The average cost of a residential solar panel system in the U.S. is $2.60–$3.50 per watt before incentives in 2026, which translates to $16,900–$22,750 for a standard 6.5 kW system. After the 30% federal tax credit, that drops to $11,830–$15,925. However, prices vary by as much as 40% between states — a system in Arizona costs 25–30% less than the same system in New York or Massachusetts.
Below you'll find comprehensive pricing data for all 50 states, including local incentives, payback periods, and our assessment of solar ROI in each market.
National Average: Solar Costs in 2026
Before diving into state-level data, here's where the national market stands:
| Metric | 2026 Average |
|---|---|
| Cost per watt (before incentives) | $2.95 |
| Average system size | 8.2 kW |
| Average total cost (before incentives) | $24,190 |
| Federal ITC (30%) | -$7,257 |
| Average cost after federal credit | $16,933 |
| Average cost per watt after credit | $2.07 |
| Average payback period | 8.5 years |
| Average 25-year savings | $30,000–$55,000 |
These figures represent fully installed turnkey systems including panels, inverter(s), racking, electrical, permitting, labor, and monitoring.
Solar Panel Cost by State: Complete 2026 Data
Tier 1: Best Solar Value States
These states combine low installation costs, high electricity rates, strong sun, and generous incentives for the fastest payback periods.
| State | Cost/Watt (Pre-ITC) | 8 kW System Cost | After 30% ITC | State Incentives | Avg Electric Rate (¢/kWh) | Payback (Years) |
|---|---|---|---|---|---|---|
| Arizona | $2.40 | $19,200 | $13,440 | Sales tax exemption, property tax exemption | 13.5 | 6.5 |
| California | $2.85 | $22,800 | $15,960 | NEM 3.0, SGIP battery rebate | 30.5 | 5.5 |
| Nevada | $2.45 | $19,600 | $13,720 | Net metering, sales tax abatement | 13.8 | 7.0 |
| Texas | $2.50 | $20,000 | $14,000 | Property tax exemption, utility rebates | 13.0 | 7.5 |
| Colorado | $2.75 | $22,000 | $15,400 | Sales/property tax exemptions, Xcel rebates | 14.5 | 7.5 |
| Florida | $2.50 | $20,000 | $14,000 | Sales tax + property tax exemptions | 14.0 | 7.5 |
| Massachusetts | $3.20 | $25,600 | $17,920 | SMART program, net metering, state credit | 27.5 | 6.0 |
| Connecticut | $3.10 | $24,800 | $17,360 | RSIP, net metering, sales tax exempt | 25.5 | 6.5 |
| New York | $3.15 | $25,200 | $17,640 | NY-Sun incentive, state tax credit (25%), net metering | 22.0 | 6.0 |
| New Jersey | $2.85 | $22,800 | $15,960 | SRECs, sales tax exempt, property tax exempt | 17.5 | 6.5 |
California's high electric rate ($0.30+/kWh) drives the fastest payback in the nation despite NEM 3.0 reducing export credits. Pairing solar with a battery is now essential in CA to maximize savings under the new rate structure. The Self-Generation Incentive Program (SGIP) offers up to $1,000/kWh for battery storage in disadvantaged communities.
