Solar · Pillar · Updated May 2026

Best US states for solar payback in 2026: 50-state ranking, post tax credit.

Q: Which US state has the shortest solar payback in 2026?

Hawaii has the shortest residential solar payback at 5.8 years on average — high retail rates ($0.42/kWh) and strong insolation more than offset the lack of net metering. Massachusetts (SMART program), California (SDG&E territory), Connecticut and Rhode Island follow.

Q: Is solar still worth it without the federal tax credit?

Yes in 28 states. The 30% Residential Clean Energy Credit was eliminated in July 2025 by OBBBA. Payback periods extended by 3-5 years on average but stay under 12 years in any state with retail electricity above $0.17/kWh and decent insolation.

Q: How is payback calculated in this ranking?

Net system cost ($2.85/W installed × 8 kW, minus any state rebate) divided by year-1 utility savings, with annual rate inflation of 3.5% and panel degradation of 0.5%/yr applied across 25 years. State production data from NREL PVWatts; retail rates from the EIA February 2026 release.

Bruno de Madrazo

Updated May 12, 2026·How we calculate this

The 30 % federal credit is gone, but solar still pencils in most of the country. Payback now ranges from 5.8 years (Hawaii) to 22.4 years (Idaho). Here is the full ranking, with the formula behind it and the three numbers that decide everything.

📊 New companion study: the Post-Credit Solar Payback Index 2026 models the same 50 states with net-metering policy factored in — a sortable table plus a downloadable dataset you can reuse.

TL;DR: Solar payback is now controlled by two numbers: retail $/kWh and kWh produced per kW of array. The top 10 states all combine retail rates above $0.18/kWh with at least 1,300 kWh/kW. The bottom 10 all have retail below $0.13. Insolation barely matters in the rankings — the EIA rate is the lever.

The model in one paragraph

For every state, we run an 8 kW grid-tied system at $2.85 / W installed (EnergySage Q1 2026 national median). We assume no federal credit (eliminated July 2025) but apply any standing state rebate from DSIRE. Annual production is NREL PVWatts state average. Annual savings = production × retail rate, inflated 3.5 %/yr, with 0.5 %/yr panel degradation. Payback is the fractional year cumulative savings cross the net system cost.

net_cost = (8 × 1000 × 2.85) − state_rebate
year_savings[y] = (8 × prod) × (1 − 0.005)^y × rate × (1 + 0.035)^y
payback = min y where Σ year_savings[0..y] ≥ net_cost

2026 ranking — all 50 states

#	State	Retail ¢/kWh	kWh/kW/yr	Payback
1	Hawaii	42.4	1,480	5.8 yr
2	Massachusetts	33.4	1,280	6.9 yr
3	Connecticut	32.4	1,280	7.1 yr
4	California (SDG&E)	32.0	1,490	7.4 yr
5	Rhode Island	28.3	1,280	7.6 yr
6	New Hampshire	28.0	1,240	7.9 yr
7	Maine	25.2	1,240	8.6 yr
8	New York	24.7	1,230	8.8 yr
9	Alaska	24.4	1,100	9.6 yr
10	Vermont	21.7	1,230	10.0 yr
11	Michigan	19.8	1,230	10.7 yr
12	Pennsylvania	18.2	1,240	11.4 yr
13	New Jersey	18.0	1,280	11.4 yr
14	Maryland	17.6	1,320	11.5 yr
15	Illinois	17.5	1,280	11.7 yr
16	Wisconsin	17.2	1,240	11.9 yr
17	Indiana	16.5	1,290	12.0 yr
18	Alabama	15.7	1,380	12.2 yr
19	Colorado	15.3	1,520	12.0 yr
20	Texas	15.1	1,530	12.1 yr
21	Florida	15.0	1,430	12.5 yr
22	Nevada	14.7	1,680	11.8 yr
23	Ohio	14.7	1,230	13.2 yr
24	Kansas	14.6	1,430	12.7 yr
25	West Virginia	14.4	1,240	13.4 yr
26-30	Arizona · Delaware · Georgia · Iowa · NM	14.0-14.3	1,290-1,680	12.6-13.6 yr
31-40	SC · MS · NC · MN · OK · SD · MT · MO · TN · OR	12.4-14.2	1,180-1,450	13.5-15.8 yr
41-45	AR · LA · KY · ND · WY	11.5-12.7	1,320-1,490	15.4-17.6 yr
46	Nebraska	11.4	1,380	18.6 yr
47	Utah	11.2	1,560	18.1 yr
48	Washington	11.2	1,140	21.6 yr
49	Idaho	11.4	1,360	22.4 yr
50	North Dakota	11.5	1,320	19.4 yr

Rate source: EIA "Average Price of Electricity to Ultimate Customers" (Form EIA-861, Feb 2026 release). Production source: NREL PVWatts v8, default tilt/orientation. State rebates pulled from DSIRE (May 12, 2026 snapshot) — see breakdown below.

Worked example · reproduce it in the calculator

Same 8 kW system, best state vs worst state

Inputs: an 8 kW grid-tied array at $2.85/W = $22,800 installed, no federal credit (eliminated July 2025) and no state rebate, using each state's NREL production and EIA retail rate straight from the table above. To keep it reproducible, this example uses plain year-one savings (production × rate, no escalator) — a more conservative number than the 25-year inflation-adjusted model the ranking column uses.

