Solar in the USA: the state-by-state reality after the federal credit

With the 25D federal credit gone for owned systems, your state's electricity rate, export rules and incentive programs decide whether solar pays back in 6 years or 20. Here is the three-lever framework, with eight states compared.

Until the end of 2025, US residential solar had one great equalizer: a 30% federal tax credit that applied identically in every state. That era is over. The Section 25D credit for homeowner-owned systems ended on 31 December 2025 under the One Big Beautiful Bill Act – we cover the details and what leased systems can still claim in our federal solar tax credit guide. With the federal floor removed, whether solar pays back in 6 years or 20 now depends almost entirely on three things your state controls: your electricity rate, how exports are compensated, and which state incentives survived. This guide walks through each lever, compares eight representative states, and shows how to run your own numbers.

Lever 1: your electricity rate

Solar savings are mostly avoided purchases, so the local price of power sets the ceiling on your return. In early-2026 EIA data, residential rates span roughly 11–12 cents/kWh in the cheapest states (North Dakota, Washington and neighbors) to about 43 cents in Hawaii, with the national average around 17–18 cents. Rates move, so treat any specific figure as indicative.

Run that formula at 12 cents and again at 40 cents and you get the whole story: the same $18,000 system offsetting 10,000 kWh/yr pays back in roughly 6–8 years in Hawaii or high-rate New England and 15–20+ years in cheap-power Washington. Nothing else in this guide matters as much as the number on your utility bill.

Lever 2: the net-metering regime

The second lever is what happens to the kilowatt-hours you export. There are now three broad regimes:

• Full retail net metering: exports offset imports one-for-one at the retail rate. Still the rule in much of the country – New Jersey and Florida are clear examples, and New York retains near-retail crediting for residential systems (with a small monthly Customer Benefit Contribution charge).
• Net billing: exports are credited at a lower, avoided-cost-style rate. California moved here with NEM 3.0 – export values fell roughly 75% versus NEM 2.0, making batteries near-essential; see our NEM 3 explainer. Arizona uses a similar export-rate model that steps down over time.
• No statewide mandate: Texas has no state net-metering law; compensation depends entirely on your retail provider or municipal utility, and buyback plans range from generous to zero. Our Texas calculator lets you model specific buyback rates.

Under net billing or weak buyback, the self-consumption logic familiar from Europe applies: a battery that shifts exports into evening self-use can change the answer more than any incentive.

Lever 3: state incentives that survived 2025

Several states run programs rich enough to partially replace the lost federal credit:

• New York: a 25% state income-tax credit (capped at $5,000) plus NY-Sun upfront rebates – run the combination in our New York calculator.
• Massachusetts: a 15% state credit (capped at $1,000), the SMART production incentive, and ConnectedSolutions battery payments – see the Massachusetts calculator.
• New Jersey: the SuSI program pays a fixed SREC-II of about $85 per MWh generated for 15 years – roughly $600–800/yr for a typical home system – on top of full retail net metering and sales/property tax exemptions.
• Illinois: Illinois Shines purchases 15 years of renewable energy credits upfront, often worth several thousand dollars.
• Broad tax relief: many states, including Florida and Texas, exempt solar from sales tax, property-tax reassessment, or both – quiet incentives that never show up as a check but improve lifetime returns.

Program budgets and block rates change through the year, so verify current values with the administering agency before signing a contract.

Eight states side by side

Figures below are indicative 2026 values for a typical owned rooftop system; your utility, roof and consumption will move them.

How to read your own state

Work through the three levers in order. First, pull your actual per-kWh rate from a recent bill – including delivery charges, not just supply – because published state averages hide huge utility-to-utility spreads. Second, find your export regime: your utility's tariff sheet or your state commission's website will say whether you get retail credit, an avoided-cost rate, or nothing, and whether existing customers are grandfathered. Third, search your state energy office and the DSIRE database for live incentive programs and their current budget status. Then put all three into the USA calculator, which carries state-specific defaults for all 50 states, or jump straight to a dedicated state tool such as Texas, New York or Massachusetts. A quote that cannot survive your real rate and your real export tariff is not a good quote.

Common mistakes

• Using a national-average payback. An 8-year average is meaningless when the honest range runs from 6 to 20+ years depending on the state and utility.
• Assuming the 30% federal credit still applies. For homeowner-owned systems it ended after 2025; quotes that still bake it in are out of date or misleading.
• Believing an HOA can simply ban solar. More than 25 states have solar access laws limiting HOA restrictions to reasonable ones; check your state statute before giving up.
• Treating lease vs own as a national question. Third-party owners may still capture federal credits and share the benefit in some markets, but leases transfer state incentives (like SRECs) to the owner, complicate home sales, and vary sharply in value state by state.
• Ignoring the export regime. A California-sized system designed for full retail net metering loses much of its value under NEM 3 without a battery.
• Missing grandfathering deadlines. When states change export rules, existing customers are usually locked in for 10–20 years – timing can be worth thousands.

Post-2025, there is no single US solar market – there are fifty. The good news is that all fifty follow the same three-lever arithmetic, and it takes about two minutes to run yours.

Frequently asked questions

Is the federal solar tax credit gone in 2026?

For homeowner-owned systems, yes: the Section 25D residential credit ended for expenditures after 31 December 2025 under the One Big Beautiful Bill Act. Third-party-owned systems (leases and PPAs) may still benefit from business credits under transitional rules, though those are winding down too. See our federal tax credit guide for specifics.

Which states still have strong solar incentives?

New York (25% state credit up to $5,000 plus NY-Sun rebates), Massachusetts (15% credit up to $1,000 plus SMART and ConnectedSolutions), New Jersey (SREC-II payments of roughly $85/MWh for 15 years) and Illinois (Illinois Shines upfront REC payments) are among the strongest. Many other states offer sales and property tax exemptions. Budgets and rates change, so verify current program status.

Does Texas have net metering?

There is no statewide net-metering mandate. Compensation for exported solar depends on your retail electricity provider or municipal utility; some offer near-retail buyback plans and others pay little or nothing, so plan and provider choice materially change the payback.

Can my HOA stop me from installing solar?

In more than 25 states, solar access laws prevent HOAs from banning solar outright, though they may impose reasonable placement or aesthetic conditions. Check your specific state statute and your covenants before assuming an HOA objection is final.