If you’re staring at a solar quote right now, the math probably feels off. The 30% federal residential tax credit expired December 31, 2025, when the One Big Beautiful Bill took effect July 4, 2025. That changes almost everything about system size, payback, and whether buying solar makes sense at all.

Here’s the blunt reality: most solar advice you’ll find online was written when a typical homeowner could pocket roughly $7,500 back from the federal government. That’s gone for people who buy systems. The entire calculation needs to restart.

Post-Credit Solar: Size vs. Payback Tradeoffs

Without the 30% federal credit, system sizing decisions shift toward faster payback rather than maximum production-here's how the math changes at different scales.

Illustrative Payback Comparison: 6kW vs 10kW System (No Federal Credit)
Factor6kW System10kW System
Typical installed cost$15,000-$18,000$25,000-$30,000
Annual production estimate7,200-9,000 kWh12,000-15,000 kWh
Annual savings (at $0.15/kWh avg)$1,080-$1,350$1,800-$2,250
Simple payback period11-17 years11-17 years
Excess production riskLow-sized to baseline usageHigher-may export at unfavorable net metering rates
Best fit scenarioHouseholds using 600-800 kWh/month seeking lowest capital outlayHigh-usage homes (1,000+ kWh/month) or planned EV/heat pump additions
Key sizing rule post-creditSize to 80-90% of current consumption; avoid oversizing unless utility offers 1:1 net metering

General information for comparison, confirm specifics for your situation.

The Market Is Telling You Something

BloombergNEF is projecting just 4.1 gigawatts of residential solar installed in the U.S. in 2026. That’s a 15% drop from 2025 and the lowest five-year total, according to reporting from June 15, 2026. This isn’t noise. It’s a market absorbing the shock of losing a credit that’s been around in some form for nearly two decades.

You might think a slower market means cheaper panels. Maybe a little. Installers who had six-month wait lists in 2024 have more availability now, and some are willing to negotiate margins. But a 5-10% price drop won’t come close to replacing the $7,500 tax credit you’d get on a $25,000 to $35,000 system. The shortfall is real. The only question is how you work around it.

Buy, Lease, or Wait: This Decision Has a Deadline Attached

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Here’s what I tell anyone weighing a full purchase against a lease or power purchase agreement: one of these options is about to close.

The Section 48E commercial tax credit for solar leases and PPAs stays at 30% through the end of 2027. But there’s a buried detail that matters. Projects must start construction by July 4, 2026 to get that credit. We’re talking weeks. If you want a PPA or lease with full tax benefits, you need installers’ contracts signed and site work booked now, not next month.

Leases and PPAs come with tradeoffs. You don’t own the equipment, which gets messy during home sales and keeps you from some state incentives. But if you don’t have enough tax liability to use credits anyway, or you hate the idea of a solar loan, locking in a PPA before July 4 might be your best financial move in 2026. Talk to two installers about both options before that deadline passes.

Right-Sizing Has Changed Because the ROI Levers Have Changed

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The old playbook was to size bigger: bigger system meant a bigger credit, and you’d eventually grow into that extra capacity. That logic doesn’t hold anymore.

The new math centers on battery pairing. As of Q1 2026, 40% of new residential solar installations include storage, up from 35% in 2025. That’s not random. Without a federal credit, oversizing your system just to dump excess power onto the grid at terrible net metering rates is a waste of money. A system sized precisely to your needs, paired with a battery and designed for self-consumption, usually wins against a larger system without storage when you run the payback numbers.

Here’s how I’d approach it now: size to handle 80-90% of your usage, targeting your peak-cost hours, then add battery storage if your utility charges time-of-use rates or if their net metering policy is tightening. Before you sign anything, though, you’ve got to understand your state’s net metering rules.

Your State’s Net Metering Policy May Be About to Change

Net metering rules are shifting hard and fast. Tracking which states changed the rules in 2026 is homework worth doing before you lock in a system size. What your utility pays for excess power varies wildly and is getting worse in several states.

Pennsylvania’s a cautionary tale. PPL Electric Utilities wants to switch to hourly wholesale market rates (called locational marginal pricing) that could slash your credit value by 60-80% compared to today’s retail rates. If that happens around July 2026 as planned, a Pennsylvania homeowner expecting retail-rate compensation will see their payback period balloon.

But then there’s New Jersey, where the net metering credit sits around $0.26 per kWh. A typical 8 kW system generates roughly $2,500 annually in credits there. That’s solid money without a federal credit, making New Jersey one of the better states for buying solar right now.

The point isn’t that solar’s good or bad nationwide. It’s that you size based on what your specific utility will pay you for exports, not what some national calculator spits out.

Entry Points Matter More Than They Used to

Colorado just made something easier for cost-conscious homeowners watching the numbers not quite add up. A law signed June 10, 2026 cleared the way for plug-in solar units, also called balcony solar or outlet panels. These typically run 400 to 800 watts and don’t need permits in most cases. You can start cutting your bills without dropping $30,000 on a full rooftop system.

It’s not a replacement for whole-home solar. But in 2026, without the big federal credit and with tighter system economics, testing smaller first to understand your actual consumption and vet local installers before committing to a major expense makes real sense. At least in states that allow it.

The honest answer is this: solar still pencils out for plenty of homeowners in 2026. But only if you size based on today’s incentives, not last year’s. Know your state’s net metering rate. Check your utility for policy shifts. Ask about that July 4 lease deadline. And don’t just copy whatever system your neighbor installed in 2023. The whole situation has changed too much for that to work.

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