Are Solar Panels Worth It in 2026? Payback Calculator
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Whether solar pays off changed in 2026. In the UK, solar still benefits from 0% VAT until March 2027 — an instant 20% saving. In the US, the 30% federal residential tax credit expired at the end of 2025, so panels now cost more out of pocket. This calculator uses the current rules for your region to show your true payback period, so you are not relying on outdated advice.
Note: Incentive rules change and depend on eligibility. UK 0% VAT applies to qualifying installs until March 2027 (then 5%). The US federal solar credit (Section 25D) expired on 31 December 2025. Always confirm current rules and your own eligibility before deciding.
How this calculator works
The calculator first applies your region's incentive to the quoted install cost. For the UK, 0% VAT relief means you avoid the 20% tax you would otherwise pay, so the effective cost drops by roughly a fifth. For the US in 2026, there is no federal credit, so the full quote stands. It then divides the post-incentive cost by your annual electricity saving, nudged for rising energy prices, to find how many years until the system pays for itself.
Worked example
An £8,000 UK install with 0% VAT effectively costs about £6,400 after the relief. Saving £1,200 a year, with energy prices rising around 4% a year, it pays back in roughly 5.2 years. The same $8,000 system in the US in 2026, with no federal credit, costs the full $8,000 and pays back in about 6.5 years — the gap is entirely down to the incentive.
Frequently asked questions
Is the US solar tax credit really gone in 2026?
The federal Residential Clean Energy Credit (Section 25D), worth 30%, expired on 31 December 2025 for homeowner-owned systems. Some states still offer their own incentives, so check your state — but the headline federal credit no longer applies.
How does the UK 0% VAT relief work?
Qualifying solar installations are charged 0% VAT on materials and labour until March 2027, after which the rate is scheduled to rise to 5%. This is an automatic saving applied by your installer, not something you claim back.
What annual saving should I enter?
Use the value of the grid electricity you would no longer buy, plus any export payments (the Smart Export Guarantee in the UK). A recent energy bill is the best starting point.
Does a faster payback mean solar is worth it?
A shorter payback is better, but also consider how long you will stay in the home, panel lifespan (typically 25 years), and rising energy prices. If payback is well within the panel lifetime, the years after are effectively free electricity.