Key Takeaways
For the first time since 2005, homeowners going solar in 2026 won’t have access to the 25D residential federal tax credit. That changes the math significantly. Cash and loans remain the most straightforward path to ownership, traditional leases and PPAs still offer a low barrier to entry, and a newer option — the prepaid lease or PPA — has emerged as a middle ground worth understanding. Each comes with real tradeoffs, and the right choice depends on your financial situation, your goals, and how long you plan to stay in your home.
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Going solar in 2026 is unlike any year before it.
The 30% federal residential tax credit, available to homeowners since 2005, is gone. For homeowners actively shopping for solar, that raises a straightforward question: what’s the best way to go solar now, and is it worth it?
The options haven’t disappeared; homeowners looking to go solar can still do so in the same ways they did before, but the math looks a little different. In response to the new market, new twists on older options are showing up. But what’s the best way to go solar in 2026? Here’s a breakdown of the three main ways to go solar in 2026, along with the honest pros and cons of each.
Table of Contents
Option 1: Ownership (Cash or Loan)
Ownership is the tried-and-true method. You purchase the system outright, either by paying cash or securing a solar loan, and the system is yours from day one.
Most solar providers work with financiers or banks that specialize in solar loans, so homeowners can secure financing and their solar contract in one go. A common and smart option some homeowners choose is a home equity loan through their local bank or credit union.
Pros:
- Direct ownership with no third party involved
- High long-term energy savings
- Solar systems have been shown to increase home value by 5 to 10%
- Take advantage of state and local incentives, which vary by location but can meaningfully offset costs
Cons:
- High upfront cash outlay, or the need to secure financing
- Solar loans often come with interest rates and dealer fees that increase the total cost of the system
- Maintenance falls entirely on the homeowner. Manufacturer warranties cover equipment, but most don’t cover labor, meaning out-of-pocket costs are possible over the system’s lifetime
- No federal tax credit to offset the purchase price
Ownership still makes financial sense for many homeowners, especially in states with strong incentive programs. Without the federal credit, though, the upfront cost burden is real, and it’s worth running the numbers carefully before committing.
We looked at average solar and solar + battery pricing when the tax credit expiration was first announced to determine the effect on ROI. You can read our full analysis here, but to summarize, the numbers show that paybacks are pushed back 3-5 years, still well within an acceptable window for a 30-year investment.
Option 2: Traditional Lease or PPA
A lease or power purchase agreement (PPA) is a widely used solar financing alternative where a third-party company owns the solar system installed on your roof. In a lease, you pay a fixed monthly amount for use of the system. In a PPA, you pay per kilowatt-hour for the energy it produces.
Leases and PPAs are largely very similar. The majority have fixed payments, but some can come with variable payments. Payments are normally at a discounted rate because the third-party that owns the system passes along some of the tax credit value to you.
Pros:
- Little to no upfront cost
- Monthly payments are often lower than your average electric bill
- Since the company owns the system, they handle maintenance
Cons:
- Price escalators are common, meaning your payment increases year over year
- There is generally no path to ownership at the end of the term
- Research shows that leased solar systems have no meaningful impact on home value
- Selling your home can become complicated, as a new buyer may not want to take over the contract
- Several lease and PPA companies have gone out of business in recent years, leaving homeowners without support
The low barrier to entry is the appeal here. For homeowners who want solar without the financial commitment of ownership, it is a legitimate option. The long-term tradeoffs, though, deserve a hard look before going solar in 2026 with this option.
Option 3: Prepaid Lease or PPA
Prepaid options are a newer twist on an older form of solar financing, and are gaining traction specifically because of the tax credit situation. Homeowners no longer qualify for tax credits, but businesses can still claim them and pass along savings to homeowners.
Prepaids typically include three parties: the homeowner, the solar company, and a lessor. The lessor, a financing entity, would own the equipment initially and take advantage of tax benefits. Those benefits can be passed along to the homeowner in the form of lower upfront costs.
Instead of making monthly payments, however, with prepaids, homeowners pay a lump sum upfront. Also differing from traditional leases and PPAs is the possibility of ownership. Many prepaid options allow (and encourage) homeowners to transfer ownership of the assets to themselves after a set period, typically 5-6 years.
Pros:
- Lower upfront cost compared to a straight cash purchase, because the lessor’s tax credit can reduce the price
- The third-party company handles maintenance during the period they own the system
- A clear path to ownership down the line
Cons:
- Still requires a significant upfront payment, either cash or financing, with associated interest rates and fees
- You generally cannot take advantage of state and local incentives, since the lessor or installer owns the system and can capture those benefits instead
- Once ownership transfers to you, the other parties are no longer responsible for maintenance
- Transparency of credit and pricing is vital to ensure pricing isn’t inflated
This option is exploding in popularity across the country, but it requires transparency from the provider. Make sure you understand exactly how much of the tax credit is being passed on, what the buyout terms look like, and what your maintenance responsibilities will be once you take ownership.
| Feature | Ownership | Lease/PPA | Prepaid Lease/PPA |
|---|---|---|---|
| Upfront Cost | $$$$ | $ | $$$ |
| Long-Term Savings | High | Moderate | High |
| Maintenance Included | No | Yes | Partial |
| Home Value Impact | Positive | Minimal | Potentially Positive |
| Path to Ownership | Immediate | Usually None | Yes |
What’s the Best Way to Go Solar In 2026?
There is no universally right answer. The best way to go solar in 2026 depends on your financial situation, how long you plan to stay in your home, and what your state offers in terms of additional incentives.
What has not changed is the core value of solar. Rising utility rates mean generating your own energy still makes financial sense. The federal credit being gone changes the math, but it does not change that fundamental reality.
Get multiple quotes, ask hard questions, and read the fine print. In 2026, the options are more nuanced than they have ever been.
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