State incentives
Solar can still pay off in all three states in 2026 — but for completely different reasons, now that the federal residential tax credit is gone. California needs a battery, Texas comes down to your buyback plan, and Florida is the cleanest "it just works" story of the three.
Updated June 30, 2026 · 10 min read
Short answer: yes — solar can still be worth it in California, Texas, and Florida in 2026, but the reasons are now completely different in each state, and they all share one catch. The federal residential solar tax credit (Section 25D) is gone for anyone buying with cash or a loan, so the math no longer rests on a 30% federal write-off. It rests entirely on your state's electricity rate and net-metering rules. In California you'll likely need a battery to make it pencil. In Texas the deciding factor is which buyback plan you sign. In Florida, full retail net metering plus high sun makes it the most straightforward case of the three.
Below we compare the three highest-search solar states on the things that actually move the needle in 2026 — and point you to a free, state-specific estimate so you can run your numbers instead of a national rule of thumb.
Start here, because it changes the math everywhere. The federal Residential Clean Energy Credit under Section 25D no longer applies to expenditures made after December 31, 2025. Critically, the IRS treats the expenditure as made when the original installation is completed — not when you signed a contract or made a deposit. So if your system is placed in service in 2026, you get $0 federal credit, regardless of when you paid.
"The credit will not be allowed for any expenditures made after December 31, 2025… an expenditure with respect to an item is treated as made when the original installation of the item is completed." — IRS FAQ on Public Law 119-21 (OBBB)
One heads-up: the IRS's general public 25D page is sending mixed messages right now. It correctly states the credit "is not available for any property placed in service after December 31, 2025" — but it also still carries leftover boilerplate telling you that you can claim the credit "until the credit begins to phase out in 2033." That phase-out language predates the One Big Beautiful Bill and is no longer operative for residential buyers; the December 31, 2025 cutoff is what controls. Be wary of any offer that points you to that "phase out in 2033" line, or that promises a "30% federal credit" for a 2026 residential install — the credit ended for systems placed in service after December 31, 2025. More on that below.
We cover this in depth in Is there a solar tax credit in 2026? and the full picture across every program in our cornerstone guide, Solar Incentives 2026.
A note to avoid confusion: this article is about homeowners. The surviving commercial credit (Section 48E) is a separate story with its own rules and timing, and it does not apply to a household buying rooftop solar. Don't let anyone blur the two.
Here's how the three states stack up on the factors that decide whether solar is worth it in 2026.
| Factor | California | Texas | Florida |
|---|---|---|---|
| Avg. residential rate (Apr 2026, EIA) | 35.25 ¢/kWh | 16.99 ¢/kWh | 15.38 ¢/kWh |
| Net-metering regime | NEM 3.0 net billing — exports paid at grid value (avoided cost), below retail | No statewide mandate — REP "solar buyback" plans vary widely | Full retail net metering, credits roll forward |
| Federal 25D credit in 2026 | None | None | None |
| Battery near-essential? | Yes — to preserve value under net billing | Depends on your buyback plan | No — nice-to-have for storm resilience |
| Headline takeaway | High rates make solar valuable, but pair it with a battery | Your plan is the policy — read the fine print | The simplest economics of the three |
(U.S. average residential rate for context: 18.83 ¢/kWh, April 2026.)
The rate figures above come from the U.S. EIA Electric Power Monthly, Table 5.6.A (April 2026 data, the most recent month published). Rates update monthly, so treat these as a snapshot, not a fixed figure.
California has the highest residential electricity rates of any state — 35.25 cents per kWh as of April 2026, nearly double the national average. Every kWh you offset with your own solar is therefore worth a lot. That's the good news.
The complication is how California pays you for power you send back to the grid. Under the Net Billing Tariff (NEM 3.0), in effect since April 15, 2023 for PG&E, SCE, and SDG&E customers, exported energy is credited "at a rate reflecting the value of this generation to the grid" — avoided-cost values that the CPUC itself says are usually lower than the retail rate you pay. In plain terms: the credit for a kWh you export is much smaller than the cost of a kWh you buy.
And it's not changing back. In March 2026, California's First District Court of Appeal upheld the net billing decision in Center for Biological Diversity v. CPUC, and in June 2026 the California Supreme Court declined to hear the case — closing off the most realistic path to reinstating retail-rate net metering for the three big investor-owned utilities.
This is why a battery has gone from optional to near-essential in California. If you can't earn much by exporting, the move is to store your midday solar and use it yourself in the high-value evening hours instead of buying expensive grid power. According to the CPUC, nearly 70% of net-billing customers had paired their solar with a battery by the end of 2024. That's the market voting with its wallet.
Bottom line for California: solar-only payback has stretched out under NEM 3.0, but solar plus a battery — self-consuming and shifting stored energy to expensive evening hours — is how the math works at those sky-high rates. Run the specifics on the California residential calculator.
Texas is the opposite of California. There's no high statewide rate doing the heavy lifting (16.99 cents per kWh in April 2026, just below the national average), but there's plenty of sun, and the state's electricity market is largely deregulated — most Texans buy power through a competitive retail market on the ERCOT grid.
