Solar panel cost: Installation and incentives

Key takeaways

• The average U.S. solar panel system costs $17,823 before incentives like the 30% tax credit.

• Monocrystalline panels cost more but offer better efficiency and warranties than polycrystalline options.

• Federal, state, and local incentives significantly reduce solar installation costs for homeowners.

There’s more to the cost of a new solar energy system than the price tag for the equipment. The bad news is you’ll also have to pay for installation and other fees. However, the good news is that government incentives can cover a sizable portion of the bill.

In this guide to solar panel costs, we cover average costs for solar energy equipment and the cost to install them. We also go over different government incentives available to you and how to get them.

How much do solar panels cost?

The average cost of a solar panel system (including installation) in the U.S. is $17,823. Costs also depend on your state. We found they range from $13,958 in Arizona, the cheapest state for solar, to $21,082 in Hawaii, the state with the most expensive installation costs. These costs don’t include incentives like the 30% tax credit or state rebates, so you may find lower prices depending on where you live.

Solar panel cost factors

Solar panel pricing depends on several key factors. First, the type of module you choose matters a lot. Monocrystalline panels are known for their higher efficiency and sleeker look, but you’ll pay a premium for them compared to polycrystalline or thin-film options.

Brand reputation also plays a big role. If you’re considering premium manufacturers like Panasonic or LG, expect to see a higher cost per watt. These brands often justify their prices with better warranties, reliability, and sometimes improved performance in less-than-ideal conditions.

System size is another factor to keep in mind. While a larger solar setup will come with a higher upfront price tag, it usually brings the cost per watt down. That means you’re getting more value for your money as you scale up.

If you’re looking at commercial or off-grid systems, the pricing structure changes. These setups often include extra components such as batteries for energy storage or advanced grid-tied equipment, which can drive up the total cost but add flexibility and independence.

So, the price you pay for solar panels isn’t just about the panels themselves—it’s shaped by the technology, brand, system size, and any special setup requirements tied to your specific energy needs.

How much do solar panels cost per square foot?

Solar panels usually cost between $7 and $10 per square foot, though this can vary based on the brand, installation costs, and your location. For example, a standard 6kW solar system for a typical U.S. home might cover 350 to 400 square feet and cost around $15,000 to $25,000 before tax credits or incentives. 

Buying solar panels vs. leasing

Some companies offer the option to lease solar panels at a flat monthly rate instead of buying them. This can be an attractive offer at face value, as leasing typically comes with lower upfront costs and a higher chance of approval than a loan. However, there are also significant downsides to consider.

Leasing solar panels means you’ll never actually own them. That means you’ll continue paying for them as long as you use them, whereas you own your panels outright once you finish paying for them. This also means that they don’t add value to your property since they can’t be sold with your home. You’d have to pay fees to break the lease or hope the next buyer would want to assume payments (which isn’t likely).

We generally recommend buying solar panels over leasing them for most homeowners. In addition to the reasons listed above, the overall cost of your solar system is usually lower over the lifetime of your panels when you buy them.

Solar panel cost per watt explained

When you’re looking at solar panels, “cost per watt” tells you how much you’ll pay for each watt of solar energy your system can produce. You’ll usually see this metric quoted in dollars per watt—like $2.50/W. We found the average solar panel system costs $3.56 per watt, while it ranges from $2.79 to $4.22. So, if you know a 5 kW system costs $3.00 per watt, multiply 5,000 by $3.00 to get a total price of $15,000.

Several factors influence this price. If your roof has an unusual shape, steep angles, or lots of obstructions like chimneys, the installation becomes more complex, raising labor time and costs. Shading from trees or buildings can require additional equipment or a more intricate panel arrangement, affecting the overall price per watt.

Local labor rates and permitting fees also play a big role. Areas with high wages or strict permitting requirements tend to drive up the total installation cost. If you add extras like a home battery system (for energy storage) or an EV charger, your upfront price per watt usually increases, since these components require more hardware and labor. Comparing quotes based on cost per watt helps you see the true value of each offer, factoring in all these details.

Solar panel installation cost

After the panels themselves, the second-largest factor in the cost of a solar energy system is installation. The only way to know for sure how much it will cost to install your solar panels is to get a real estimate from a local contractor. We actually recommend getting three or more to compare for the best rates. However, understanding what goes into installation costs can help you know a good deal when you see one.

Solar panel installation cost factors

Contractors price solar installations individually, accounting for several key factors that affect cost. These include:

Location

Where your home is located has a big impact on how much you’ll pay for solar installation. Local labor rates determine what solar installers and electricians charge by the hour, so if you live in a high cost-of-living city like San Francisco or New York, expect higher installation costs. Your regional solar energy market matters, too. In places where there aren’t many certified solar contractors, those few providers can set higher prices. But if you’re in an area with lots of competition—think Texas or California—installers are more likely to offer better deals to win your business.

Inspection and permitting

Permitting and inspection can add weeks to your solar panel timeline and increase costs by $500 to $2,000, depending on your city’s requirements. For example, Los Angeles requires multiple inspections, while Austin’s streamlined process reduces delays and fees, making your experience smoother and potentially cheaper.

