Calculate Tax Deduction on Mortgage Interest

Estimate your Return on Investment (ROI) and see how many years it takes for your solar system to pay for itself.

The gross price before any incentives.

Currently 30% (ITC) in the USA.

One-time local incentives or utility rebates.

Your average electricity expense.

How much of your bill will solar cover?

Typical utility prices rise ~3% annually.

Calculation Results

Net System Cost

$0

Year 1 Savings

$0

Payback Period

0 Years

25-Year ROI

0%

Estimated Total Savings (25 Years): $0

Understanding Your Solar Payback Period

The solar panel payback period is the amount of time it takes for the electricity savings generated by your solar energy system to equal the initial cost of installation. For most homeowners, this period ranges between 6 and 10 years, though it varies based on location and local incentives.

How to Calculate Solar Payback

Calculating your ROI involves more than just dividing the system price by your bill. You must account for federal tax credits, local rebates, and the fact that utility rates increase over time. Our calculator uses the following formula:

• Net Cost: Total System Cost – (Federal Tax Credit + Local Rebates)
• Annual Savings: (Monthly Bill × 12) × Percentage of Energy Offset
• Payback: The year where Cumulative Savings ≥ Net Cost

Key Factors That Influence Your ROI

1. The Federal Solar Tax Credit (ITC): As of 2024, the federal government allows you to deduct 30% of your total solar installation cost from your federal taxes.
2. Sunlight Exposure: Homeowners in states like Arizona or Florida generally see faster payback periods than those in Oregon or Maine due to higher peak sun hours.
3. Electricity Rates: The more your utility company charges per kilowatt-hour (kWh), the more money you save by switching to solar.
4. Incentives and SRECs: Some states offer Solar Renewable Energy Certificates (SRECs), which pay you for the clean energy you produce, significantly shortening the payback duration.

Example Scenario:

Suppose you buy a 7kW system for $21,000. After the 30% federal tax credit ($6,300), your net cost is $14,700. If your solar panels save you $150 per month ($1,800/year), and utility rates rise by 3% annually, your payback period would be approximately 7.5 years.