Solar Lease vs. Buy in 2026: Who Still Gets a Tax Credit?

As of 2026, a lease or PPA is the only route where the 30% federal solar credit survives — the installer who owns the system claims it under IRS §48E — while buying gives you the best lifetime savings but $0 federal credit. With a lease the company owns the panels, takes the commercial §48E credit, and may pass part of it back as a lower rate; you pay $0 down but keep less of the long-term savings and inherit an escalator that raises your payment every year.

By SolarCostData Data Desk · Reviewed September 2026 · Corrections log

On this page: CalculatorTableHow we calculatedSources

The calculator above is the same model as the solar lease vs buy calculator : cash, loan (with the dealer fee) and lease/PPA (with the escalator) over 25 years, the federal credit at $0 for the buyer and §48E kept by the lessor. The rest of this guide explains what those columns mean and what to pull apart in a contract.

Before 2026, the lease-versus-buy debate was mostly about preference — both paths captured the 30% credit one way or another, and the gap was narrow. The end of the residential credit blew that symmetry apart. Now the two options answer genuinely different questions, and picking the wrong one can cost you thousands.

Why lease offers are everywhere in 2026: SEIA / Wood Mackenzie, US Solar Market Insight Q2 2026 (June 2026) forecasts a 21% residential contraction in 2026 with growth resuming in 2027 driven by third-party-owned systems, whose §48E credit eligibility runs through 2030 via safe-harbor — so TPO is where the industry’s remaining incentive lives, and sales channels have pivoted hard toward it. The same report records the bankruptcy of the second-largest national installer: before signing a 20-25 year lease or PPA, check your provider’s financial health and what the contract says happens to service and warranties if the company changes hands.

Why the two paths split

The credit that ended, §25D , was the residential one — it belonged to homeowners who buy. The credit that survived, §48E , is commercial — it belongs to the business that owns energy equipment. A leasing company owns the panels on your roof, so it still claims 30%. You, buying your own system, no longer can. That single distinction drives everything below.

Comparing a lump sum today against twenty-five years of payments only works if you discount those payments. Here is the same three routes shown both ways — the raw totals, and what they are worth in today’s money:

The market already voted — and it flipped

It helps to know which way the industry is moving, because it explains the sales pressure you’ll feel. As recently as 2024, when homeowners could pocket the 30% themselves, a loan usually beat a lease and most deals were purchases. The credit’s expiration flipped that overnight. In Aurora Solar’s 2026 Solar Snapshot survey of solar sales professionals, the share reporting that more than half their projects were third-party-owned (lease/PPA) jumped from 44% in 2025 to an expected 65% in 2026 — and roughly two out of three residential deals are now expected to close as a lease or PPA rather than a purchase.

That surge isn’t because leasing suddenly got better for you; it’s because it’s the only structure left with a federal credit attached, and it’s the easiest thing for a salesperson to close. The broader market actually shrank — the SEIA / Wood Mackenzie report cited above forecasts residential installations contracting on the order of 18–21% in 2026 as the credit’s loss cooled demand. Read the room accordingly: when a rep steers you hard toward a lease, part of that is the §48E logic, and part of it is simply that the lease is what still sells. Your job is to separate the two.

Buying in 2026

You pay the full cost and get no federal credit, so the payback is longer than it was two years ago. What you get in return is everything: you own the system, keep 100% of the electricity savings, add to your home’s value , and enjoy nearly free power once it’s paid off. Over 25 years, buying still usually wins on total dollars — provided your electricity rate and net metering are favorable, which is exactly what the state payback ranking and the savings calculator are for. The honest caveat: in a low-rate state with weak net metering, a cash purchase can take 18+ years to break even, and that’s precisely where a lease starts to make sense. If cash is the only obstacle, note that a fee-free loan on the true cash price preserves the ownership advantage without the escalator you’ll meet below.

Can I still get 30% off with a solar lease or PPA in 2026?