Roof pitch or ground mounting requirements

If your roof’s pitch is steep or unusually shaped, installers may need extra labor, safety gear, or mounting hardware, raising solar panel costs. Ground-mounted solar systems, like those at warehouses, usually require more materials and site prep, driving costs higher than standard residential rooftop installations.

Size

The more solar panels you need installed, the longer the installation will take—and the higher your labor costs will be. While the cost per panel generally decreases as you add more panels, since setup, breakdown, and cleanup are included in the overall labor bill, your total installation cost will still rise with larger solar projects. So, if you're planning a sizeable residential or commercial solar energy system, expect the overall installation price to increase accordingly.

Type of solar panels

The type of solar panel you pick—monocrystalline, polycrystalline, or thin-film—affects installation costs. Monocrystalline panels, known for high efficiency, usually cost more to install due to their weight and structure. Thin-film panels are lighter and easier to mount, often lowering labor costs. Factors like panel efficiency, size, and required mounting hardware also influence your total installation price.

Home details

Other factors about your home and property can affect the overall cost of installing solar panels. If your house has more than one story, you’ll likely pay more for the installation due to the extra labor involved. Roof materials also play a big role—if you have clay tiles or other specialty roofing that makes it tougher to attach solar panels, installation costs may increase. These site-specific challenges directly impact what you’ll pay to go solar.

Solar panel maintenance cost

While not a part of the installation cost itself, maintaining your solar panels may also require a professional. Solar panel systems have no moving parts and therefore don’t need much regular maintenance, if any. They do need to be cleaned at least twice a year, and it’s a good idea to have them inspected annually.

However, you will need the occasional repair or cleaning to keep your panels working as efficiently as possible. Many providers offer a warranty or service contract for the first few years after installing your system, but you may still have to pay upfront and wait to be reimbursed. We recommend budgeting between $350 and $800 per year for maintenance. 

DIY vs. professional solar panel installation

Some people choose to install their solar panels themselves as a way to save money. This is not something we recommend unless you have direct experience installing these types of systems. There are a few reasons why, including:

• Energy efficiency: Professional installers don’t just throw panels up on your house, they orient them in a way that maximizes their efficiency—something that takes knowledge and experience to do properly.

• Safety: Working on a roof puts you in danger of a fall that could result in serious injury or worse. Installers have the proper equipment and oversight to stay safe on the job.

• Installation quality: Installers have the tools, materials, and experience needed to ensure that your solar panels stay put and hold up over time and through severe weather. If you fail to install your panels correctly, you risk them falling off or damaging your home.

• Speed: A team of solar professionals can get the installation done quickly, with minimal disruption to your home and life. Unless you have a team of people willing to help out, installing your panels yourself is likely to take a long time.

Use a solar panel cost calculator for better planning

You’ll want a solid estimate before investing in solar panels, and that’s where a solar panel cost calculator comes in handy. These online tools take your home’s energy use, your location, and the system size you’ll need to suggest a solar setup that matches your needs. With just a few details—like your average electricity bill, your ZIP code, and your roof’s orientation—you can get a quick estimate of your ideal system size, total installation cost, potential savings, and even your upfront price after tax credits.

PVWatts solar power calculator

The PVWatts Calculator, developed by the National Renewable Energy Laboratory (NREL), is one of the most reliable options for homeowners. It’s tailored to estimate how much electricity (in kilowatt-hours) a photovoltaic system will produce, taking into account your local solar resource, system size, panel tilt, and shading. 

Once you enter your address and some basic info about your planned solar array, PV Watts provides a monthly and annual energy production estimate. This gives you a clear picture of how much solar power you can generate at your location—whether you’re in sunny San Diego or cloudy Seattle.

You’ll also see estimates for system cost, both before and after the 30% federal solar tax credit, along with projected 25-year savings based on current utility rates. For example, if you live in Austin, Texas, and you plug in a 6 kW system, PV Watts might estimate an installation cost of $18,000 before incentives, dropping to $12,600 after the tax credit. It’ll also project how much you’ll save over the next few decades by reducing or eliminating your electric bill.

Solar estimate without personal information is possible

Most solar quotes require contact details, but you can get a solar estimate without personal information from open-access calculators.

You don’t have to share your phone or email to get a solar estimate. Tools like Google's Project Sunroof or PVWatts Calculator from NREL let you enter your address or ZIP code to see potential savings, system size, and sunlight hours—without submitting any personal details. 

Just plug in your location and roof info, and you’ll see estimated costs and payback periods. These open-access calculators use satellite imagery and local solar data, so you’ll get a reliable ballpark figure before you ever talk to a sales rep.

Monthly costs and solar panel financing options

When you’re looking at solar panel financing, your monthly costs and payment options vary based on how you choose to pay for your system. Here’s a quick breakdown:

1. Solar Loan

With a good solar loan, you might pay $100 to $250 per month, depending on your loan amount, interest rate, and loan term (usually 10 to 20 years). It’s important to make sure you’ll save on electricity costs considering your loan payment.

