how long it takes for your solar panel system to pay for itself through electricity savings. The calculation involves four key factors:
The average cost of solar panels in 2026 is $3 per watt. An 8 kW system (typical for a household with a $150/month electric bill) costs approximately $24,000 before incentives.
The federal government offers a 30% tax credit (ITC) for solar installations through 2032. This reduces your net cost by nearly one-third immediately.
Your location dramatically affects solar production. Arizona receives 6.5 sun hours per day on average, while states like New York average 4.0 hours. Our calculator uses real sun hour data for all 50 states to provide accurate estimates for your specific zip code.
With the national average electricity rate at $0.14 per kWh, a typical system saves $1,500-3,000 annually depending on your current bill and system size.
The payback period typically ranges from 8-13 years, with southwestern states seeing faster returns due to higher sun exposure.
Your solar panels offset your monthly electric bill. A system sized to match your usage can reduce your bill to just connection fees (typically $10-30/month). Annual savings equal your current yearly electricity costs minus minimal connection fees.
This is the number of years until your cumulative savings equal your net system cost (after tax credits). Most homeowners see payback within 10-12 years, with systems lasting 25-30 years.
We calculate this by projecting electricity rate increases of 2-3% annually (historical average). A system installed today will save increasingly more each year as utility rates rise. This compounds to $40,000-80,000 in total savings over the system's lifetime.
Solar panels lose approximately 0.5% efficiency per year. Our calculator factors this gradual decline into long-term projections, providing conservative estimates.
The national average for residential solar installations is $3.00 per watt in 2026, down from $4+ per watt a decade ago. This price typically includes:
$100/month
6-7 kW
~$18,000-21,000
$150/month
8-10 kW
~$24,000-30,000
$200/month
11-13 kW
~$33,000-39,000
$300/month
16-18 kW
~$48,000-54,000
Prices vary by state due to local labor costs, permit fees, and available state incentives. Competitive solar markets like California and Texas often have lower per-watt costs due to installer competition.
The federal Investment Tax Credit (ITC) allows you to deduct 30% of your solar installation cost from your federal taxes. This credit is non-refundable, meaning it can reduce your tax liability to zero but won't generate a refund beyond what you owe.
File IRS Form 5695 with your tax return. If your tax liability is less than 30% of the system cost, you can roll over the unused credit to future tax years.
States with high electricity rates and abundant sunshine offer the best solar ROI:
| State | Avg Sun Hours | Avg Payback | 25-Year Savings |
|---|---|---|---|
| Arizona | 6.5 | 8.2 years | $65,000 |
| New Mexico | 6.3 | 8.5 years | $62,000 |
| Nevada | 6.2 | 8.7 years | $58,000 |
| California | 5.8 | 9.1 years | $71,000 |
| Colorado | 5.5 | 9.3 years | $54,000 |
| Texas | 5.3 | 9.8 years | $52,000 |
| Florida | 5.5 | 10.1 years | $49,000 |
| Utah | 5.6 | 10.2 years | $48,000 |
| Kansas | 5.3 | 10.5 years | $46,000 |
| Oklahoma | 5.3 | 10.7 years | $44,000 |
Northern states like New York and Massachusetts see longer payback periods (12-14 years) but still achieve positive ROI over 25 years due to higher electricity rates offsetting lower sun hours.