Tier 2: Strong Solar Markets
| State | Cost/Watt (Pre-ITC) | 8 kW System Cost | After 30% ITC | State Incentives | Avg Electric Rate (¢/kWh) | Payback (Years) |
|---|---|---|---|---|---|---|
| New Mexico | $2.60 | $20,800 | $14,560 | Solar market development tax credit | 14.0 | 8.0 |
| Utah | $2.55 | $20,400 | $14,280 | Net metering, property tax exemption | 11.5 | 9.0 |
| South Carolina | $2.65 | $21,200 | $14,840 | State tax credit (25%), net metering | 13.5 | 7.5 |
| Maryland | $2.90 | $23,200 | $16,240 | SRECs ($60–$80/MWh), property tax exemption | 16.0 | 7.5 |
| Illinois | $2.95 | $23,600 | $16,520 | IL Shines (SRECs), net metering | 15.5 | 8.0 |
| Rhode Island | $3.10 | $24,800 | $17,360 | REF incentive, net metering, SREC program | 24.0 | 7.0 |
| Hawaii | $3.00 | $24,000 | $16,800 | State tax credit (35%), high electric rates | 38.0 | 4.5 |
| Oregon | $2.85 | $22,800 | $15,960 | Solar + Storage Rebate, net metering | 12.5 | 9.5 |
| Georgia | $2.55 | $20,400 | $14,280 | Limited — no state credit | 13.0 | 9.0 |
| Virginia | $2.80 | $22,400 | $15,680 | Net metering, property tax exemption | 13.5 | 9.0 |
Tier 3: Moderate Solar Markets
| State | Cost/Watt (Pre-ITC) | 8 kW System Cost | After 30% ITC | State Incentives | Avg Electric Rate (¢/kWh) | Payback (Years) |
|---|---|---|---|---|---|---|
| North Carolina | $2.65 | $21,200 | $14,840 | Property tax exemption | 12.5 | 9.5 |
| Pennsylvania | $2.90 | $23,200 | $16,240 | SRECs ($30–$45/MWh) | 16.5 | 8.5 |
| Ohio | $2.85 | $22,800 | $15,960 | Net metering, SRECs | 14.0 | 9.5 |
| Michigan | $2.95 | $23,600 | $16,520 | Net metering | 18.0 | 8.5 |
| Missouri | $2.70 | $21,600 | $15,120 | Net metering, property tax exemption | 12.5 | 10.0 |
| Minnesota | $3.05 | $24,400 | $17,080 | Net metering, Solar*Rewards | 14.5 | 10.0 |
| Wisconsin | $2.95 | $23,600 | $16,520 | Focus on Energy rebate | 16.0 | 9.5 |
| Tennessee | $2.55 | $20,400 | $14,280 | TVA Green Invest program | 12.0 | 10.5 |
| Indiana | $2.70 | $21,600 | $15,120 | Net metering (declining), property tax exemption | 14.0 | 9.5 |
| Iowa | $2.80 | $22,400 | $15,680 | Property tax exemption | 14.0 | 10.0 |
Tier 4: Challenging Solar Markets
These states have lower electricity rates, less sun, or fewer incentives, resulting in longer payback periods. Solar still works — it just takes longer to break even.
| State | Cost/Watt (Pre-ITC) | 8 kW System Cost | After 30% ITC | State Incentives | Avg Electric Rate (¢/kWh) | Payback (Years) |
|---|---|---|---|---|---|---|
| Washington | $2.85 | $22,800 | $15,960 | Net metering, sales tax exemption | 11.0 | 12.0 |
| Montana | $2.90 | $23,200 | $16,240 | Net metering, property tax exemption | 12.5 | 11.0 |
| Idaho | $2.65 | $21,200 | $14,840 | Net metering | 10.5 | 12.5 |
| Wyoming | $2.75 | $22,000 | $15,400 | Net metering, property tax exemption | 11.5 | 12.0 |
| Nebraska | $2.85 | $22,800 | $15,960 | Limited incentives | 11.5 | 12.5 |
| North Dakota | $2.90 | $23,200 | $16,240 | Property tax exemption | 11.0 | 13.0 |
| South Dakota | $2.80 | $22,400 | $15,680 | Net metering | 12.5 | 11.5 |
| Kentucky | $2.65 | $21,200 | $14,840 | Net metering | 12.0 | 11.0 |
| Louisiana | $2.55 | $20,400 | $14,280 | State tax credit phased out | 11.5 | 11.5 |
| Alabama | $2.55 | $20,400 | $14,280 | Minimal state incentives | 13.0 | 10.5 |
| Mississippi | $2.55 | $20,400 | $14,280 | Net metering | 12.5 | 11.0 |
| Oklahoma | $2.50 | $20,000 | $14,000 | Net metering, limited incentives | 11.0 | 11.5 |
| Kansas | $2.65 | $21,200 | $14,840 | Net metering | 13.5 | 10.5 |
| Arkansas | $2.55 | $20,400 | $14,280 | Net metering | 11.5 | 11.5 |
| West Virginia | $2.70 | $21,600 | $15,120 | Net metering | 12.5 | 11.0 |
| Alaska | $3.10 | $24,800 | $17,360 | Limited sun, high install costs | 23.0 | 10.0 |
| Vermont | $3.15 | $25,200 | $17,640 | Net metering, state incentive | 20.0 | 8.5 |
| New Hampshire | $3.10 | $24,800 | $17,360 | Net metering, rebate program | 22.0 | 7.5 |
| Maine | $3.05 | $24,400 | $17,080 | Net metering, state incentive | 22.5 | 7.5 |
| Delaware | $2.85 | $22,800 | $15,960 | SRECs, Green Energy Fund | 14.5 | 9.5 |
| D.C. | $3.20 | $25,600 | $17,920 | SRECs ($350+/MWh), high electric rates | 15.5 | 5.5 |
Washington, D.C. has the highest SREC values in the nation at $350–$400 per MWh (megawatt-hour). For an 8 kW system producing ~10 MWh/year, that's $3,500–$4,000 in annual SREC income on top of electricity savings, driving D.C.'s exceptional payback period despite high installation costs.
