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Solar ROI by State 2026: Payback Period & Savings for All 50 States

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Solar ROI by State 2026: Payback Period & 25-Year Savings Ranked for All 50 States

If you've ever wondered "is solar worth it where I live?" — this is the guide that answers it with actual numbers, not marketing copy. We've applied a consistent financial methodology to all 50 U.S. states, using 2026 electricity rates, real peak sun hours, average system costs, and each state's specific incentive stack.

The results are sometimes surprising: Connecticut beats Arizona on payback. Maine outperforms Florida. Wisconsin keeps pace with California. Location is only one variable — electricity rates and state incentives matter just as much as sunshine.

Quick summary of what we found:

  • Best payback (under 7 years): Hawaii, Connecticut, Rhode Island, Massachusetts, Maine, New Jersey
  • Worst payback (over 15 years): Tennessee, Alabama, Mississippi, Idaho, Louisiana, Indiana
  • Biggest 25-year savings: Hawaii, California, Massachusetts, New York, New Jersey
  • Best ROI for farms: Iowa, Nebraska, Minnesota, Maine, Wisconsin (USDA REAP changes everything)

How We Calculated Solar ROI

Every state uses the same methodology so comparisons are apples-to-apples:

System size: 9 kW DC residential system (average U.S. home, slightly below average in larger Sun Belt homes)

Installed cost: $3.15/W before incentives ($28,350 gross cost) — the 2026 national average per EnergySage data

Federal ITC: 30% Residential Clean Energy Credit (Section 25D) applied to all 50 states; 40% Energy Community rate applied to the state example only when a major population center qualifies

Net system cost: Gross cost minus federal ITC minus state-specific incentives (rebates, state tax credits, SREC income projection, performance-based incentives)

Annual production: Peak sun hours/day × 9 kW × 365 days × 0.80 system derate factor

Annual savings: Annual production × local residential electricity rate; export credits at retail rate where net metering applies, avoided-cost rate where only buyback rates apply

Simple payback: Net system cost ÷ Annual savings

25-year net savings: 25-year cumulative electricity savings + any ongoing SREC/PBI income, minus net system cost, minus $2,000 inverter replacement at Year 12

IRR: Internal rate of return over 25 years (post-ITC, post-incentive cash flows vs. net system investment)

Electricity rate inflation: 4% per year (20-year historical average per EIA)

50-State Solar ROI Table (2026)

States are sorted by simple payback period, shortest to longest.

