Find out how much you could save by going solar. Enter your monthly electricity bill, select your state, and get an instant 25-year savings estimate with system sizing, cost after federal tax credits, and payback period.
Pro tip: The 30% federal solar Investment Tax Credit (ITC) applies to the full cost of your system, including installation. A $20,000 system would receive a $6,000 tax credit.
How Solar Panels Save You Money
Solar panels generate electricity from sunlight, directly reducing the amount of power you need to purchase from your utility company. Once installed, a residential solar system produces free electricity for 25 years or more. The savings start immediately: your electric bill drops because your panels are generating a significant portion (or all) of the energy your home consumes during daylight hours.
A typical U.S. homeowner paying $150 per month for electricity could save between $30,000 and $90,000 over 25 years, depending on location, system size, and local electricity rates. This calculator uses your actual bill, state-specific solar production data, and current incentive values to produce a personalized estimate that reflects real-world conditions.
Understanding the Federal Solar Tax Credit (ITC)
The federal Investment Tax Credit (ITC) allows homeowners to deduct 30% of the total cost of a solar energy system from their federal income taxes. This includes panels, inverters, mounting hardware, wiring, and professional installation. The 30% credit is available through 2032, after which it steps down to 26% in 2033 and 22% in 2034 before expiring for residential installations.
Many states offer additional incentives on top of the federal credit, including state tax credits, rebates, performance-based incentives (PBIs), and sales-tax exemptions on solar equipment. These programs vary widely by state and can significantly reduce your net cost. This calculator factors in a state-level incentive estimate when available.
Net Metering and How It Works
Net metering is a billing arrangement that credits solar homeowners for the excess electricity they send back to the grid. When your panels produce more power than your home uses (typically midday), the surplus flows to the grid and your meter effectively spins backward, earning you credits that offset electricity you draw at night or on cloudy days. Most states support some form of net metering, though policies and credit rates vary.
This calculator assumes full net metering at the retail rate, which is the most common arrangement. In states that have moved to net billing or reduced export rates, actual savings may be slightly lower. Adding battery storage can help you capture more of your own production when net metering credits are limited.
Panel Degradation and Long-Term Performance
Solar panels lose a small amount of output capacity each year due to natural degradation. Industry standard is approximately 0.5% per year, meaning after 25 years a panel retains about 87.5% of its original rated output. Top-tier manufacturers guarantee at least 80–85% production at year 25. This calculator accounts for annual degradation when projecting lifetime savings and energy production.
Solar Leasing vs. Buying: Which Is Better?
When you buy a solar system outright (cash or loan), you own the equipment, claim the federal tax credit, and keep all the savings. A cash purchase delivers the highest total return because there are no interest charges. A solar loan lets you finance the purchase with little or no money down, though interest costs reduce your net savings.
A solar lease or power purchase agreement (PPA) lets you go solar with zero upfront cost. A third-party company owns the panels on your roof and sells you the electricity at a fixed rate, typically 10–30% below your utility rate. You save money each month but don’t receive the tax credit or own the equipment. Leases make sense if you cannot use the tax credit (for example, insufficient tax liability) or prefer to avoid maintenance responsibility.
How Roof Orientation and Shade Affect Production
A south-facing roof in the Northern Hemisphere receives the most sunlight over the course of a day and produces the highest annual energy output. Southwest-facing roofs are nearly as productive, capturing strong afternoon sun. West- and east-facing installations typically produce 10–20% less than due south. Even north-facing roofs can work in some regions, though output penalties are significant.
Shade from trees, neighboring buildings, or roof features (dormers, vents) reduces panel output. Even partial shading on one panel can disproportionately affect the entire string in older systems, though modern microinverters and power optimizers mitigate this effect. This calculator applies a shading factor so you can see the estimated impact on your savings.
Looking for related tools? Try our Renovation ROI Calculator to compare solar against other home improvement returns, or explore all Home & Real Estate tools.