Solar Panel Cost by State in 2026: Complete Pricing Guide

Last updated: February 2026

The question every homeowner asks first: how much do solar panels actually cost?

In 2026, the honest answer is: it depends heavily on your state. The combination of local labor markets, permitting complexity, electricity rates, and state-level incentives creates a spread of more than $1.00/watt between the cheapest and most expensive states — a difference of $10,000 or more on a typical 10-kilowatt system.

With the residential federal solar Investment Tax Credit (Section 25D) having expired on December 31, 2025, state-level incentives have never been more important. This guide breaks down exactly what you'll pay in the top 15 solar markets, what's driving those costs, and how to determine whether solar still makes financial sense in your state.

What You're Actually Paying For

The "cost of solar" isn't just the panels themselves — hardware typically accounts for only 40–50% of the total installed price. According to the National Renewable Energy Laboratory (NREL), the fully installed cost of a residential system in 2026 breaks down as follows:

• Solar modules (panels): 25–30% of total cost
• Inverter(s): 8–12% of total cost
• Racking and mounting hardware: 5–8%
• Electrical wiring and components: 6–10%
• Labor (installation crew): 12–18%
• Permitting, engineering, and interconnection: 5–10%
• Installer overhead and margin: 15–25%

This "soft cost" problem — the non-hardware portion — is why prices vary so much between states. A straightforward permitting process in Arizona takes 2–3 weeks. In some California jurisdictions, the same process takes 3–5 months. That time equals money.

National Average Cost in 2026

According to NREL's Q4 2025 residential solar benchmark report, the national average installed cost is approximately $3.00/watt before any incentives. For a typical 10 kW system — enough to cover the average American household's electricity needs — that's $30,000 gross.

The practical range across most U.S. markets runs from $2.70/watt to $3.50/watt, with outliers in Hawaii and the Northeast pushing above $3.50/watt due to higher labor costs and more complex installations.

State-by-State Solar Cost Comparison: Top 15 Markets

The table below reflects fully installed, gross costs per watt and estimated costs for a 10 kW system. Data is based on installer quotes aggregated by EnergySage (Q4 2025 – Q1 2026) and NREL benchmark modeling.

Sources: EnergySage Solar Marketplace Q4 2025–Q1 2026; NREL U.S. Solar Photovoltaic System Cost Benchmark; EIA Electric Power Monthly, February 2026

What Drives Cost Differences Between States

1. Labor Market Costs

States with higher median wages — Massachusetts, New York, Connecticut — have higher installation labor costs. According to the Bureau of Labor Statistics, solar installer wages in Massachusetts average $32/hour versus $22/hour in Texas and $20/hour in Arizona. This alone explains a $0.30–0.50/watt differential.

2. Permitting Complexity

California has made strides with SB 379, which standardizes solar permitting, but local jurisdictions still vary enormously. Some Los Angeles County cities process permits in two weeks; others take four months. Hawaii's unique utility interconnection requirements add both time and cost.

3. Market Competition

Texas has one of the most competitive solar installation markets in the country, with hundreds of licensed installers competing for business. This downward price pressure explains why Texas consistently ranks among the cheapest states despite having no significant state solar incentive programs.

4. Roof and Site Complexity

A simple south-facing roof with minimal shading in Phoenix costs less to install than a complex multi-directional roof in Seattle. Shading analysis, roof penetration requirements for tile roofs (common in California and Florida), and ground-mount vs. rooftop differences all add to final costs.

5. System Configuration

Microinverter-based systems (Enphase) cost 10–15% more than string inverter systems but perform better in shaded or complex roof conditions. Power optimizers (SolarEdge) fall in between. High-efficiency panels like SunPower Maxeon or LG add $0.20–0.40/watt versus standard tier-1 modules.

State Incentives That Still Matter in 2026

Without the federal residential ITC, state incentives now carry the entire weight of the financial case for solar in many markets.

Massachusetts: The Gold Standard

Massachusetts remains the most financially rewarding state for residential solar in 2026. The SMART (Solar Massachusetts Renewable Target) program provides a monthly incentive payment for every kWh your system produces, with rates ranging from $0.10–0.15/kWh depending on your utility and system size. Combined with the 15% Massachusetts state income tax credit (up to $1,000) and the second-highest residential electricity rates in the continental U.S. (24¢/kWh per EIA February 2026), the average payback period in Massachusetts is 6–8 years — among the best in the country.