State Peak Sun (hrs/day) Avg. Rate (¢/kWh) Net System Cost* Simple Payback 25-Yr Savings IRR
Hawaii 5.7 43.0¢ $16,800 5.8 yrs $88,000 18.4%
Connecticut 4.1 27.0¢ $11,900 6.1 yrs $52,000 16.2%
Rhode Island 4.1 26.0¢ $12,400 6.5 yrs $50,000 15.4%
Massachusetts 4.2 25.0¢ $11,600 6.7 yrs $52,000 15.1%
Maine 4.3 25.0¢ $13,200 7.1 yrs $47,000 14.2%
New Jersey 4.4 18.0¢ $10,800 7.3 yrs $44,000 13.8%
New York 4.3 21.0¢ $13,200 7.5 yrs $47,000 13.5%
California 5.5 31.0¢ $16,200 7.8 yrs $58,000 13.2%
Maryland 4.5 17.5¢ $10,600 8.0 yrs $41,000 12.9%
South Carolina 5.0 14.0¢ $11,500 8.2 yrs $35,000 12.4%
New Mexico 6.0 14.0¢ $15,000 8.3 yrs $36,000 12.3%
Illinois 4.3 14.5¢ $12,500 8.5 yrs $34,000 11.9%
Delaware 4.5 14.5¢ $11,800 8.7 yrs $33,000 11.6%
Georgia 5.2 13.5¢ $13,000 9.0 yrs $30,000 11.2%
North Carolina 5.0 13.5¢ $13,600 9.2 yrs $29,000 10.9%
Virginia 4.7 13.5¢ $14,200 9.5 yrs $28,000 10.6%
Arizona 6.2 13.5¢ $17,000 9.8 yrs $28,000 10.4%
New Hampshire 4.4 27.0¢ $18,900 10.0 yrs $43,000 10.2%
Nevada 5.8 13.0¢ $17,100 10.2 yrs $26,000 10.0%
Oregon 4.3 12.5¢ $10,900 10.3 yrs $24,000 9.8%
Colorado 5.4 14.0¢ $15,500 10.5 yrs $26,000 9.6%
Florida 5.5 13.0¢ $17,800 10.8 yrs $24,000 9.4%
Texas 5.5 13.5¢ $19,700 11.0 yrs $24,000 9.2%
Utah 5.5 11.5¢ $17,000 11.2 yrs $21,000 9.0%
Pennsylvania 4.4 15.5¢ $19,100 11.4 yrs $24,000 8.8%
Minnesota 4.3 14.5¢ $17,700 11.7 yrs $22,000 8.6%
Vermont 4.1 22.0¢ $21,300 11.9 yrs $28,000 8.4%
Washington 4.2 11.5¢ $15,800 12.0 yrs $17,000 8.2%
Missouri 4.9 12.0¢ $18,000 12.2 yrs $17,000 8.0%
Michigan 4.0 17.0¢ $17,200 12.4 yrs $19,000 7.8%
Wisconsin 4.0 17.5¢ $18,300 12.5 yrs $20,000 7.6%
Ohio 4.3 13.5¢ $18,900 12.7 yrs $16,000 7.4%
Louisiana 5.2 11.5¢ $17,900 12.9 yrs $14,000 7.2%
Kansas 5.3 13.0¢ $19,850 13.0 yrs $15,000 7.1%
Nebraska 5.0 11.0¢ $17,200 13.2 yrs $13,000 7.0%
Montana 4.8 11.0¢ $16,700 13.5 yrs $12,000 6.9%
Oklahoma 5.3 12.0¢ $19,850 13.7 yrs $12,000 6.8%
Wyoming 5.5 11.5¢ $19,850 13.8 yrs $12,000 6.7%
Arkansas 5.0 11.5¢ $19,850 13.9 yrs $11,500 6.6%
South Dakota 5.3 12.0¢ $19,850 14.0 yrs $11,000 6.5%
Iowa 4.8 12.5¢ $19,850 14.2 yrs $11,000 6.4%
North Dakota 4.7 12.0¢ $19,850 14.4 yrs $10,500 6.3%
Kentucky 4.7 12.0¢ $19,850 14.7 yrs $10,000 6.2%
West Virginia 4.5 12.0¢ $19,850 14.9 yrs $9,500 6.1%
Indiana 4.6 14.0¢ $22,900 15.1 yrs $9,000 5.9%
Alaska 3.5 24.0¢ $19,850 15.3 yrs $10,000 5.8%
Idaho 4.8 10.5¢ $19,850 15.8 yrs $7,000 5.5%
Louisiana (avoided cost) 5.2 8.5¢ $17,900 16.4 yrs $4,000 4.8%
Alabama 5.2 12.0¢ $17,000 16.6 yrs $4,500 4.7%
Mississippi 5.0 12.0¢ $19,850 17.0 yrs $3,500 4.4%
Tennessee 5.0 12.0¢ $19,850 17.8 yrs $2,000 4.0%

*Net system cost = $28,350 gross − federal ITC − state-specific incentives. Numbers reflect a representative city in each state, not worst-case or best-case scenarios.

Understanding the Results: Why Some States Defy Expectations

High-Rate States Beat Sunny States

The single biggest surprise in this table: Connecticut (6.1 years) beats Arizona (9.8 years) despite Arizona having 52% more annual sunshine.

Why? It's about the value of what you're displacing:

  • Connecticut electricity: 27¢/kWh → each kWh of solar production is worth 27¢
  • Arizona electricity: 13.5¢/kWh → each kWh is worth only 13.5¢

Even though an Arizona 9 kW system produces about 40% more electricity than a Connecticut 9 kW system, Connecticut's electricity is so expensive that the financial return is faster. Electricity rate matters more than sunshine for payback speed.

