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Solar Payback in 2026, Without the Federal Credit
The residential 30 percent credit ended for systems placed in service after 31 December 2025. Almost every payback calculator still assumes it. This one does not, and it shows you the case where leasing now beats buying.
How much of what you generate you use yourself. The rest is exported, which pays far less.
| Annual generation | 10,230 kWh |
|---|---|
| Installed cost before incentives | $21,780 |
| Cost after any credit you can still claim | $21,780 |
| Bill saving, first year | $2,505 |
| Net position after 25 years, owning | $40,853 |
| Net position after 25 years, lease or PPA | $9,990 |
Owning wins here, by $30,864 over 25 years. You carry the capital cost and the maintenance, and you keep the whole saving.
The 25D credit is gone for owned systems. California also cut export rates sharply under NEM 3.0 (2023), so self-consumption matters more than export volume. High retail rates still make the arithmetic work without any credit.
What this model assumes, and where it will be wrong for you
- Retail rate $0.31/kWh and installed cost $3.30/W — both are market typicals, not your quote.
- Yield of 1550 kWh per kW per year. A shaded or north-facing roof can be 30% below that.
- Exported energy is valued at 30% of the retail rate. Real export rates vary enormously.
- No electricity price inflation, and no panel degradation. Those two partly cancel out over 25 years.
- The lease comparison assumes a rate discount, not a fixed monthly fee. Escalator clauses, which raise your rate every year, are common and are not modelled here — read the contract.
The credit did not disappear. It moved.
Section 25D let a homeowner claim 30 percent of an owned system against their federal tax. The One Big Beautiful Bill Act, signed on 4 July 2025, ended it for anything placed in service after 31 December 2025. If you buy a system in 2026, that money is simply not there.
What survives is the commercial credit, Section 48E, and it survives on the owner of the system. Under a lease or a power purchase agreement the provider owns the hardware, claims 48E, and passes part of it back to you as a discount on the rate you pay. So the 30 percent still exists in the market. It just no longer belongs to you if you write the cheque yourself.
That is a genuine reversal, and it is why this calculator prints a verdict rather than a single payback year. But it is worth being precise about how often it flips, because "leasing is back" would be an overstatement: across every combination of market, system size and self-consumption this tool can produce, owning still wins in roughly 97 percent of them.
The lease wins in one specific corner, and it is a recognisable one. Cheap retail electricity, a small system, and low self-consumption — Texas at 15 cents a kWh with a 3 kW array feeding mostly export is the clearest example. There, owning barely clears its own capital cost over 25 years, so a discount you get for free beats a saving you had to buy. Where power is expensive, as in California, Germany or Australia, owning still wins comfortably even with no credit at all.
Why we are not selling you the lease
Marketplaces that compare these two options usually earn a commission on installer leads, and lease deals pay well. We earn nothing either way, which is the only reason to trust the output when it says owning wins, and equally when it says it does not.
One caveat the model cannot price for you: escalator clauses. Many lease and PPA contracts raise your rate by 2 to 3 percent every year for 20 or 25 years. Over that span an escalator can erase the entire discount that made the deal look good on day one. The comparison here assumes a flat discount, which is the friendlier assumption for the lease — read the contract before you rely on it.
Where to check your own numbers
Three inputs move the answer more than anything else: your real electricity rate, the quoted price per watt, and how much of the generation you actually consume rather than export. Our guide to solar payback in 2026 walks through each one, and the assumptions behind ROI models covers what changes when you flex them.
Sizing the system is a separate question, and the string configurator answers the electrical half of it.