You put $0 down, and the company that owns the panels claims the §48E credit. In a competitive market they may pass some of that into a lower rate — but understand the framing: you never receive the credit or a check; the owner decides how much of it reaches your price. In a one-quote, high-pressure sale, very little does. This is the route our §48E explainer covers in full — including the detail most summaries miss, that the December 2027 in-service deadline binds only projects that begin construction after July 4, 2026.

The short version, in figures:

The escalator, year by year

Then there’s the escalator, the clause that quietly decides whether a lease is a good deal. Most 2026 contracts write it as 0.99%, 1.99%, or 2.99% a year, and 2.9% is the most common. It compounds, which is what people underestimate. Here’s what a lease that starts at $150 a month does over its term at a 2.9% escalator:

By the final years you’re paying roughly double the opening rate — even as the panels produce slightly less each season from normal degradation. A lease that undercuts your utility bill in year one can drift above it a decade later, which is the whole reason the useful comparison is never the first-year payment; it’s the full-term total. Run the arithmetic once and it’s sobering: a $150 lease escalating at 2.9% has you pay on the order of $60,000–$65,000 across 25 years and still not own the panels, versus a one-time cost in the mid-$20,000s to own an equivalent system outright. The lease buys you $0 down and included maintenance; it does not buy you the asset. A 0% escalator is worth more than a low headline rate, and a prepaid lease sidesteps the escalator entirely.

Why “leasing solar is a bad idea” keeps getting searched

The phrase completes on its own, and the honest answer is that it’s sometimes right. A monthly lease is a bad idea when the escalator compounds past your utility’s rate growth, when the owner passes little of the §48E credit into your price, or when you’re likely to sell before term and inherit the transfer friction below. It’s a defensible idea in exactly one situation: your state’s purchase math is genuinely poor and $0-down is the only way solar happens at all. The same third-party-ownership logic now applies to batteries too — if a rep bundles one in, run the battery TPO vs. buy calculator on that line item separately.

The prepaid lease: the third path most reps won’t lead with

There’s a structure that splits the difference, and it’s the most interesting development of 2026 for a homeowner who wants the credit’s benefit but hates the escalator. In a prepaid lease (or prepaid PPA), a third party still owns the system — so it still claims the §48E credit — but instead of paying monthly, you pay most of the system’s value up front, commonly around 70%. Because §48E flows to the owner, that upfront price effectively hands you the credit’s value as a 20–30% discount off what buying outright would cost, even though the residential credit is gone.

Two features make it more than a gimmick. First, there’s no escalator — you’ve prepaid, so there’s no annual increase to compound against you. Second, most prepaid leases include a buyout that lets you take ownership after about six years, once the credit’s recapture period has passed, often for a nominal amount. Play it out and you get the best of both worlds: the third party captures the 30% you no longer can, passes the bulk of it to you as a lower price, and you still end up owning the panels. The trade-offs are real — you tie up a large sum up front (though you can finance it), and the ownership transfer and its terms must be spelled out in the contract, not just promised. But for a buyer who would otherwise pay full freight with $0 credit, a well-structured prepaid lease can be the single most cost-effective route in 2026. Confirm the buyout price and timing in writing before you sign.

What to pull apart in a lease contract

The escalator is the headline number, but a lease lives or dies on clauses buried deeper. Before signing any monthly lease or PPA, get clear answers on:

• The escalator rate and the full-term total. Make them show you the payment in years 1, 10, 20, and 25, and the sum of all payments. A 0% escalator changes the deal entirely.
• The buyout schedule. What does it cost to purchase the system in year 6, year 10, year 15? A fair contract prices this reasonably; a punitive buyout is a trap that locks you in.
• The production guarantee. Does the provider guarantee a minimum annual kWh and compensate you if the system underproduces? Without it, you pay for power you’re not getting.
• Who maintains and insures it, and what happens to your roof. Panels the company owns should be the company’s problem to repair. Get the roof-penetration warranty and re-roof/removal terms in writing.
• The transfer terms if you sell. A clean lease lets a qualified buyer assume it at little or no cost; a messy one charges fees or requires a buyout that can stall your home sale.