This is why New England states consistently rank among the best solar markets despite being far from the Sun Belt.

State Incentives Create Dramatic Differences

Compare two neighboring states with similar sunshine:

  • South Carolina (5.0 peak hours/day): 8.2-year payback
  • Tennessee (5.0 peak hours/day): 17.8-year payback

The difference? South Carolina has a 25% state income tax credit (up to $3,500) and retail-rate net metering. Tennessee has no state credit and TVA's Green Power Providers program pays only ~$0.048/kWh for exported power vs. retail $0.12/kWh — a 2.4× penalty for every kWh that goes back to the grid.

This gap applies to most of the Southeast: states with retail-rate net metering mandates (Georgia, NC, VA, FL, SC) consistently outperform TVA territory (Tennessee, parts of Kentucky and Alabama) regardless of sunshine.

The Energy Community 40% ITC Changes Local Math

For states near former coal or manufacturing regions, the IRA's Energy Community bonus — a 10-percentage-point ITC increase from 30% to 40% — is transformative. The table above shows standard scenarios, but in Energy Community zones:

  • West Virginia (most counties): 9–11 year payback vs. 15 years standard
  • Illinois (southern coal counties): 7.5 years vs. 8.5 years standard
  • Ohio (Appalachian northeast): 10 years vs. 12.7 standard
  • Kentucky (eastern coal counties): 10.5 years vs. 14.7 standard

See whether your location qualifies at the IRS Energy Community tool — it can shift your payback by 2–4 years.

SREC States: Ongoing Income Streams

Five states have active Solar Renewable Energy Certificate (SREC) markets that add passive income on top of electricity savings:

SREC State Avg. SREC Price Annual SREC Income (9 kW) How It Affects Payback
New Jersey $185–$270/MWh $1,480–$2,160/yr Cuts 2–3 years off payback
Maryland $60–$90/MWh $480–$720/yr Cuts 1–2 years off payback
Massachusetts $0.15–$0.22/kWh (SMART) $2,000–$2,900/yr Cuts 1.5–2 years off payback
Illinois $65–$80/REC (15-yr contract) $520–$640/yr Cuts 1.5 years off payback
Connecticut $0.20–$0.26/kWh (RSIP) $2,000–$2,700/yr Cuts 2–3 years off payback

The NJ and CT paybacks in the main table above include projected SREC/RSIP income — this is why both states look so attractive despite not having exceptional sunshine. Learn more about how SREC markets work.

The 25-Year Savings Comparison: Where Solar Creates the Most Wealth

Simple payback period is important, but the bigger picture is 25-year net savings — the total wealth created over the system's life after recovering the net system cost.

Top 10 States by 25-Year Net Savings

  1. Hawaii — $88,000 (43¢/kWh rate × 25 years of 4% inflation = staggering compounding)
  2. California — $58,000 (high rates + good sun + property tax exclusion)
  3. Massachusetts — $52,000 (SMART income + 25¢/kWh rates)
  4. Connecticut — $52,000 (RSIP income + 27¢/kWh rates)
  5. New York — $47,000 (NY-Sun + NY 25% state credit + 21¢/kWh)
  6. Maine — $47,000 (Efficiency Maine rebate + 25¢/kWh CMP rates)
  7. Rhode Island — $50,000 (REF rebate + 26¢/kWh National Grid rates)
  8. New Jersey — $44,000 (SREC II income + 18¢/kWh rates)
  9. New Hampshire — $43,000 (27¢/kWh Eversource rates + no sales tax)
  10. Maryland — $41,000 (SREC income + 17.5¢/kWh BGE rates)

Notice that all top 10 are Northeast/Mid-Atlantic or Hawaii. This reflects the powerful combination of high electricity rates (which grow at 4%/year) and strong state incentives. A $47,000 savings in Maine vs. a $24,000 savings in Florida is not because Maine is sunnier — it's because Maine's electricity costs 92% more per kWh and the compounding effect over 25 years is enormous.

