Solar ROI & Payback Calculator

Solar Economics in 2026

The federal Residential Clean Energy Credit (the 30% ITC that shaped solar economics for over a decade) expired for systems placed in service after December 31, 2025, per the IRS. Payback timelines now depend almost entirely on your local utility rate and any state-level programs, so check with your state energy office before assuming a federal discount.

Worked example. A $25,000, 8 kW system at 5 peak sun hours/day and $0.18/kWh, with no incentive applied, produces about 11,680 kWh in year one (worth roughly $2,102 in avoided electricity that first year). As utility rates rise (modeled here at 3.5%/year) and panel output degrades slightly (0.5%/year), the running total crosses zero at about 10.3 years, which is what this calculator's defaults show above.

The model applies an 80% system efficiency factor to account for real-world losses from the inverter, wiring, soiling, and panel temperature (a system rarely produces its full rated capacity in the field) and degrades output by 0.5% per year, in line with typical Tier-1 panel warranties.

Limitations. This is a simplified model, not a professional solar quote. It assumes constant sunlight hours and doesn't account for financing costs, roof shading changes, equipment failures, or resale value. Get a site-specific quote from a licensed installer before making a purchase decision.