Solar Panel Payback Calculator
Updated · By the CalculatorDash editorial team · How we check our maths
Quick answer
Home solar in the US costs roughly $2.50–$3.00 per watt before incentives in 2026, so a typical 8 kW system is about $20,000–$24,000. The 30% residential federal credit (25D) ended for systems placed in service after December 31, 2025, so most homeowners now see payback periods of roughly 9–14 years, depending on sun and electricity prices.
How this calculator works
A solar payback estimate needs three things: how much electricity you use, how much sun your roof gets, and what the system costs after incentives. This calculator turns your monthly bill into kWh, sizes a system to cover the share of usage you choose, and then works out when cumulative savings pass the cost of the system, allowing for electricity prices that rise each year.
For US homeowners the numbers changed in 2026. The 30% Residential Clean Energy Credit applied to systems placed in service through December 31, 2025, so leave incentives at 0% unless you have a state or utility rebate. In India, the PM Surya Ghar scheme pays a fixed subsidy per kW for eligible rooftop systems; enter it as an approximate percentage of system cost.
The formula
- System size (kW)
- yearly kWh × coverage ÷ (sun hours × 365 × 0.8)
- Net cost
- kW × 1,000 × cost per watt × (1 − incentives)
- First-year savings
- kW × sun hours × 365 × 0.8 × electricity price
- Payback (years)
- ln(1 + net cost × g ÷ first-year savings) ÷ ln(1 + g), where g is the yearly price increase
Worked example
A $160 monthly bill at $0.18/kWh is about 889 kWh a month. Covering 90% with 4.5 sun hours needs a 7.3 kW system. At $2.75 per watt that is about $20,000. It produces about 9,600 kWh a year, saving roughly $1,730 in year one, and with 3% annual price increases it pays back in about 10 years.
Tips
- 01Use 12 months of bills, not one summer month, to size the system.
- 02Check your utility's net-metering or export rate; it can matter more than the panel price.
- 03Get quotes in price per watt so you can compare installers on equal terms.
Frequently asked questions
Is the 30% solar tax credit still available in 2026?
For homeowners who buy their system, the federal Residential Clean Energy Credit ended for systems placed in service after December 31, 2025. Some state and utility incentives remain. Confirm your situation with a tax professional.
How much does a solar system cost per watt?
Most 2026 US quotes fall around $2.50–$3.00 per watt before incentives, with variation by state and installer.
What size solar system do I need?
Divide your yearly kWh use by (peak sun hours × 365 × 0.8). A home using 10,000 kWh a year in a 4.5-sun-hour area needs about 7.6 kW.
What is a good solar payback period?
Anything under about 10 years is generally considered good, since panels are typically warrantied for 25 years.
Sources for the default values
Defaults are typical figures from these sources; change any value to match your situation.