What Drives Solar Costs by State?
The same 8 kW system can cost $19,200 in Arizona but $25,600 in Massachusetts. Here's why:
Labor Costs
Labor accounts for 20–30% of total installation cost. States with higher prevailing wages (California, New York, Massachusetts, Connecticut) have proportionally higher solar costs. Unionized markets can add $0.20–$0.40/W.
Permitting and Interconnection
Permitting costs range from $200 (streamlined online permits in Arizona, California) to $2,000+ (multi-department reviews in some northeastern jurisdictions). Some states have adopted SolarAPP+ (an automated online permitting platform) which speeds approvals and reduces costs.
Installer Competition
Markets with many installers (California, Texas, Florida, Arizona) tend to have lower per-watt pricing due to competition. Less competitive markets (rural states, newer solar markets) have fewer options and higher prices.
Supply Chain and Logistics
Panels and equipment ship from ports and distribution centers concentrated in coastal states. Inland and remote installations face higher freight costs. Alaska and Hawaii have the highest logistics costs.
Electricity Rate
Paradoxically, states with higher electricity rates (California, Massachusetts, Connecticut, New York) attract more solar installers, which drives competition and can moderate installation costs — while simultaneously improving payback period.
State-Level Incentives: The Big Differentiators
Solar Renewable Energy Certificates (SRECs)
SRECs are tradeable certificates generated by your solar system. States with SREC markets effectively pay you for every MWh your system produces:
| State | SREC Value (per MWh) | Annual Income (8 kW system) |
|---|---|---|
| Washington, D.C. | $350–$400 | $3,500–$4,000 |
| New Jersey | $150–$200 (TRECs) | $1,500–$2,000 |
| Massachusetts | $200–$275 | $1,800–$2,500 |
| Pennsylvania | $30–$45 | $300–$450 |
| Maryland | $60–$80 | $600–$800 |
| Ohio | $15–$25 | $150–$250 |
| Illinois | Performance-based | $1,000–$2,000 (upfront) |
State Tax Credits
| State | Tax Credit | Max Amount |
|---|---|---|
| New York | 25% of system cost | $5,000 |
| South Carolina | 25% of system cost | $3,500 |
| Hawaii | 35% of system cost | $5,000 |
| Arizona | 25% of system cost | $1,000 |
| Iowa | 15% of system cost | $5,000 |
Real example: New York homeowner. 8 kW system at $3.15/W = $25,200. Federal ITC (30%) = -$7,560. NY state tax credit (25%, max $5,000) = -$5,000. NY-Sun incentive = -$1,600. Net cost: $11,040. At $22 ¢/kWh, annual savings of ~$2,100. Payback: 5.3 years. This makes New York one of the best solar ROI states in the nation despite above-average installation costs.
Property and Sales Tax Exemptions
Most states exempt solar installations from property tax assessments (your home value increases but your property taxes don't). Many also exempt solar equipment from state sales tax. These exemptions typically save $1,000–$3,000 combined on an 8 kW system.
Real-World Cost Examples
Example 1: Budget-Conscious in Texas
- System: 7.5 kW, 18 × 415W panels, string inverter
- Gross cost: $18,750 ($2.50/W)
- Federal ITC: -$5,625
- Net cost: $13,125
- Annual production: 11,500 kWh
- Annual savings: $1,495 (at $0.13/kWh)
- Payback: 8.8 years
Texas's competitive installer market and lack of permitting complexity keeps costs down, though the absence of state incentives means you're relying entirely on the federal credit.
