Free tool · Updated October 2026

Solar Lease vs Buy Calculator (2026)

Since 2026, buying solar no longer earns the 30% federal homeowner credit, while a lease or PPA company can still claim a business credit. Here is what that does and does not change, and a calculator to compare buying, leasing and a PPA using your own quotes.

Updated October 2026Federal rules checked against IRS and statute textNo example number below is a market statistic

Short answer

There is no rule that one option always wins; it depends on the exact numbers in your quotes. The 30% federal credit for buying (Section 25D) ended for solar and batteries installed after December 31, 2025, so a purchase is now priced without it.

A lease or PPA is different: the company that owns the system can still claim the business credit (Section 48E, up to 30%), but that credit is the owner's, not yours, and only your contract shows whether any of it lowers your payment. Buying tends to come out ahead when the savings repay the price during the years you stay in the home; a lease or PPA comes out ahead when its payment stays below the electricity it replaces for the whole term, including any yearly increase.

Enter your quotes below, then see the comparison table and the 2026 rules.

Start with your own quotes. Fields marked EXAMPLE are placeholders, not market data. Autofilled state values come from the sources listed at the bottom of the page.

1. Your home and electricity

Used to value what the solar system saves you.

EXAMPLE: replace with your average bill
EXAMPLE: use the size in your quote
Decides whether the owner's Section 48E credit is still available on a new lease/PPA system (see the rules below).

2. If you buy

Federal credit for buying: $0 (Section 25D ended for installations after Dec 31, 2025).

0 = paying cash. A loan adds interest.
EXAMPLE: only used when the rate is above 0
0 = not counted. Add an inverter replacement or similar if you expect one (check your warranty).

3. If you lease or sign a PPA

The owner may claim a federal credit. It is not added to your side here: only the quoted price matters.

EXAMPLE: use your quote
EXAMPLE: use your contract's escalator (0 if fixed)
EXAMPLE: use your quote
EXAMPLE: use your contract's escalator (0 if fixed)
0 if the quote says nothing is due at signing.

4. Time and prices

Every option is compared over the same number of years.

EXAMPLE: use your contract term, or how long you will stay
0 = today's prices all the way (our default on every calculator). A higher number favors whichever option has the lower escalator.

Fixed in the model: 0.5% less output each year (from SolarNiverse model assumptions), no resale value counted for any option, savings counted only for the electricity you actually use (bill ÷ price).

Example inputs

Calculating...

BuyLeasePPA

Running total (savings minus everything you pay)

AfterBuyLeasePPA

    Planning estimate only, not a quote, tax advice or a guarantee. Your installer's production model, your utility's export rules and your contract decide the real result. How this is calculated.

    Lease vs buy vs PPA at a glance

    Where the contract decides, the table says so instead of guessing a typical figure.

    Buy (cash or loan)LeasePPA
    Upfront cost The full price in cash, or loan payments (interest adds to the cost). Set by the contract. Check for any payment or fee due at signing. Set by the contract. Check for any payment or fee due at signing.
    What you pay Nothing for the electricity the system makes once it is paid for. A fixed monthly payment, which may rise each year (the escalator), whatever the system produces. A price per kWh the system produces, which may rise each year, so the bill follows output.
    Federal credit None. The 30% homeowner credit (Section 25D) ended for installations completed after Dec 31, 2025. The owner (the company) may claim the Section 48E credit, up to 30%. You do not. Whether it lowers your payment is up to the contract. Same as a lease: the owner may claim it, not you.
    State credits Some states credit systems you own: AZ (25%, up to $1,000), HI (35%, up to $5,000, with a new yearly state cap), MA (15%, up to $1,000), NY (25%, up to $5,000). Usually not available for lease payments. NY uses a different formula for leases and PPAs of 10+ years. Usually not available for PPA payments. Check your state's rules.
    Maintenance and repairs Yours, within the equipment and workmanship warranties. Set by the contract. Confirm in writing who pays for inverter repair or replacement and roof-related work. Set by the contract. Confirm in writing who pays for repairs and monitoring.
    Selling the home The system stays with the house; a loan, if any, must be paid off or transferred. Depends on the contract: the buyer may take it over, you may buy it out, or it may be removed. Ask for the transfer steps and buyout schedule. Same questions as a lease: transfer to the buyer, buyout, or removal.
    Ownership at the end You own it for its remaining life. Defined by the contract (renew, buy out or remove). Get the options and any price formula in writing. Defined by the contract (renew, buy out or remove). Get the options and any price formula in writing.
    Typical risks Large upfront cost or loan interest; no federal credit; you carry the risk of low output and repairs. A payment that rises on a schedule while the electricity you replace may not; long contract; transfer or buyout hurdles; owner's credit eligibility affects pricing. A per-kWh price that rises on a schedule; payment follows output (including output you cannot use); long contract; transfer or buyout hurdles.

    The 2026 rules in plain English

    If you buy (cash or loan): no federal credit

    The Section 25D credit is not allowed for expenditures made after December 31, 2025. For solar and batteries, an expenditure counts as made when the original installation is completed, so paying earlier does not help if the system is finished later. Our calculators therefore use a federal credit of $0 for anything you own.

