Why the price of solar changed at the end of 2025
From 2022 through the end of 2025, the federal government paid back 30% of the cost of a home solar system through a tax credit, money subtracted directly from what a household owed the Internal Revenue Service. That credit is not available for any system placed in service after December 31, 2025, the Internal Revenue Service states. The One Big Beautiful Bill Act, a law signed in July 2025, moved that expiration date up by 9 years. Homeowners rushed to install before the deadline, and shopper engagement on the solar marketplace EnergySage rose 205% year over year in the second half of 2025.
When demand outweighs supply, that often results in panic pricing within any industry.
Emily Walker, Director of Insights at EnergySage. Source 2.
What a solar system costs today
EnergySage, a company that collects competing installer quotes for homeowners, measures price as dollars for every watt of solar panel capacity a system can generate, a way of comparing systems of different sizes. Its shoppers were quoted a median of 2.49 dollars a watt across the second half of 2025, up 0.4% from the first half. EnergySage publishes a national example, for a system not tied to any real family, sized at 12 kilowatts, or 12,000 watts of panel capacity, and costing 30,505 dollars before any incentive. A rebate of 2,000 dollars lowers that to 28,505 dollars, and the household saves an estimated 2,822 dollars a year on electricity. Dividing the cost by the yearly savings gives the payback period, the number of years until the savings equal what the system cost, which EnergySage calculates at 10.1 years for this example.
Show the numbers
| Washington DC | 3.03 |
| Massachusetts | 2.91 |
| California | 2.48 |
| Texas | 2.22 |
| Florida | 2.12 |
Price per watt is not the same everywhere. Among the states EnergySage tracks, Washington DC has the highest price, 3.03 dollars a watt, and Florida has the lowest, 2.12 dollars a watt. California, the state Wood Mackenzie and the Solar Energy Industries Association, a trade group, rank as the largest residential solar market by installed capacity so far this year, sits near the middle at 2.48 dollars a watt.
How long a system takes to pay for itself
A higher price per watt does not always mean a longer wait to break even. In California, a system costs 22,078 dollars on average and pays for itself in 7.58 years, then keeps producing power for 15 to 20 more years that is already paid off, EnergySage states. Over 25 years, a California household saves an estimated 111,481 dollars. Those yearly savings track the price of grid electricity, which the United States Energy Information Administration forecast would average 16.8 cents a kilowatt hour nationally in 2025, up 2% from 2024.
Show the numbers
| Washington DC | 5.05 |
| Massachusetts | 7.31 |
| California | 7.58 |
| Texas | 12.49 |
| Florida | 16.44 |
Washington DC, the highest price per watt in the chart above, also breaks even the fastest, in 5.05 years. Florida, the lowest price per watt, takes the longest to break even, 16.44 years.
What happens once the credit is gone
Wood Mackenzie expects residential solar installations to fall 18% year over year in 2026, now that the tax credit that drove the rush to install is gone.