The solar lease buyout, and what happens when the lease ends

A monthly lease runs 20 to 25 years, and it’s worth knowing the ending before you sign the beginning, because your options are fixed in that original contract. At term you’ll typically have four:

• Have it removed — the provider takes the system down, usually at their cost.
• Renew or extend — often at a reduced rate that reflects the aged panels, buying a few more years of savings.
• Buy it out at fair market value — by then the equipment is old, so buyouts commonly land in the $1,000–$3,000 range, after which maintenance and eventual removal become your responsibility.
• Transfer it to your home’s buyer if you sell before term.

The catch is that a 20-to-25-year-old system is near the end of its productive life anyway, so “you can buy it for $1,000 later” is worth less than it sounds — you’re buying a tired asset. Read the end-of-term and buyout provisions before signing, not because they’re the best part of the deal, but because a punitive removal fee or an unfavorable renewal rate buried there can quietly change the math.

Selling a home with solar on it

Ownership shows up hardest at resale. An owned system transfers with the house and can add to its value the way any paid-off home improvement does. A leased system belongs to someone else, so your buyer has to qualify to assume the lease or you have to buy it out before closing — an extra contingency that can cool a deal or shave your price. It’s rarely a dealbreaker, but it’s a real friction that owned systems (and prepaid leases you’ve converted to ownership) simply don’t carry. If you expect to move within a decade, weight this heavily.

So is it better to lease or buy solar panels?

If you can pay cash and you’ll stay in the home, buying still wins on lifetime dollars, even with $0 credit — that’s the default answer for most people who can afford it. A monthly lease or PPA earns its place when you can’t or won’t put money down, or when your state’s economics make a cash purchase’s payback genuinely poor. And a prepaid lease now sits between them: it captures the §48E discount you can’t get by buying, without the escalator that makes monthly leases risky, and ends in ownership. Whichever you choose, treat the escalator (or buyout terms) as the number that matters most, get the full-term total in writing, and make the installer show you how much §48E they’re actually passing through. Everything else in the pitch is secondary to those figures. To see buying, a loan, and a lease totaled side by side over 25 years, run the cash vs. loan vs. lease calculator .

Sources

• Federal credit status — IRS, Residential Clean Energy Credit ; Public Law 119-21 (2025).
• Installed cost — regional medians in the spirit of Lawrence Berkeley National Laboratory’s Tracking the Sun series; treat as orientation and compare against your own quotes.
• State and utility programs — DSIRE program index , Database of State Incentives for Renewables & Efficiency, NC Clean Energy Technology Center.
• Payback model — shared with our solar savings calculator : 2.5%/yr utility inflation, 0.5%/yr degradation, annual maintenance, one inverter replacement around year 14, and the 2026 federal credit at $0.

Figures on this page are estimates built from the sources above, not quotes. State and utility programs change and are often budget-limited — verify current terms on DSIRE and with your own utility before relying on them. Nothing here is tax, legal or financial advice.

Frequently asked questions

Sources: U.S. Energy Information Administration (EIA) electricity rates · DSIRE incentive records · public IRS/OBBBA guidance. Figures are modeled estimates, not quotes or tax advice. See our methodology.

Where to go next

• Cash vs. loan vs. lease — All three paths totaled across 25 years, with the escalator and the dealer fee built in rather than hidden.
• Loan vs. cash — How to keep ownership when cash is the only obstacle, without paying for a rate buy-down you never asked for.
• The credit rules in full — What the lessor is actually claiming under §48E, including the conditional 2027 deadline most summaries state wrongly.
• Solar and home value — The resale side of ownership, and the friction a third-party-owned system adds to a sale.
• Payback by state — A lease earns its place where the purchase math is genuinely poor. Check whether your state is one of those.