    If you lease or sign a PPA: the owner may still claim a credit

    The company that owns the system can claim the business credit under Section 48E (up to 30%). The 2025 law's restriction on leased property only covers solar water heating and small wind (Section 25D(d)(1) and (4)), not solar electric systems. Conditions the owner has to meet include:

    • New solar must be in service by December 31, 2027, unless construction began by July 4, 2026.
    • Foreign-entity sourcing rules (prohibited foreign entity, or FEOC, rules) apply to the owner.

    This is the owner's credit, not the homeowner's. Whether any of it shows up as a lower payment is a pricing decision made in the contract, so compare quoted numbers, not the credit. A new system finished after 2027 only qualifies for the owner's credit if construction began by July 4, 2026, which is why the calculator asks when installation completes.

    Not a tax opinion. The credit rules for the owner are summarized from the IRS and statute text listed below. If your decision depends on them, ask the company in writing what it assumes, and check with a tax professional.

    What the 2026 market data says

    EnergySage's Fall 2026 marketplace report (H1 2026 data) found that the average cost of a PPA was below utility electricity rates in every qualifying state. That is a comparison of sample quotes, not a promise about your offer, and you still need to look at the yearly increase over the whole term.

    UNVERIFIED as 2026 market statistics: typical contract term, typical yearly escalator, typical buyout price and typical savings for leases and PPAs. We do not state them as facts. The contract fields in the calculator start with example values only.

    State credits for owned systems

    Arizona, Hawaii, Massachusetts and New York offer credits for systems you own (amounts in the table above). They generally do not apply to lease or PPA payments, and New York has a separate formula for leases and PPAs of 10 years or more. Other states may have programs we have not verified, so the calculator lets you enter your own state credit amount.

    How the calculator works

    For each year of the comparison period, the calculator values the electricity your system produces at your electricity price (growing by the utility price increase you choose), up to the amount you actually use, which is your monthly bill divided by your price. Output starts at system size times the per-kW output and falls 0.5% a year. Then it subtracts what each option costs:

    • Buy: the purchase price (or loan payments), plus any repairs you enter. A state credit you enter is counted in year 1. The federal credit is $0.
    • Lease: the monthly payment times 12, increased each year by the lease escalator, plus any upfront fee.
    • PPA: the PPA price times every kWh produced (including kWh you cannot use), increased each year by the PPA escalator, plus any upfront fee.

    It does not count resale value, what happens after the term, taxes on any payment, export credits that differ from your retail price, or batteries. If your utility pays less than retail for exports, enter a lower electricity price to be conservative. Autofilled values per state: electricity price is the EIA residential average (Aug 2025 to Jul 2026), cost per watt is the EnergySage marketplace average (Sep 2026), and output is from NREL PVWatts for one city per state; all three are averages, so replace them with your own where you can.

    Before you sign anything, ask for: the full payment schedule and escalator, the contract term, any upfront fees or liens against your property, who pays for repairs and monitoring, whether output is guaranteed, the transfer and buyout terms if you sell, what happens at the end of the term, and what the company assumes about the federal credit and its in-service date.

    Frequently asked questions

    Is it better to lease or buy solar panels in 2026?

    It depends on your actual quotes. Buying no longer earns the 30% federal homeowner credit (Section 25D), which ended for solar installed after December 31, 2025. A lease or PPA is different: the company that owns the system may still claim the business credit (Section 48E), but that credit belongs to the owner, and only your contract shows whether it lowers your payment. Enter your own numbers in the calculator to compare.

    Did the 30% federal solar tax credit end?

    For homeowners who buy their system (cash or loan), yes. The Section 25D credit is not allowed for expenditures made after December 31, 2025, and for solar that means installation completed after that date. Paying earlier does not help if the installation is completed later.

    Can a solar lease or PPA still get a federal tax credit?

    The company that owns a leased or PPA system can still claim the Section 48E credit, up to 30%. The 2025 law's restriction on leased property covers only solar water heating and small wind (Section 25D(d)(1) and (4)), not solar electric systems. New solar generally must be in service by December 31, 2027 unless construction began by July 4, 2026, and the owner must meet foreign-entity sourcing rules. You do not claim this credit yourself.

    Will the lease company's tax credit lower my monthly payment?

    Not automatically. The credit belongs to the system owner. Whether any of it is reflected in your payment or PPA rate is a pricing decision written into your contract, so compare the actual quoted numbers.

    Is a solar PPA cheaper than grid electricity?

    EnergySage's Fall 2026 marketplace report (H1 2026 data) found that average PPA rates were below the compared utility rates in every qualifying state. That is a comparison of sample quotes, not a promise about your offer, so check your own quote against your own utility rate, including any annual escalator.

    Do state solar tax credits apply to leases and PPAs?

    Usually not. State credits for owned systems, such as those in Arizona, Hawaii, Massachusetts and New York, are generally for systems you own and do not apply to lease payments. New York uses a different formula for leases and PPAs of 10 years or more. Check your state's rules for your contract type.

    What happens to a solar lease or PPA when I sell my house?

    It depends on the contract. Common outcomes are that the buyer takes over the contract, you buy the system out, or you pay to have it removed, but the terms vary. Before signing, ask for the transfer process and any buyout schedule in writing.

    What are typical lease terms and escalators?

    We have not verified current 2026 market statistics for contract term, annual escalator or buyout price, so we do not quote them. The contract fields in the calculator start with example values; replace them with the numbers from your quotes.