Here's the catch that trips up a lot of buyers: Texas has no statewide net-metering mandate. Instead, individual retail electric providers (REPs) offer "solar buyback" plans, and the terms vary enormously from plan to plan — some are generous, some are stingy, and some don't buy back excess generation at all. The state isn't setting your export rate; your retail plan is.
The good news is that this is disclosed. Texas REPs publish an Electricity Facts Label (EFL) for each plan — a standardized, PUCT-required disclosure — and you can check it (along with the plan's terms of service) to see whether and how the plan credits excess solar generation before you sign. (A handful of municipal utilities and co-ops outside the deregulated market run their own buyback arrangements, so the rules near you depend on your provider.)
Bottom line for Texas: solar can be excellent here — if you pair it with a good buyback plan. A poorly chosen plan can quietly tank your savings even on an otherwise great install. Read the Electricity Facts Label, and model it against your usage on the Texas residential calculator.
Florida is the most straightforward of the three. Rates are lower than California (15.38 cents per kWh in April 2026), but the sun is abundant and — crucially — Florida kept full retail net metering.
That nearly changed. A 2022 bill (HB 741/SB 1024) would have shifted credits toward avoided-cost rates and allowed new fixed fees, but Gov. DeSantis vetoed it on April 27, 2022, preserving the long-standing framework. Under Florida PSC Rule 25-6.065, investor-owned utilities credit your monthly excess generation as a kWh credit that rolls to next month's bill — a full retail offset — with any unused credits at year-end paid out at the utility's avoided-cost (COG-1) rate. Systems up to 2 MW are eligible.
A practical bonus in a hurricane-prone state: a solar-plus-battery system can ride through grid outages, which is a real resilience benefit on top of the bill savings. (Worth noting: the 2022 veto preserved today's rules, but no net-metering regime is guaranteed forever — future PSC or legislative changes are always possible.)
Bottom line for Florida: the simplest economics of the three states. Full retail net metering plus high sun means your solar production is valued at the same rate as the power you'd otherwise buy. Check your specifics on the Florida residential calculator.
A national "average payback" figure is close to useless here, because the three biggest solar states play by three different rulebooks. Your real economics come from a handful of inputs multiplied together:
Because so much of this is state- and utility-specific, the reliable move is to model your own situation rather than lean on a rule of thumb. Get a free, no-pressure residential solar estimate tailored to your state and utility. If you're still deciding where solar is most attractive, our best states for solar breakdown puts these three in national context.
Three watch-outs, all sharpened by the loss of the federal credit:
Be wary of any 2026 residential pitch that promises a "30% federal tax credit." As covered above, Section 25D doesn't apply to cash or loan installs completed after December 31, 2025, so no such federal credit is available for a 2026 residential install. If an offer hinges on one, verify the claim before you sign. See solar scam red flags for 2026.
Financing choice matters more now. With no federal credit to soften the cost, the difference between paying cash, taking a loan, or signing a lease/PPA has a bigger impact on your bottom line. We break down all four in how to pay for home solar in 2026.
Decide on the full picture, not the headline. Whether solar is "worth it" depends on your rate, your roof, and your state's rules together — see is home solar worth it in 2026? for the framework.
This article was written and fact-checked on June 30, 2026. Electricity rates are reported monthly and net-metering rules can change, so verify current figures before making a decision.
Educational content, not tax, financial, or legal advice. Figures are current as of the update date above; verify with a qualified professional before acting.
There is no federal residential solar tax credit in any state in 2026 if you buy with cash or a loan — Section 25D ended for systems whose installation was completed after December 31, 2025 (IRS, under Public Law 119-21). State and local incentives and net-metering rules still vary by state, but the 30% federal credit is gone for new residential buyers.
Under California's NEM 3.0 net billing tariff (in effect since April 15, 2023 for PG&E, SCE, and SDG&E), power you export to the grid is credited at the grid's avoided-cost value — which the CPUC says is usually below the retail rate you pay. Storing that energy in a battery and using it during high-value evening hours preserves much more of solar's value, which is why the CPUC reports that nearly 70% of net-billing customers had paired their solar with a battery by the end of 2024.
Texas has no statewide net-metering mandate. Because most of the state has a deregulated retail electricity market, your compensation for excess solar comes from a 'solar buyback' plan offered by your retail electric provider, and terms vary a lot from plan to plan. Always check the plan's Electricity Facts Label — a standardized, PUCT-required disclosure — to see whether and how it buys back excess generation before you sign.
No. Florida kept full retail net metering. A 2022 bill (HB 741/SB 1024) that would have shifted credits toward avoided-cost rates was vetoed by Gov. DeSantis on April 27, 2022. Under Florida PSC Rule 25-6.065, monthly excess generation is still credited as a kWh credit at retail value and rolled to your next bill, with any unused year-end credits paid at the utility's avoided-cost (COG-1) rate; systems up to 2 MW are eligible.
It depends on what 'best' means for you. California has the highest electricity rates (35.25 cents/kWh in April 2026, EIA), so each kWh you offset is valuable — but you'll likely need a battery to make the math work under NEM 3.0. Florida offers the simplest economics thanks to full retail net metering plus high sun and a strong storm-resilience case. Texas can be excellent or mediocre depending entirely on the buyback plan you choose. Run your own numbers on our residential calculator rather than relying on a national average.
Free, no obligation, and sourced from the IRS, USDA, and EIA.