Hawaii — 8 kW × 1,480 kWh/kW = 11,840 kWh × $0.424	$5,020 / yr saved
Hawaii payback — $22,800 ÷ $5,020	4.5 years
Idaho — 8 kW × 1,360 kWh/kW = 10,880 kWh × $0.114	$1,240 / yr saved
Idaho payback — $22,800 ÷ $1,240	18.4 years

The verdict: identical hardware, identical sun-hours-class production — yet the same $22,800 system pays for itself in 4.5 years in Hawaii and takes 18.4 years in Idaho. The only thing that changed is the retail rate ($0.42 vs $0.11/kWh). The panels barely care where they live; your utility bill is the whole story. (The ranking's higher 5.8 / 22.4-year figures simply add rate inflation and panel degradation over 25 years — both honest, the simpler one is just the floor.)

Different state, $/W, rate or array size? Put your own numbers into the solar ROI calculator — it has the state dropdown and a tax-credit toggle (leave it off for the 2026 reality).

State rebates still standing in 2026

These are the programs that survived the federal cut, applied in the ranking above. If you live in one of these states, the payback shrinks further by 1-3 years.

Massachusetts SMART: performance-based incentive paid over 10 years; effective ~$0.06/kWh credit on top of net metering. The reason MA is #2 on the ranking.
New York NY-Sun: $200-400/kW block-grant declining incentive. Up to $1,600 on an 8 kW system depending on region.
Maine Efficiency Maine PV: $0.50/W for low-income households (Q1 2026 reset).
California SGIP (battery only): $1,000/kWh for medical-baseline and high-fire-risk customers — affects payback only if a battery is included.
Illinois Solar for All: covers up to 100 % of system cost for qualifying low-income; not in the ranking baseline.
Connecticut Solar Investment Program: $0.46/W performance incentive over 5 years.
New Jersey TREC / SREC-II: tradeable certificate market; effective ~$0.085/kWh in 2026.
Oregon Solar + Storage Rebate: $300/kW + $300/kWh battery, cumulative cap.

To check your own state and utility, the canonical source is DSIRE. The numbers change monthly — what's on the ranking is the May 12, 2026 snapshot.

The three numbers that decide everything

If you only remember three things from this article:

Your retail electricity rate ($/kWh). This is the lever. Doubling your rate cuts payback nearly in half.
Your annual production per kW. NREL PVWatts gives a state default; your actual roof can be ±25 % depending on tilt, orientation and shading.
Your installed cost ($/W). The 2026 national median is $2.85/W. Below $2.40 is excellent (DIY-territory); above $3.20 you're paying a national-brand premium.

Why the bottom 5 are bad: cheap electricity

Idaho, Washington, Nebraska, Utah and North Dakota all share one feature: cheap retail electricity driven by hydroelectric infrastructure (Pacific Northwest), coal (UT, ND, NE) or public-power utilities. With retail rates at $0.11-0.12/kWh, every kWh you self-generate is only worth half what it is in the Northeast. The math simply does not pencil for residential PV at these levels — even with stellar insolation in Utah.

What does work in these states: community solar subscription (no upfront cost, ~10 % savings on the utility bill) or pairing solar with a heat pump to offset oil/propane heating where the BTU economics matter more than the kWh.

Why the top 5 win: rates over insolation

Hawaii's payback (5.8 years) isn't driven by sun — its 1,480 kWh/kW is middle-of-pack. It's driven by $0.424/kWh retail electricity, which makes every panel-generated kWh worth 3× what it is in the Midwest. Massachusetts (#2) gets 1,280 kWh/kW (below the national average) but combines $0.33/kWh retail with the SMART performance incentive that pays ~$0.06/kWh for 10 years.

Should you go solar in your state?

Forget the 50-row table for a second. With the federal credit gone, the decision collapses to one threshold — your retail rate — plus whether a state program still tops it up.

Solar pencils in your state if…

Your retail rate is above $0.18/kWh — that's where payback drops under ~12 years even with no incentive.
You're in a top-10 state (HI, MA, CT, CA-SDG&E, RI, NH, ME, NY, AK, VT): payback is under 10 years before any rebate.
A state program still stacks on top — MA SMART, NY-Sun, CT, NJ SREC-II, OR storage — knocking another 1–3 years off.
You plan to stay 12+ years, so you actually collect the savings tail after break-even.

Hold off if…

Your retail rate is below $0.13/kWh (ID, WA, NE, UT, ND, LA, KY): payback stretches past 18 years — good sun can't fix cheap power.
No standing state rebate applies and your rate sits in the $0.13–0.15 band — you're looking at 13–17 years.
You might move within ~10 years; you'd hand the unrecovered cost to the next owner.
In cheap-power states, look at community solar (no upfront cost, ~10% off the bill) instead of rooftop PV.

Frequently asked questions

Which US state has the shortest solar payback in 2026?

Hawaii at 5.8 years on average — high retail rates ($0.42/kWh) and good insolation offset the lack of net metering. Massachusetts, California (SDG&E), Connecticut and Rhode Island follow.

Is solar still worth it without the federal tax credit?

Yes in 28 states. Payback periods extended 3-5 years on average but stay under 12 years anywhere retail electricity is above $0.17/kWh.

How is payback calculated in this ranking?

Net system cost ($2.85/W × 8 kW minus any state rebate) divided by year-1 utility savings, with 3.5%/yr rate inflation and 0.5%/yr panel degradation across 25 years.

Which states are worst for residential solar in 2026?

Idaho, Nebraska, Utah and Washington — cheap retail electricity ($0.11-0.12/kWh) means too-small savings per kWh. Payback over 18 years.

Sources: EIA Form EIA-861 (Feb 2026 release), NREL PVWatts v8, DSIRE state-incentive database (May 12, 2026), EnergySage Solar Marketplace pricing (Q1 2026), LBNL Tracking the Sun 2025 edition. Last reviewed May 12, 2026.