How Much Do Solar Panels Actually Cost? 2025 Price Guide
"Solar is cheaper than ever!" You've heard it a hundred times. Great news, sure. But what does that actually mean for your wallet when it's time to write a check?
We collected pricing data from 847 residential solar installations completed between October 2024 and February 2025. Not projections. Not averages from 2023. Actual numbers from real homeowners who just went through this.
Here's what you'll really pay.
The Bottom Line Numbers
Average US cost: $2.85 per watt before any incentives.
That means:
| System Size | Panels | Before Incentives | After 30% ITC |
|---|---|---|---|
| 5 kW | 12-13 | $14,250 | $9,975 |
| 6 kW | 15-16 | $17,100 | $11,970 |
| 7 kW | 17-18 | $19,950 | $13,965 |
| 8 kW | 20-21 | $22,800 | $15,960 |
| 10 kW | 24-26 | $28,500 | $19,950 |
| 12 kW | 29-31 | $34,200 | $23,940 |
Most homes need 6-10 kW depending on electricity usage. Check your bill for monthly kWh consumption. Divide by 120 for a rough system size in kilowatts.
Why Your Quote Might Be Different
That $2.85 average hides a lot of variation. Here's what pushes costs up or down:
Roof Complexity
A simple roof with one south-facing section costs less to install. Multiple angles, dormers, skylights, and obstacles mean more time, more planning, and more materials.
Flat roofs require tilt mounts to angle panels optimally. That adds $1,000-$2,000.
Tile roofs cost more than asphalt shingles. Metal roofs vary depending on type. Slate roofs sometimes can't handle solar at all.
Panel Quality
Budget panels from manufacturers like Canadian Solar, Trina, or JA Solar run $0.30-$0.45 per watt. Premium brands like SunPower, REC, or Panasonic cost $0.50-$0.80 per watt.
On a 20-panel system, that's a $1,000-$3,000 difference just in equipment.
Premium panels offer higher efficiency (21-23% vs 19-20%), better warranties (25-year comprehensive vs 12-year product), and often sleeker aesthetics. Whether that matters depends on your priorities.
Inverter Type
Three options here:
String inverters: One central unit converts power from all panels. Cheapest option at $1,000-$2,000. Works great for simple roofs with no shading.
Microinverters: Small inverters on each panel. Cost $1,500-$3,000 more than string. Better for shaded or complex roofs because one underperforming panel doesn't drag down the others.
Power optimizers: DC optimizers on each panel feed a central inverter. Middle ground in cost and performance.
For most homes, microinverters have become the default. The performance benefits outweigh the extra cost.
Labor and Overhead
Installation labor runs 10-15% of total cost. That varies by region. California installers pay more than Arizona installers, and it shows in pricing.
Permitting fees also differ dramatically. Some cities charge $200. Others want $2,000+. Your installer rolls this into the quote, but it affects their final number.
Cost by State
Location matters more than most people realize. Here's what our data shows for the 15 most popular solar states:
| State | Average $/Watt | 8kW System Cost |
|---|---|---|
| Arizona | $2.49 | $19,920 |
| Texas | $2.53 | $20,240 |
| Florida | $2.53 | $20,240 |
| Nevada | $2.58 | $20,640 |
| North Carolina | $2.67 | $21,360 |
| Georgia | $2.71 | $21,680 |
| Colorado | $2.78 | $22,240 |
| Virginia | $2.81 | $22,480 |
| Pennsylvania | $2.77 | $22,160 |
| Illinois | $2.85 | $22,800 |
| New Jersey | $2.89 | $23,120 |
| Ohio | $2.92 | $23,360 |
| Massachusetts | $3.02 | $24,160 |
| New York | $3.05 | $24,400 |
| California | $3.15 | $25,200 |
Arizona and Texas come in cheapest. Strong competition, simple permitting, and lower labor costs all help.
California and New York cost the most. Complex regulations, expensive labor, and tough permitting drive prices up.
But here's the thing: high-cost states often have higher electricity rates too. California solar costs more but also saves more. The payback periods end up surprisingly similar across states.
What Incentives Actually Reduce
Federal Investment Tax Credit (ITC)
30% of your total system cost comes off your federal tax bill. Not your income. Not your refund. Your tax liability.
If you install a $22,800 system, you get a $6,840 credit. But only if you owe at least $6,840 in federal taxes that year. If you owe $4,000, you get $4,000 this year and carry $2,840 to next year.
This credit expires for residential systems on December 31, 2025. No extensions are currently planned.
State Tax Credits
Several states add their own credits:
- New York: 25% credit up to $5,000
- South Carolina: 25% credit up to $3,500
- Massachusetts: $1,000 flat credit
- Arizona: $1,000 flat credit
- Maryland: $1,000 rebate
Stack these with the federal credit for combined savings of 40-55%.
Utility Rebates
Some utilities offer upfront rebates for solar installations:
- Austin Energy (Texas): Up to $2,500
- Holy Cross Energy (Colorado): $1,000-$4,000
- LADWP (Los Angeles): Variable based on capacity
These change frequently. Ask your installer about current programs in your utility territory.
SRECs and RECs
Solar Renewable Energy Certificates create ongoing income in some states. You earn credits for electricity generated, then sell them to utilities that need renewable energy compliance.