• Good credit helps you secure a competitive interest rate—sometimes as low as 3–5% with leading lenders.

• You own the system, so you get the federal solar tax credit (30% through 2032) and local solar incentives.

• As an example, you could borrow $20,000 for a 15-year term at 4% APR—your payment’s about $148/month.

2. Solar Lease or Power Purchase Agreement (PPA)

With a lease, you’ll make a fixed monthly payment (often $60–$150) to a solar company, similar to a utility bill.

• No upfront cost, but you don’t own the panels, so you miss out on tax credits and incentives.

• The solar provider owns and maintains the system; you pay for the electricity it generates or a set lease fee.

• Leases often lock in a 20-year payment schedule.

You get the least benefit from a lease overall.

3. Outright Purchase

This is the best option, if you can afford it. You pay the full price upfront—usually $15,000 to $30,000 for a typical home system.

• No monthly payments, and you immediately benefit from reduced (or zero) electric bills.

• You own the system outright, qualifying for tax credits and boosting your home’s value.

• As an example, you could pay $18,000 upfront, get a $5,400 federal tax credit, and enjoy decades of free solar energy and recuperate the cost in under 10 years.

Overall, loans spread costs over time with ownership benefits, leases/PPAs are low-commitment but less rewarding, and outright purchases require cash but offer the biggest long-term savings.

Solar panel incentives

When you’re weighing the cost of solar panels for your home, don’t forget about the tax breaks and incentives that government agencies provide. These financial incentives can greatly reduce the upfront cost of installing a solar energy system. At the federal level, the Investment Tax Credit (ITC) is a major benefit that lets you deduct a percentage of your solar installation costs from your federal taxes. 

Many states, like California and New York, also offer their own rebates and incentives, while local governments and utility companies may provide additional programs to encourage homeowners to switch to renewable energy. These combined incentives make solar power more accessible and affordable across the United States.

Federal government solar incentives

You can lower your federal tax bill by claiming the Residential Clean Energy Credit (RCEC) if you install solar panels on your home. For systems placed in service through 2032, the RCEC lets you claim 30% of the total cost of your solar system—including equipment, labor, and permitting—on your federal income taxes. 

You’ll need to own the system (not lease it), and your installation must be at your primary or secondary U.S. residence. Fill out IRS Form 5695 to claim the credit. If your tax liability is less than your credit, you can roll over the remainder to the next year. This incentive applies to both solar photovoltaic (PV) panels and batteries installed with or after the solar system. The credit will step down to 26% in 2033 and 22% in 2034, so timing can affect your savings.

State and local government solar incentives

When you install residential solar panels, you can tap into a range of state and local incentives that help cut your upfront costs and boost your long-term savings. Many states offer tax credits, which directly reduce your state income tax—New York, for example, gives you a credit worth up to $5,000. Some areas provide property tax exemptions, so adding solar panels won’t increase your property tax bill, even though they raise your home’s value.

Net metering is another major benefit. In states like California, any extra electricity your panels generate goes back to the grid, and you get credits on your electric bill. Local rebates are common, too. Utilities in states like Massachusetts and Texas often pay cash incentives per kilowatt of solar you install or offer low-interest loans to help with the purchase.

Solar Renewable Energy Certificates (SRECs) are available in certain states, letting you earn and sell credits for the clean energy your system produces. Some cities and counties also waive permitting fees or speed up approval processes for solar projects.

These incentives can change depending on where you live, so you’ll want to check with your state energy office or local utility to see what’s available. Combining state, local, and federal incentives can make solar more affordable and help you recover your investment faster.

Bottom line on solar panel cost

In the United States, a typical 5 kW solar panel system costs about $17,823, which includes installation charges but doesn’t factor in any financial incentives. The installation process itself makes up a big part of your total investment. However, federal programs like the Renewable Clean Energy Credit, along with state and local rebates, can reduce your out-of-pocket expenses.

If you take the time to research current solar panel pricing and incentives, you’ll get a much clearer estimate of what you’ll actually pay for a residential solar energy system. Be sure to gather multiple quotes from certified solar installers. Comparing these offers helps you lock in the best deal available in your area.

FAQ about solar panel cost

Below are a few frequently asked questions about solar panel cost:

What is the cost for one solar panel?

A single solar panel typically costs between $200 and $350, depending on the brand, wattage, and efficiency. Installation, inverter, and other equipment are priced separately. Brands like LG, SunPower, and Canadian Solar are popular choices.

How much does solar cost for a 2,000-square-foot house?

You could pay anywhere from $10,000 to $20,000 for a solar system on a 2,000-square-foot house, before tax credits. Factors like location, electricity use, roof type, and installer affect your final cost.

Are solar panels really worth it?

Solar panels are often worth the money you spend on them. They tend to pay for themselves within 10 years and can even generate revenue through net metering.

How long do solar panels last?

Most solar panels come with a 25-year performance warranty, guaranteeing at least 80% efficiency. However, their total lifespan often reaches 30 to 40 years before you might see significant output loss.