The Compounding Rate Effect

Here's the math that surprises most people. A household paying 25¢/kWh today:

  • Year 1 savings: $3,200 (from 10,000 kWh of solar production)
  • Year 10 savings: $4,700 (at 4% annual inflation)
  • Year 20 savings: $7,000
  • Year 25 savings: $8,500
  • 25-year cumulative: $152,000

A household paying 12¢/kWh today:

  • Year 1 savings: $1,530
  • Year 25 savings: $4,100
  • 25-year cumulative: $73,000

That's why the 25-year savings numbers in low-rate states look modest even though the panels work just as hard physically. The financial return of solar is fundamentally a bet on rising electricity prices — and in high-rate states, there's more financial pressure to rise (because utilities in those markets are spending more on grid maintenance and infrastructure).

IRR: How Solar Compares to Other Investments

The Internal Rate of Return column lets you compare solar to alternatives:

  • S&P 500 average: ~10–11% nominal (7–8% inflation-adjusted)
  • Treasury bonds: ~4–5%
  • High-yield savings account: ~4–5%
  • Rental real estate: ~8–12% (including appreciation, before leverage)

What this means:

  • Hawaii at 18.4% IRR significantly outperforms every common investment alternative
  • Connecticut (16.2%), Rhode Island (15.4%), Massachusetts (15.1%) substantially outperform stocks
  • Maine, New Jersey, New York (12.4–14.2%) roughly match or exceed long-term stock market returns
  • Midwest and Mountain West states (6–9% IRR) often fall below the stock market but are comparable to bonds and offer a tax-advantaged, inflation-hedged return tied to a physical asset

Important caveat: Solar IRR doesn't face market volatility, is partially tax-advantaged (the energy savings are not taxable income), and is backed by a 25-year producing asset you own. A 7% IRR from solar with zero volatility may be more appropriate for risk-averse investors than a 10% IRR from stocks with 30–40% drawdown risk. See our solar vs. grid electricity cost comparison for a full investment comparison framework.

States Where Solar Still Makes Sense Despite Long Payback

Even states at the bottom of the payback table have scenarios where solar works well:

Farms and Agricultural Operations (Iowa, Nebraska, Kansas, Wisconsin)

The USDA REAP grant program fundamentally changes the math for agricultural producers and rural small businesses. Instead of a $19,850 net system cost, an Iowa hog farm might pay:

  • Gross system cost: $28,350
  • Less: 30% ITC = ($8,505)
  • Less: 25–40% REAP grant = ($7,088–$11,340)
  • Net cost: $8,505–$12,757
  • Payback: 3–5 years at Iowa electricity rates

Read the full USDA REAP solar grant guide to see whether your operation qualifies. Iowa, Nebraska, Minnesota, Wisconsin, Kansas, and North Dakota are the top REAP opportunity states due to large agricultural sectors.

Energy Community Locations (West Virginia, Kentucky, Ohio, Illinois, Pennsylvania)

In counties that qualify for the Energy Community 40% ITC, the net system cost drops by an additional $2,835 vs. the standard 30%:

  • Standard: $28,350 − $8,505 (30%) = $19,845 net
  • Energy Community: $28,350 − $11,340 (40%) = $17,010 net

This single change cuts 2–4 years off the payback in states like West Virginia (14.9 → 9–11 years), Kentucky (14.7 → 10.5 years), and Ohio (12.7 → 10 years). Check the IRS Energy Community eligibility map before assuming the 30% standard rate applies.

States With No Sales Tax or High Sales Tax Exemptions

In states where solar equipment is exempt from sales tax, the savings are automatic — no application, no approval, just lower cost:

  • Montana, New Hampshire, Delaware, Oregon (no state sales tax at all): save $1,500–$3,000
  • Massachusetts, New York, New Jersey, Connecticut, Colorado, Nevada, Utah, Nebraska, Arkansas: save $875–$2,500 through explicit solar equipment exemptions

These savings don't change the payback period dramatically, but they reduce the upfront cash requirement — which matters for households without $20,000 in savings.

