Solar Cash vs Loan vs Lease/PPA Calculator

Reflects the Jan 2026 tax credit change

Solar Cash vs Loan vs Lease/PPA

The 30% credit is gone for owned systems in 2026 — see what that actually does to your numbers.

Until the end of 2025, anyone who bought solar — cash or loan — could claim a 30% federal tax credit. That credit (Section 25D) expired for good on December 31, 2025. If you buy a system in 2026 or later with cash or a loan, the federal credit is $0. The one path that still carries the credit is third-party ownership — a lease or Power Purchase Agreement (PPA) — where the leasing company claims a 30% credit (Section 48E, through 2027) and is expected to pass some of that value through in your monthly pricing. This calculator compares the real 25-year cost of all four paths under current law.

$
$
Please enter the system cost to calculate.
%
$
› Adjust offset % and escalator assumptions (optional)
%
%/yr
25-year net cost (lower is better)
—
Total cost minus electricity bill savings, over 25 years.
Path2026 tax credit25-yr net cost
!

Missing system cost

Please enter the system cost before calculating — it's the required field.

What actually changed on January 1, 2026

For nearly two decades, buying solar — outright or with a loan — came with a 30% federal tax credit (Section 25D), worth $8,400 on a typical $28,000 system. The One Big Beautiful Bill Act repealed that credit nearly a decade ahead of schedule, effective for any system installed after December 31, 2025. There's no phase-down and no partial credit: cash and loan purchases in 2026 get exactly $0 federal credit.

The four financing paths, 2026 rules
Cash: pay full cost upfront → $0 federal credit → you keep 100% of bill savings
Loan: finance the full cost → $0 federal credit → pay interest, keep 100% of savings
Lease: fixed monthly payment → no ownership, no credit to you → leasing co. claims 30% (Sec. 48E) and prices accordingly
PPA: pay per kWh produced → no ownership, no credit to you → same 48E pass-through logic as lease
Worked example — $28,000 system, $180/month bill, 90% offset: cash buyer pays $28,000 upfront and saves ~$48,600 in avoided bills over 25 years (after escalation) — net cost ≈ −$20,600 (a net gain). A loan at 7.5%/15yr adds roughly $11,200 in interest, shrinking that net gain.

Why lease/PPA still carries a tax benefit — indirectly

Under a lease or PPA, you don't own the system, so you can't claim any tax credit yourself. But the company that owns it can — Section 48E lets commercial owners of residential solar claim a 30% Investment Tax Credit, as long as construction begins by July 4, 2026 or the system is placed in service by the end of 2027. That credit is baked into how the leasing company prices your monthly payment. It's not a dollar-for-dollar pass-through, and pricing varies by provider, but it's the reason lease and PPA pricing has stayed more competitive than a straight loan in 2026.

Cash and loan: same credit situation, different cash flow

Now that the credit is gone for both, the cash-vs-loan decision is purely about cash flow and interest cost. Cash avoids interest entirely but ties up a lump sum. A loan spreads the cost but adds real interest — often the single biggest cost difference between the two paths over 25 years.

What lease and PPA give up

  • No equity: you don't own the system and generally don't get the home-value bump that comes with owned solar.
  • Escalators: most leases and PPAs include a built-in annual price increase, typically 1–3%.
  • Transfer complexity: selling your home with an active lease or PPA can complicate the sale — buyers must agree to take over the contract.
  • No control over maintenance timing, though the company typically handles repairs at no extra cost.

For the underlying electricity savings math without the financing comparison, see the solar savings calculator. To model the loan itself, try the personal loan calculator, and check your overall budget before committing to a 20+ year contract.

Related calculators

Ad slot — in-content / native

Frequently asked questions

Is the 30% solar tax credit really gone in 2026?+
For cash and loan purchases, yes — completely. Section 25D, the residential credit, was repealed for any system installed after December 31, 2025, with no phase-down. If you buy a system outright or finance it with a loan in 2026, you get $0 federal credit.
How do leases and PPAs still get a tax credit if homeowners don't?+
The leasing company owns the system, not you, so they can claim a separate commercial credit (Section 48E) worth 30%, available through 2027. They're expected to factor that savings into your monthly lease or PPA price, though there's no guaranteed dollar-for-dollar pass-through.
Should I rush to install before a deadline?+
The cash/loan credit deadline (December 31, 2025) has already passed. For lease and PPA, the relevant deadline for the leasing company is construction starting by July 4, 2026, or the system being placed in service by the end of 2027 — but that's their compliance window, not yours directly.
Is cash or loan better now that there's no credit?+
It comes down to opportunity cost and interest rates. Cash avoids all financing costs but uses a lump sum upfront. A loan spreads the cost out but adds interest — often a meaningful chunk over a 15–20 year term. Compare both using this calculator's results.
Do state and utility incentives still exist?+
Many do, and they vary widely by state — net metering, state tax credits, and utility rebates aren't affected by the federal 25D repeal. Check your specific state and utility before assuming you've lost every incentive.
Can I switch from a lease to ownership later?+
Many leases and PPAs include a buyout option at certain years, but the price is set by the contract, not the market, and you generally won't get a fresh tax credit on the buyout since the system isn't "newly installed" at that point.
Does a leased system add value to my home?+
Generally less than an owned system. Buyers and appraisers tend to view owned solar more favorably because it adds equity, while a leased system transfers an ongoing monthly obligation that a buyer must agree to assume.
This calculator provides general estimates only and is not financial or tax advice. It models the federal Section 25D repeal for cash/loan purchases and the Section 48E credit available to third-party owners under current law, but does not model specific state incentives, utility rate structures, net metering policy, or individual lease/PPA contract terms, which vary widely by provider and location. Confirm exact figures with installers and a tax professional before signing any contract.

Scroll to Top