If you haven’t heard, the federal solar tax credit is set to expire soon - on December 31, 2025. This credit has played a major role in making solar more affordable by allowing homeowners to claim 30% back on the cost of their solar installation. While the expiration of this credit might sound discouraging, the good news is that solar still pays for itself, even without it.
Solar Costs Are Lower Than Ever
While the tax credit has helped many homeowners make the switch to solar, at the same time, the cost of solar has continued to drop and has dropped significantly over the years. This drop in the cost of solar will benefit homeowners looking to make the switch, helping to lower the cost of a complete solar installation.
Last year, Our World in Data revealed data that indicated solar panel prices have fallen around 20% every time global solar capacity doubled. This means that each time the total number of solar panels installed worldwide (global solar capacity) doubles, the average price of solar panels drops by about 20%. This data also showed that solar costs have fallen by 90% in the last decade and batteries by more than 90%.
Supporting this, Wood Mackenize reported that solar panel prices dropped 30% year on year in 2024. This means the average price of solar panels in 2024 was 30% lower than it was in 2023. Over the last few decades, solar panels have gone from one of the most expensive forms of renewable energy, to the cheapest and fastest growing source of new electricity in the United States, according to the U.S. Department of Energy. In recent years, there have been new types of new power capacity built in the U.S. (solar farms, wind turbines, gas plants) and solar accounts for the largest share of new electricity generation
Why Solar Keeps Getting Cheaper
The rapid decline in solar costs is largely due to technological innovation. The International Energy Agency projects that Solar PV will become the largest renewable energy source by 2029.
Integrated technology solutions continue to evolve. For instance, recent research covered by the BBC highlights a potential breakthrough material known as perovskite, described as a ‘wonder material’ that could revolutionize solar efficiency. Although this research is mostly happening in the UK, its impact could be global - including the US.
From improved production methods to ongoing research & development at top universities, it’s clear that innovation will keep pushing solar prices down while improving performance.
Rising Electricity Prices, And No End in Sight
One of the biggest reasons homeowners go solar is to protect themselves from rising electricity costs.
According to the U.S. Energy Information Administration (EIA), electricity prices have increased by 33% in the past decade - from 12 cents to 16 cents per kilowatt hour on average. Certain states in America are feeling the impact even more.
Solar panels allow homeowners to generate their own power, reducing reliance on the electricity grid and shielding them from future rate hikes. Many analysts and media outlets warn that electricity prices will continue to rise, driven by increasing fuel costs, infrastructure upgrades, and new energy demands from technologies like AI-powered data centers.
Is the Solar Payback Period Going to Change?
Naturally, you might wonder: How much can I really save by going solar?
The answer depends on multiple factors including your home size, location, and energy usage. The U.S. Department of Energy provides a simple way to estimate your solar payback period: divide your system’s final cost (after incentives) by your annual energy savings.
While the upcoming end of the federal tax credit may affect the expected payback period, other incentives are still available to help lower your overall costs.
Other Incentives Still Available
Although the federal tax credit will end in 2025, many state and local incentives remain.
For example:
- Illinois lawmakers recently approved a new bill creating incentives for battery storage, geothermal systems, and virtual power plants, as reported by Canary Media. (The Clean and Reliable Grid Affordability Act, or CRGA)
Resources like dsireusa.org provide a full list here of available state-specific solar incentives. These programs show that, even without the federal credit, local governments are continuing to push renewable energy forward.
The Power of Community
There are still other initiatives in place that make solar more affordable. This includes group buying programs where neighbors come together to drive down the cost of solar. Customers come together and installers are then incentivized to lower their costs as they benefit from increased volume. This creates a win-win model for both solar installers and homeowners that unlocks reduced pricing.
Solar Adds Value to Your Home
Beyond savings, solar panels can also increase your home’s resale value. Research from the U.S. Department of Energy and Berkeley Lab found that homebuyers are consistently willing to pay more for homes with solar installations.
So whether you’re planning to stay for decades or move in a few years, solar is an investment that continues to pay dividends.
Solar Still Pays Off, Even as Incentives Shift
Even as incentives change, solar still pays off . Based on our current calculations, even without the tax credits, many households will be able to see a payback period within 10 years. Over a 30-year span, even without the tax credit, solar can still generate $40,000–$50,000 in added value for a typical homeowner. Payback periods vary depending on many factors. When you register for Switch Together, you will receive a personalized estimate of your payback period.
It is clear that solar remains one of the smartest financial investments a homeowner can make. With technology improving, prices falling, and electricity costs rising, solar still delivers long term savings. Over time, even without the tax credit, solar will still pay for itself. Whether your goal is to save money, gain energy independence, or increase your home’s value, solar continues to deliver reliable long term value.