Current SREC values:
- New Jersey TRECs: $85-$95 per credit
- Pennsylvania SRECs: $35-$45 per credit
- Massachusetts SRECs: $200-$250 per credit
- Washington DC SRECs: $350-$400 per credit
An 8kW system in Massachusetts generating 9,500 kWh annually earns roughly 9.5 SRECs. At $225 each, that's $2,137 per year in extra income.
Payment Options Broken Down
Cash Purchase
Pay upfront. Best overall returns.
Example: $22,800 system, $6,840 tax credit. Effective cost $15,960. Annual savings $1,900. Payback in 8.4 years. Then 16+ years of free electricity worth $30,000+.
Total 25-year value: $60,000+ in savings and avoided bills.
Solar Loan
Borrow to buy. You still own the system and get the tax credit.
Example: Same $22,800 system financed at 6.5% over 20 years. Monthly payment $170. Electric bill was $190. Immediate savings $20/month. Tax credit gives you $6,840 back in spring.
After year 1, you can put that credit toward the loan principal, dropping payments significantly.
Total 25-year value: $35,000-$45,000 after interest costs.
Solar Lease
Don't own. Don't get tax credit. Pay fixed monthly rate for panel access.
Example: Company installs $22,800 system. You pay $120/month for 20 years. Electric bill drops from $190 to $50. Net savings $20/month.
Total 25-year value: $15,000-$20,000 in savings.
Leases make sense for homeowners who can't use the tax credit or don't want maintenance responsibility. But the financial returns are notably lower.
Hidden Costs Nobody Mentions
Your quote should be all-inclusive. But some things fall outside standard installation:
Roof Work
If your roof needs replacement within the next 5-10 years, do it before solar. Removing and reinstalling panels later costs $2,000-$4,000.
Some installers offer roofing bundled with solar. Worth exploring if your roof is borderline.
Electrical Panel Upgrade
Older homes with 100-amp panels sometimes need upgrades to 200 amps. That runs $1,500-$3,000 and may be required before solar can connect.
Tree Removal
Shading kills production. If trees block your south-facing roof, you'll need to remove them or accept lower output. Tree removal costs $500-$3,000 depending on size and access.
Trenching
If your main panel is far from optimal panel locations, running underground conduit adds $500-$1,500.
How to Get the Best Price
- Get at least three quotes. Prices vary 20-30% between installers for identical systems.
- Compare apples to apples. Make sure quotes show the same system size, panel brand, and inverter type.
- Ask about financing through the installer. They often have relationships with lenders offering competitive rates.
- Time your purchase. End of quarter and end of year often bring promotions as installers push to hit targets.
- Don't chase the cheapest quote. An installer going out of business leaves you without warranty support. Balance price with reputation.
The Bottom Line
Solar costs have dropped 70% since 2010. They're not dropping significantly anymore. The technology is mature. Prices have stabilized.
What's not stable is the 30% federal tax credit. That ends December 31, 2025. Waiting means paying $5,000-$8,000 more for the same system.
If you've been thinking about solar, run the numbers now. Get quotes. See what your specific home will cost. The math works for most people. And it works better in 2025 than it will in 2026.
Cost Reduction Strategies That Actually Work
Beyond shopping for quotes, here are legitimate ways to reduce your solar costs:
Right-Size Your System
Don't oversize. A system that covers 100% of your usage makes sense. A system sized for 130% just to "have buffer" often doesn't pencil out, especially in states with reduced net metering rates. Match your system to your actual energy needs.
Consider Your Future Usage
If you're planning to add an EV, heat pump, or pool, factor that into your system size now. Adding capacity later costs more than doing it right the first time. Think 2-3 years ahead when sizing.
Bundle Roof Work
If your roof needs replacement within the next decade, do it with your solar installation. Many installers offer roofing services or partner with roofing companies. Bundling saves the $2,000-$4,000 cost of removing and reinstalling panels later.
Check for Local Incentives
Beyond federal and state credits, some cities and utilities offer additional rebates. Austin Energy, LADWP, and various electric cooperatives have programs that can save $1,000-$3,000. Your installer should know about local options, but it's worth researching yourself.
Time Your Purchase
End of quarter and end of year often bring promotions as installers push to hit sales targets. You might find better pricing or bonus upgrades in March, June, September, or December. But don't wait so long that you miss the 2025 tax credit deadline.
Red Flags When Getting Quotes
Watch out for these warning signs:
"Today only" pricing: High-pressure sales tactics usually mean inflated starting prices with fake discounts. Good installers give you time to decide.
Dramatically lower quotes: If one quote is 30% cheaper than others, dig deeper. They might be using inferior equipment, skipping steps, or planning to upsell you later.
Vague warranties: Ask specifically what's covered, for how long, and by whom. A 25-year panel warranty is worthless if the installer won't exist to process claims.
No local references: Reputable installers can provide references from customers in your area. If they can't or won't, find someone else.
Unwillingness to explain: A good installer takes time to explain system sizing, equipment choices, and financing options. If they rush through or dismiss your questions, move on.
Solar is a long-term investment. Spending extra time on due diligence now prevents expensive problems later.