New York: NY-Sun's Rebate

The NY-Sun initiative provides direct rebates of $0.20–0.40/watt for residential systems, plus New York's 25% state tax credit (up to $5,000 maximum). At 22¢/kWh electricity rates and strong net metering protections, payback periods in New York typically run 8–10 years.

New Jersey: SREC-II Revenue

New Jersey's SREC-II program generates Solar Renewable Energy Certificates that solar owners can sell quarterly. Current SREC-II prices are approximately $90–95 per certificate, and a 10 kW system generates roughly 11–12 certificates per year — adding $1,000–1,140 in annual income on top of electricity bill savings.

Hawaii: High Rates, High Credits

Hawaii's residential electricity rates — averaging 42¢/kWh per EIA February 2026 data — create some of the strongest economics for solar in the country despite higher installation costs. The state's 35% income tax credit (up to $5,000) helps offset premium installation costs, and most systems achieve payback in 7–9 years even at higher upfront costs.

Illinois: Shines Program

The Illinois Shines program provides Renewable Energy Credits (RECs) paid upfront as a "Adjustable Block" incentive. Current rates under Adjustable Block Group 14 are approximately $75–80 per REC for residential systems, paid over 15 years in a lump sum at contract signing. This can reduce effective system cost by $7,000–10,000 for a 10 kW system.

When Is Solar Worth It in 2026 Without the Federal ITC?

The answer depends primarily on three factors: your electricity rate, your solar resource (sun hours), and available state incentives.

High-Rate States: Yes, Almost Always

If you're paying more than 18¢/kWh for electricity — which includes California, Massachusetts, Connecticut, New York, New Jersey, Rhode Island, and Hawaii — solar is almost certainly financially worthwhile even without the federal credit, assuming you own your home and have a suitable roof.

At 24¢/kWh (Massachusetts average), a 10 kW system producing 12,000 kWh/year saves $2,880 annually before accounting for net metering or SMART incentive payments. At a net system cost of $30,000 after the state credit, that's a 10.4-year payback period — well within the 25-year warranty life of modern panels.

Mid-Rate States: It Depends

At 12–17¢/kWh (Texas, Florida, Arizona, Colorado, Nevada, North Carolina), solar still pencils out in many cases — particularly if you have strong net metering protections, high annual sun hours (Arizona, Nevada), or additional state incentives (Colorado, Maryland).

Texas is interesting: despite zero state incentives and 12¢/kWh rates, the combination of abundant sunshine (1,800–2,200 sun hours/year in most of the state), competitive pricing ($2.75/watt), and no state income tax to worry about makes solar financially viable for many Texas homeowners with a 12–15 year payback.

Low-Rate, Low-Sun States: Do The Math Carefully

States with low electricity rates and limited solar resources — think the Pacific Northwest, parts of the Midwest — require careful analysis. At 9–11¢/kWh (Idaho, Montana, Wyoming) with only 4–4.5 peak sun hours per day, payback periods often stretch to 18–22 years, making solar a marginal investment without significant state incentives.

Factors That Can Reduce Your Net Cost

Even without the federal residential ITC, there are legitimate ways to reduce your effective out-of-pocket cost:

Utility rebates: Many utilities — including Duke Energy Carolinas, Georgia Power, and Xcel Energy — offer direct rebates of $200–600 for solar installations. These are often stacked with state incentives.

Solar renewable energy certificates (SRECs): In New Jersey, Maryland, Pennsylvania, and Massachusetts, SRECs or similar instruments provide ongoing revenue.

Financing: Solar loans at 5–8% interest allow you to preserve cash while building equity in your system. Compare loan terms carefully — origination fees on some solar-specific loans effectively add $0.50/watt to your system cost.

Comparative bidding: EnergySage data consistently shows that homeowners who get 3+ competing quotes save an average of $5,000–7,000 versus those who accept the first quote. The solar market is competitive; use that to your advantage.

The Bottom Line

Solar panel costs in 2026 range from $2.70 to $3.70 per watt depending on where you live, with a national average of approximately $3.00/watt. The expiration of the residential federal tax credit has raised the bar for solar economics, but in high-rate states with strong state incentives — Massachusetts, New York, New Jersey, Hawaii, Illinois — the financial case remains compelling.

In mid-rate states, the math requires more careful analysis that accounts for your specific roof, local sun hours, utility rate trajectory, and available financing. Use the calculators below to model your specific situation before committing to a purchase.

---

Data sources: NREL Residential Solar Benchmark Report Q4 2025; EnergySage Solar Marketplace Data Report Q4 2025–Q1 2026; EIA Electric Power Monthly February 2026; DSIRE State Incentive Database February 2026