After the 30% federal tax credit, a typical 6 kW system costs $10,500 to $14,700. It pays for itself in 5 to 10 years and then produces free electricity for another 15 to 20.
Tallyard Editorial·Updated April 20, 2026·Reviewed against EnergySage market data, NREL PVWatts, and IRS Section 25D
Start with the number after the tax credit, not before
Every solar cost article leads with the gross price because it is more dramatic. A $18,000 system sounds expensive. But no homeowner pays $18,000. The federal Investment Tax Credit (ITC) reduces your federal tax bill by 30% of the system cost. That $18,000 system costs $12,600 after the credit. Many states add their own rebates ($500 to $5,000 depending on state), and some utilities offer performance-based incentives on top. The net cost is always significantly lower than the sticker price.
Fig. 1. The 30% ITC applies to the full installed cost including equipment, labor, and permitting. It is a dollar-for-dollar tax credit, not a deduction.How we calculated these numbers▾
System pricing from EnergySage 2025-2026 Solar Marketplace Report ($2.50-3.50/watt national average). ITC per IRS Section 25D as amended by the Inflation Reduction Act. Payback calculations use EIA residential electricity rates by state and NREL PVWatts production estimates by location.
Fig. 2. Compare quotes in dollars per watt. This normalizes for system size differences. A $3.00/W quote for an 8 kW system is a better deal than a $3.50/W quote for a 6 kW system.Fig. 3. States with high electricity rates pay back fastest. California at $0.30/kWh pays back in 4-6 years. Midwest at $0.12/kWh takes 10-14.
Illustrative example · San Diego, CA
A homeowner installed a 7.2 kW system for $21,600 ($3.00/W). After the 30% ITC ($6,480) and a California state rebate ($1,000), net cost was $14,120. Their previous electricity bill averaged $220/month. The solar system covers 95% of usage. Monthly savings: $209. Annual savings: $2,508. Payback: 5.6 years. Remaining panel warranty after payback: 19.4 years of essentially free electricity.
Composite illustration based on typical project dimensions, regional contractor pricing, and 2026 material costs. Not a specific real project.
Fig. 4. Buying captures the full financial benefit. Leasing costs nothing up front but gives most of the savings to the leasing company.
Tax credit rollover
If your federal tax liability is less than the ITC amount in the installation year, the unused credit rolls forward to the next tax year. You do not lose it. But you need enough tax liability to use it eventually. If your annual federal tax bill is very low, consult a tax professional before committing.
For system sizing based on your electricity usage, use the solar calculator. For wire sizing from the inverter to your panel, the wire size calculator handles NEC requirements.