Headline 2026 numbers: residential solar averages $2.65 to $3.15 per watt installed, depending on state. After the 30% federal credit and stackable state incentives, most homeowners pay $11,500–$15,500 for a 7–8 kW system. Payback periods range from under 6 years (Massachusetts, Connecticut, New Jersey) to 11+ years (Texas, parts of Florida).
State-by-state cost (7–8 kW typical install, 2026)
| State | $/watt | System size (kW) | Gross cost | Net after incentives | Payback (yrs) |
|---|---|---|---|---|---|
| California | $2.95 | 7.0 | $20,650 | $13,455 | 7.1 |
| Texas | $2.55 | 8.5 | $21,675 | $15,172 | 11.2 |
| Florida | $2.65 | 8.0 | $21,200 | $14,840 | 10.4 |
| New York | $3.05 | 7.5 | $22,875 | $14,513 | 6.8 |
| Massachusetts | $3.15 | 7.0 | $22,050 | $13,434 | 5.9 |
| New Jersey | $2.95 | 7.0 | $20,650 | $13,255 | 6.4 |
| Arizona | $2.45 | 7.5 | $18,375 | $12,463 | 8.8 |
| Colorado | $2.85 | 7.0 | $19,950 | $13,465 | 9.2 |
| Illinois | $2.90 | 7.5 | $21,750 | $13,725 | 7.8 |
| Nevada | $2.50 | 7.0 | $17,500 | $11,650 | 9.5 |
| Oregon | $2.95 | 8.0 | $23,600 | $15,720 | 10.1 |
| North Carolina | $2.65 | 8.0 | $21,200 | $14,240 | 9.7 |
| Pennsylvania | $2.85 | 7.5 | $21,375 | $14,963 | 9.4 |
| Maryland | $2.95 | 7.5 | $22,125 | $14,488 | 8.1 |
| Connecticut | $3.05 | 7.0 | $21,350 | $13,945 | 7.4 |
| Utah | $2.55 | 7.5 | $19,125 | $12,788 | 9.6 |
The four variables driving state differences
- Per-watt install cost. Driven by installer competition, labor cost, and permitting complexity. Range: $2.45 (Arizona) to $3.15 (Massachusetts).
- System size you need. Sunny states need smaller systems for the same kWh production. A 6 kW system in Phoenix produces what a 7.5 kW system produces in Boston.
- Retail electric rate. Determines the value of every kWh you generate. Range: 11¢/kWh (Texas) to 32¢/kWh (Hawaii, California).
- Net metering policy. Full retail credit (most states) means every kWh exported is worth retail. Wholesale-rate compensation (CA NEM 3.0, parts of TX) means exports are worth ~30% of retail.
State incentive stack examples
- Massachusetts: 30% federal + SMART program (performance payments over 10 years, ~$1,800–$3,400 cumulative) + state income tax credit (15% up to $1,000) + property tax exemption.
- New York: 30% federal + NY-Sun rebate ($0.20/watt, ~$1,400 on 7 kW) + 25% state tax credit (capped $5,000) + property tax exemption.
- California: 30% federal + Self-Generation Incentive Program (battery rebates) + property tax exemption. NEM 3.0 reduces export value vs. previous tariffs.
- Texas: 30% federal + utility-specific rebates (Austin Energy: $2,500; CPS Energy: $2,500; Oncor: $0.06–$0.08/watt) + property tax exemption.
- Florida: 30% federal + sales tax exemption on equipment + property tax exemption + net metering at retail rate.
The "compounding" credits
Federal credit is a one-time cash event. State performance incentives (Massachusetts SMART, New York Value Stack) pay out over 10 years and compound the federal credit's value. A SMART payment of $200/month for 10 years is $24,000 nominal — often more than the post-federal-credit cost of the system itself. These programs are the reason MA payback is half of TX payback even though TX has cheaper installs and more sun.
What about HOA restrictions?
32 states have "solar access" laws that prohibit HOAs from banning solar (HOAs can still regulate aesthetics and placement). California, Florida, Texas, Arizona, Colorado, and most northeastern states have the strongest protections. If you're in an HOA-regulated community, the install will go ahead but expect 2–4 weeks of architectural review.
How to actually budget
Use the solar panel cost calculator with your state and average monthly bill. The calculator applies the same per-watt cost, system sizing, and incentive stack used in the table above. For state-specific incentive details (which change frequently), check the DSIRE database — it's the most authoritative source for current programs by ZIP.
Frequently asked questions
Why are solar costs lower in Texas and Arizona than in California?
Two reasons: less complex permitting (Texas has minimal state-level requirements; California has CEC and AHJ stacks) and labor cost differences. The flip side: California has higher electric rates, so even at $2.95/watt the payback period is shorter than Texas at $2.55/watt.
Is the federal tax credit going away?
The 30% Residential Clean Energy Credit runs through 2032 at full strength, then steps down to 26% in 2033 and 22% in 2034. Systems must be installed and operational by year-end to claim that year's credit. As of 2026, no proposals to accelerate phase-out are active.
Why does payback vary so much by state?
Three factors: cost per watt installed (low in TX/AZ, high in MA/NY), retail electric rate (high in CA/MA/NY, low in TX/FL), and net metering policy (full retail credit in some states, wholesale rate in others). High-rate, full-net-metering states pay back fastest even at higher install cost.
What's NEM 3.0 and how does it affect California payback?
NEM 3.0 (active April 2023) reduced solar export compensation in California to ~25% of retail rate, vs ~95% under NEM 2.0. Payback periods extended by 2–3 years. Battery storage now meaningfully improves CA solar economics — without it, payback is 9–11 years instead of the prior 5–7.