How Much Do Solar Panels Cost in 2026?

Average Solar Panel Costs in 2026

The cost of residential solar panels in 2026 ranges from $2.50 to $3.50 per watt before incentives, with the national average sitting at approximately $2.85 per watt. For a typical 6 kW system, that translates to $15,000 to $21,000 before the federal tax credit.

After applying the 30 percent federal Investment Tax Credit (ITC), the average out-of-pocket cost drops to between $10,500 and $14,700. Many homeowners pay even less thanks to state and local incentives.

What Determines Solar Panel Pricing?

Several factors influence the final price you will pay for a solar installation. Understanding these variables helps you evaluate quotes and spot good deals.

System Size

The size of your solar system, measured in kilowatts (kW), is the biggest cost driver. A larger home with higher electricity consumption needs more panels. The average U.S. residential system is between 6 kW and 10 kW. A 6 kW system uses roughly 15 to 18 panels, while a 10 kW system uses 25 to 30 panels.

Equipment Quality

Premium panels from manufacturers like SunPower, REC, and Panasonic cost more than budget options but offer higher efficiency and longer warranties. The difference between a standard panel and a premium panel is typically $0.20 to $0.50 per watt, which translates to $1,200 to $3,000 on a 6 kW system.

Inverter choice also matters. Microinverters from Enphase cost more upfront than a single string inverter from SolarEdge or SMA, but they offer panel-level optimization and easier monitoring.

Labor and Installation Costs

Labor accounts for roughly 10 to 15 percent of total system cost. Rates vary by region, with higher costs in the Northeast and lower costs in the Southeast and Southwest. Complex roof designs, multi-story homes, and ground-mounted systems add to installation expenses.

Permitting and Interconnection

Permit fees vary widely by jurisdiction, ranging from $100 to $500 or more. Some utilities charge interconnection fees. Your installer typically handles all permitting as part of the project cost.

Location

Solar costs vary significantly by state. States with competitive solar markets like Texas, Florida, and Arizona tend to have lower prices due to high installer competition. States in the Northeast often have higher installation costs but also offer more generous incentives.

Cost Breakdown: Where Does the Money Go?

Here is how the cost of a typical residential solar installation breaks down:

Solar panels: 25 to 30 percent of total cost

Inverter(s): 10 to 15 percent

Racking and mounting hardware: 5 to 10 percent

Labor: 10 to 15 percent

Permitting and inspection: 3 to 5 percent

Sales, overhead, and margin: 25 to 35 percent

The last category is where you have the most negotiating power. By comparing multiple quotes through SmartEnergyUSA, you can identify installers offering competitive margins without sacrificing quality.

Aerial view of residential solar installation - How Much Do Solar Panels Cost in 2026?

Federal and State Incentives

Federal Solar Investment Tax Credit (ITC)

The ITC allows you to deduct 30 percent of your total solar installation cost from your federal income taxes. For a $17,000 system, that is a $5,100 tax credit. This incentive is available through 2032, after which it steps down to 26 percent in 2033 and 22 percent in 2034.

State Incentives

Many states offer additional incentives that stack on top of the federal ITC:

State tax credits: States like South Carolina and Arizona offer their own income tax credits for solar.

Rebates: Some utilities and states offer upfront cash rebates of $500 to $2,500.

SRECs: In states like New Jersey, Massachusetts, and Maryland, you can earn Solar Renewable Energy Credits worth $50 to $300 or more per credit annually.

Property tax exemptions: Most states exempt the added home value from solar from property taxes.

Sales tax exemptions: Many states waive sales tax on solar equipment purchases.

Solar Cost Trends: Past, Present, and Future

Solar panel costs have plummeted over the past two decades. In 2006, the average cost per watt was over $9.00. By 2016, it had fallen to around $3.50. In 2026, we are seeing average costs of $2.85 per watt.

This dramatic decline is driven by improvements in manufacturing efficiency, increased global production capacity, and growing market competition. While the pace of cost declines has slowed, analysts expect prices to continue falling at 2 to 4 percent per year.

Meanwhile, electricity rates from utilities continue to climb at an average of 3 to 5 percent annually. This widening gap between solar costs and utility rates makes the financial case for solar stronger each year.

Solar panel array harnessing sunlight - How Much Do Solar Panels Cost in 2026?

How to Get the Best Price on Solar

Compare Multiple Quotes

The single most effective way to get a good deal on solar is to compare quotes from three or more installers. Research shows that homeowners who compare quotes save an average of 10 to 20 percent. SmartEnergyUSA connects you with multiple pre-vetted installers so you can easily compare pricing and equipment.

Consider Timing

Solar installers are often busiest in spring and summer. Scheduling your installation in fall or winter can sometimes yield lower prices as installers look to fill their schedules.

Ask About Equipment Options

Request quotes with different equipment tiers. A mid-range panel paired with microinverters often delivers the best balance of performance and value.

Negotiate

Solar quotes are not fixed prices. If you have a competing quote, share it with other installers and ask if they can match or beat it. Many installers will work with you on price rather than lose the sale.

Is Solar Worth the Cost?

For the vast majority of American homeowners, the answer is yes. A solar system that costs $17,000 before incentives and $11,900 after the ITC will typically generate $25,000 to $50,000 in electricity savings over 25 years. That represents a return on investment of 100 to 300 percent.

Solar also increases your home's resale value by an average of $15,000 to $25,000 according to research from Lawrence Berkeley National Laboratory, further improving the financial picture.

Ready to find out exactly what solar would cost for your home? Get free, personalized quotes from top-rated installers in your area through SmartEnergyUSA.