Solar Panel System GuideEnergySage reports that residential solar averages $2.60 per watt before incentives, which works out to about $31,135 for a typical 12 kW system. The Department of Energy describes a federal tax credit that reduces that cost by a percentage of the total. This guide breaks the numbers down and tells you which figures are market averages that vary by state.
Cost Per Watt
Solar installers price systems by the watt, which lets you compare quotes across different system sizes. EnergySage reports an average of $2.60 per watt before incentives as of its 2026 data. Because this is a national average, your local number can sit above or below it depending on labor, permitting, and equipment.
Multiplying cost per watt by system size gives you the sticker price before any credit. EnergySage uses a 12 kW system as its typical residential example, which lands at about $31,135 before incentives.
Total Installed System Cost and Its Range
The installed price covers panels, inverters, racking, wiring, permits, and labor. EnergySage places a typical 12 kW system between $27,526 on the low end and $33,869 on the high end before incentives.
State variation is large because of differing labor rates, incentives, and competition. EnergySage's state figures range from about $22,049 in California to $55,285 in Alabama, which shows why a national average only takes you so far.
The Federal Tax Credit
The Department of Energy explains that a tax credit is a dollar for dollar reduction in the income tax you owe, not a deduction.The Department of Energy's Solar Investment Tax Credit page describes a 30 percent credit for systems installed between 2022 and 2032 under the 2022 law. Federal residential solar tax credit rules changed for systems placed in service after 2025, so that schedule may no longer apply to a new system. Confirm the current credit and your eligibility at IRS Form 5695 and energy.gov before you count on any amount.
The DOE page also notes that the 30% credit reduces a typical rooftop system's cost by roughly $7,500. Because tax legislation changes, confirm the percentage and any deadlines that apply to your install year directly at the DOE source or with IRS Form 5695 guidance before you rely on a number.
What the Numbers Mean for Payback
Once the credit is applied, the remaining cost is what you recover through electricity savings. EnergySage reports that homeowners recoup installation costs in an average of about 10 years.
Over a longer horizon the savings compound. EnergySage estimates homeowners save between $41,000 and $155,000 over 25 years, a wide band that reflects differences in electric rates, sun exposure, and system size.