Solar Panel Cost by State: 2026-2027 Complete Price Guide
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If you're a homeowner considering solar panels, one of the first questions you'll ask is: "How much will it actually cost me?" The answer depends heavily on where you live. Solar panel prices vary dramatically from state to state due to differences in labor costs, local regulations, available sunlight, and — most importantly — state and local incentives.
After spending months researching installation quotes, talking to dozens of solar installers across the country, and analyzing data from the Solar Energy Industries Association (SEIA), I've put together this comprehensive guide to help you understand exactly what you'll pay in your state in 2026.
National Average Solar Costs in 2026
The national average cost of solar panels in 2026 has dropped to approximately $2.95 per watt, down from $3.05 in 2025. For a typical 7 kW residential system, here's what you're looking at:
| Metric | Amount |
|---|---|
| Average cost per watt | $2.95 |
| Typical system size | 7 kW |
| Total cost before incentives | $20,650 |
| Federal ITC (30%) | -$6,195 |
| Net cost after federal credit | $14,455 |
These figures represent the installed cost, including panels, inverters, mounting hardware, wiring, permits, and labor. They do not include solar batteries, which typically add $8,000–$15,000 to the total cost. If you're interested in battery storage, check out our complete guide to solar batteries.
Solar Panel Cost by State: Full Breakdown
Here's a comprehensive look at solar costs across the most popular states for solar installation. These prices reflect the average cost for a 7 kW system in each state as of early 2026:
| State | Cost per Watt | System Cost (7 kW) | After 30% ITC | Payback Period |
|---|---|---|---|---|
| California | $2.80 | $19,600 | $13,720 | 6 years |
| Texas | $2.60 | $18,200 | $12,740 | 8 years |
| Florida | $2.65 | $18,550 | $12,985 | 7 years |
| Arizona | $2.45 | $17,150 | $12,005 | 7 years |
| New York | $3.20 | $22,400 | $15,680 | 6 years |
| Massachusetts | $3.35 | $23,450 | $16,415 | 5 years |
| New Jersey | $2.95 | $20,650 | $14,455 | 6 years |
| Colorado | $3.00 | $21,000 | $14,700 | 8 years |
| North Carolina | $2.75 | $19,250 | $13,475 | 8 years |
| Virginia | $2.90 | $20,300 | $14,210 | 7 years |
Notice that higher installation costs don't always mean a worse deal. Massachusetts has some of the highest costs per watt, but its high electricity rates ($0.28/kWh) and generous state incentives mean homeowners there often see the fastest payback period — sometimes under 5 years. This is a critical point that many solar cost guides miss.
Factors That Affect Solar Panel Costs in Your State
Solar pricing isn't as simple as just looking at a national average. Several key factors create the wide range of costs you see between states:
1. Local Electricity Rates
States where electricity is expensive (like California at $0.27/kWh or Connecticut at $0.29/kWh) offer faster payback because your solar panels displace more expensive energy. In states with cheap electricity like Louisiana ($0.11/kWh), the financial case for solar is weaker — though still positive over 25 years.
2. Solar Irradiance (Sunlight)
The amount of sunlight your location receives directly affects how much energy your panels produce. Arizona averages about 6.5 peak sun hours per day, while Ohio averages only 4.2. More sunlight means more energy production and faster ROI.
3. Labor and Permitting Costs
Some states have complex permitting processes that add weeks and thousands of dollars to installation costs. California, while solar-friendly, has notoriously complicated building codes. In contrast, states like Texas have streamlined their permitting to attract solar investment.
4. State Incentives
Beyond the federal 30% ITC, many states offer their own incentives. For a detailed breakdown of the federal credit, read our step-by-step tax credit guide.
State Solar Incentives and Rebates
The federal Investment Tax Credit (ITC) is available in every state, but additional state-level incentives can dramatically reduce your costs. Here are some of the most generous programs:
- New York: NY-Sun incentive providing up to $0.20/watt rebate plus a 25% state tax credit (up to $5,000)
- Massachusetts: SMART program offering performance-based payments plus net metering credits at retail rate
- South Carolina: 25% state tax credit (one of the most generous in the nation) with no cap
- Maryland: Clean Energy Grant Program providing $1,000 rebate plus REC income
- Minnesota: Solar*Rewards program with steady performance payments over 10 years
Pro tip: Always verify current incentive availability with your state's energy office before getting quotes. Programs can change or expire, and some have limited funding that runs out mid-year.
The 5 Cheapest States for Solar Panels in 2026
If you're looking for the absolute lowest costs, these states offer the best combination of low installation prices and strong incentives:
- Arizona — $2.45/watt with abundant sunshine and strong net metering
- Texas — $2.60/watt with no state income tax and property tax exemptions for solar
- Florida — $2.65/watt with no sales tax on solar equipment and good net metering
- Nevada — $2.55/watt with excellent solar resource and utility rebate programs
- North Carolina — $2.75/watt with property tax exemptions and net metering
How to Calculate Your Solar ROI
Understanding your return on investment requires some simple math. Here's the framework I use when advising homeowners:
- Find your annual electricity cost — Check your utility bills for the past 12 months and add them up
- Determine your solar offset — Most systems are designed to offset 80–100% of your usage
- Calculate net system cost — Total cost minus federal ITC minus state incentives
- Divide net cost by annual savings — This gives you your payback period in years
- Calculate 25-year savings — Annual savings × 25 years, factoring in 2–3% annual electricity rate increases
For example, if your net system cost is $14,000 and you save $1,800 per year on electricity, your payback period is approximately 7.8 years. Over 25 years (the standard panel warranty), you'd save roughly $45,000 — that's a return of over 300% on your investment.
Frequently Asked Questions
The average cost of a residential solar panel system in the U.S. in 2026 is approximately $20,650 before the federal tax credit and $14,455 after the 30% ITC. This is based on a typical 7 kW system at $2.95 per watt. Prices vary considerably by state, ranging from $2.40 to $3.50 per watt depending on local labor costs, permitting requirements, and equipment choices.
Arizona and Texas consistently rank among the cheapest states for solar installation, with costs as low as $2.40 per watt. When combined with strong solar resources (averaging 6+ peak sun hours per day), these states often offer the best return on investment for homeowners. However, keep in mind that the cheapest installation cost doesn't always mean the best value — states with higher electricity rates may offer faster payback periods.
Yes, the 30% federal Investment Tax Credit (ITC) applies to all 50 states. It reduces your federal income tax liability by 30% of the total cost of your solar system, including equipment and installation. However, state and local incentives vary significantly. Some states like California, New York, and Massachusetts offer additional state tax credits, rebates, or performance-based incentives that can further reduce your net cost.
The typical payback period for solar panels in the U.S. ranges from 6 to 10 years, depending on your state, electricity rates, system size, and available incentives. States with high electricity costs like California and Massachusetts tend to have shorter payback periods (5–7 years), while states with low electricity rates may see payback periods of 8–12 years. After the payback period, you essentially get free electricity for the remaining life of your panels.
Solar panel prices have decreased approximately 70% over the past decade and continue a downward trend. In 2026, the average cost per watt is $2.95, down from $3.05 in 2025. However, inverter and installation labor costs have remained relatively stable. Most industry analysts expect a continued modest decline of 2–4% per year in overall system costs through 2030.