Example 2: Maximizing ROI in Massachusetts
- System: 8.5 kW, 21 × 405W panels, Enphase microinverters
- Gross cost: $27,200 ($3.20/W)
- Federal ITC: -$8,160
- SMART program income: ~$1,200/year for 10 years
- State sales tax exemption: -$1,700
- Net cost (Year 1): $17,340
- Annual savings + SMART: $3,700
- Payback: 4.7 years
Massachusetts's combination of high electricity rates ($0.275/kWh), the SMART program, and strong net metering creates one of the best solar markets in the country.
Example 3: Sunny but Cheap Power in Idaho
- System: 8 kW, 20 × 400W panels, string inverter
- Gross cost: $21,200 ($2.65/W)
- Federal ITC: -$6,360
- Net cost: $14,840
- Annual production: 12,000 kWh
- Annual savings: $1,260 (at $0.105/kWh)
- Payback: 11.8 years
Idaho has great sun but rock-bottom electricity rates from hydropower. Solar makes environmental sense but the financial case is weaker without state incentives.
Example 4: Overcoming Low Sun in Vermont
- System: 9 kW, 22 × 410W panels, microinverters
- Gross cost: $28,350 ($3.15/W)
- Federal ITC: -$8,505
- Vermont state incentive: -$1,800
- Net cost: $18,045
- Annual production: 9,500 kWh
- Annual savings: $1,900 (at $0.20/kWh)
- Payback: 9.5 years
Vermont's lower sun hours are offset by progressive energy policies and above-average electricity rates.
Solar Cost Trends: Where Prices Are Headed
Panel costs have declined approximately 70% since 2014. However, the rate of decline has slowed, and total system costs (which include labor, permitting, and soft costs) are declining at a slower pace than hardware alone.
| Year | Average Cost/Watt (Before ITC) | Average 8 kW System Cost |
|---|---|---|
| 2018 | $3.50 | $28,000 |
| 2020 | $3.10 | $24,800 |
| 2022 | $3.00 | $24,000 |
| 2024 | $2.85 | $22,800 |
| 2026 | $2.95 | $23,600 |
Why did costs tick up slightly in 2026–2026? Tariff adjustments on imported panels (primarily from Southeast Asian manufacturing), increased demand straining installer capacity, and rising labor costs. However, the higher-efficiency panels available today (400–440W vs 350–380W a few years ago) mean you need fewer panels per system, partially offsetting the per-watt increase.
How to Get the Best Price in Your State
Get at least 3 quotes. Pricing varies 20–30% between installers for the same system. Use platforms like EnergySage, which provides competitive quotes from pre-vetted installers.
Consider local installers over national brands. Large national companies (Sunrun, SunPower/Maxeon, Tesla) often charge $0.30–$0.60/W more than local and regional installers for comparable equipment. Local installers also tend to provide more responsive customer service.
Don't pay for premium panels unless you need them. If you have ample roof space, mid-range 400–415W panels offer the best value. Premium 440W+ panels are worth it only when roof space is constrained.
Time your purchase strategically. Q4 (October–December) is often the slowest season for solar installers. You may find better pricing and faster installation during fall and winter months.
Stack every available incentive. Federal ITC + state tax credit + SRECs + utility rebates + sales/property tax exemptions can reduce your out-of-pocket cost by 40–60% in the best states.
Key Takeaways
- Average U.S. solar cost in 2026: $2.95/W before incentives, $2.07/W after federal ITC
- Best ROI states: Hawaii (4.5 yr), California (5.5 yr), D.C. (5.5 yr), Massachusetts (6.0 yr), New York (6.0 yr)
- Lowest installation costs: Arizona ($2.40/W), Nevada ($2.45/W), Texas ($2.50/W), Florida ($2.50/W)
- The 30% federal tax credit saves $5,600–$8,400 on a typical system
- SREC income can add $500–$4,000/year in participating states
- Get 3+ quotes — pricing varies 20–30% between installers
- Stack incentives — federal + state + utility = 40–60% cost reduction in top markets
Frequently Asked Questions
Related Articles
How to Calculate Watt-Hours of a Battery (Easy 2-Step Formula)
calculator-guide • 14 min read
Home Battery Backup: Complete Guide (Tesla Powerwall, Enphase & More) — 2026
guide • 18 min read
How Many Watts in a 12V Battery? (Calculator + Chart)
calculator-guide • 16 min read
Solar Panel Calculator: How Many Panels Do You Need? (2026)
calculator-guide • 16 min read