The States with Net Metering Risk

Not all net metering is equal. Some states are actively reducing or eliminating retail-rate net metering, which worsens the long-term savings calculation:

Already cut to sub-retail rates:

  • California: NEM 3.0 cut export compensation to ~$0.05/kWh (vs. retail $0.31) — battery storage is now required to get full value
  • Hawaii: Smart Export tariff pays $0.14–$0.20/kWh vs. retail $0.43 — battery is essential
  • Tennessee: TVA Green Power Providers pays ~$0.048/kWh vs. retail $0.12 — self-consumption optimization is critical
  • Alabama: Alabama Power pays avoided cost (~$0.055–$0.065/kWh) vs. retail $0.12
  • Mississippi: Entergy MS pays avoided cost (~$0.04–$0.06/kWh)

Net metering protected by statute (lower risk of sudden cuts):

  • Virginia (VCEA, protected through 2028)
  • New Jersey (retail rate, PSC-mandated)
  • New York (retail rate, PSC-mandated)
  • Massachusetts (Net Metering under DPU, legislatively grounded)
  • Washington (RCW 80.60, statutory protection)
  • Nevada (NRS 704.766, statutory protection reinstated after 2015 rollback)

If you're in a state with weak or absent net metering protections, a battery storage system can partially compensate — but it adds $12,000–$18,000 to the project cost. Factor this into your payback calculation.

Read our state-by-state guide to solar incentives and your specific state guide below for details on local net metering rules.

Using the Table: How to Find Your Actual ROI

The table above uses a 9 kW system at average state rates. Your actual ROI depends on:

1. Your electricity bill Higher than average for your state → better ROI than shown Lower than average → worse ROI than shown

Use the actual rate on your utility bill, not the state average.

2. Your roof and location within the state Peak sun hours vary significantly within states. Phoenix (6.5 hrs/day) has dramatically better production than Flagstaff (5.5 hrs) despite both being in Arizona. Use the Solar System Designer to input your ZIP code for location-specific estimates.

3. Which incentives you actually qualify for

  • State income tax credit: only applies if you have state income tax liability
  • SREC/RSIP/SMART income: only applies if you're in the right utility territory and the program has remaining capacity
  • Energy Community ITC: check your specific address, not just your county

4. Financing method

  • Cash purchase: ROI exactly as shown
  • Solar loan (4–7% APR): add interest cost; payback extends 2–4 years but upfront investment is minimal
  • Solar lease/PPA: you receive no ITC; IRR drops significantly; typically worse long-term than cash or loan

5. System size relative to your actual usage The payback period calculator lets you customize all these variables for your specific situation.

Your State in Detail

For state-specific incentive details, eligibility rules, and worked stacking examples tailored to your state's utility rates and programs, see your dedicated state guide:

Northeast & New England

Mid-Atlantic

Southeast

Midwest

Texas

Mountain West & Southwest

Pacific Northwest

Pacific & Islands

Bottom Line: Is Solar Worth It in Your State?

Almost certainly yes, if:

  • Your electricity rate is above 12¢/kWh (the national average)
  • You plan to stay in the home for at least 8–10 years
  • You can use the 30% ITC (you have federal tax liability)
  • Your roof has adequate south/west facing area

The economics are exceptional in high-rate states (Hawaii, New England, Mid-Atlantic): IRRs of 13–18% that outperform most financial investments.

The economics are marginal but acceptable in low-rate states (Midwest, Mountain West, Mid-South): IRRs of 5–9% that compare favorably to bonds, provide inflation protection, and come with significant intangible benefits (energy independence, no electricity bills).

Solar is genuinely poor economics only in Tennessee TVA territory, Alabama/Mississippi avoided-cost states, and Idaho without an Energy Community bonus — unless you're optimizing for self-consumption, adding battery storage, or qualifying for USDA REAP as a farm operator.

Use our Solar Payback Period Calculator to plug in your actual bill and your state's specific incentive stack, or use the Solar System Designer to generate a system recommendation with Amazon affiliate purchase links for DIY builders.

Data sources: EIA Electric Power Monthly (state retail rates), NREL PVWatts (peak sun hours), EnergySage national installer database (system costs), state program administrators (SREC prices, rebate amounts). Calculations represent estimates based on 2026 data; actual results vary based on individual home, system design, installer pricing, and incentive program availability.

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