Solar Lease vs Buy: Which Is Better After the Tax Credit Ended?
Solar lease vs buy (and PPA) for 2026: who gets the tax credits now, upfront and lifetime cost, savings, maintenance and selling the house.
By the GableMath team · Published · 4 min read
Buying still earns the most over 25 years if you can pay cash or borrow cheaply and plan to stay — but since the 30% homeowner credit ended for systems installed after 2025, the gap has narrowed. A lease or PPA now often wins on price for people who can't use a large upfront purchase, because the leasing company can still claim a federal credit the homeowner can't. Read the escalator and the transfer terms before you sign.
- Cash or low-rate loan, staying 10+ years
- Buy
- No upfront money, want savings day one
- Lease or PPA with no/low escalator
- Likely to sell within 5 years
- Neither — or a lease that transfers easily
- Want a battery too
- Compare both; leases may bundle storage
Short answer: buying still wins over the long run for owners who can afford it, but 2026 changed the math. The 30% federal credit that made buying so attractive no longer applies to homeowner-owned systems installed after 2025. Leasing companies, however, own the panels and can still claim a commercial federal credit on qualifying systems. On EnergySage's H1 2026 marketplace data, lease quotes came in about 39% below the cash price and prepaid PPAs about 57% below on its comparison basis — a big reason leases have become competitive again.
Solar lease vs buy: the four ways to pay
| Cash purchase | Solar loan | Lease | Power purchase agreement (PPA) | |
|---|---|---|---|---|
| Who owns the panels | You | You | Solar company | Solar company |
| Upfront cost | Full price | Little or none | Usually none | Usually none |
| What you pay | Once | Monthly loan payment | Fixed monthly payment | A rate per kWh produced |
| Federal tax credit (2026) | None (25D ended) | None (25D ended) | Company may claim 48E | Company may claim 48E |
| Maintenance and repairs | You (after warranties) | You | Company | Company |
| Lifetime savings | Highest | High, minus interest | Moderate | Moderate |
| Selling the house | Adds an owned asset | Loan payoff or transfer | Buyer must assume or you buy out | Same as lease |
Why the 2026 tax rules matter
Until the end of 2025, a homeowner who bought a system took 30% off its cost through the residential clean energy credit (25D). The IRS confirms that credit isn't allowed for systems installed after December 31, 2025, under P.L. 119-21.
The same law still lets third-party owners — the company behind a lease or PPA — claim the commercial clean electricity credit (48E) on qualifying residential systems, under tighter deadlines: solar must be placed in service by the end of 2027 unless construction began by July 4, 2026. A company that captures a 30% credit can price a lease below what a homeowner would pay in cash, which is exactly what EnergySage's 2026 quotes show.
The catch: those deadlines mean lease pricing may change again after 2027. If a lease looks good, compare it on today's numbers, not on what it might be next year.
Solar lease vs purchase: a worked comparison
Take an 8 kW system. At EnergySage's H1 2026 national median of $2.57 per watt, the cash price is about $20,600, with no federal credit to subtract. Berkeley Lab's survey of systems actually installed puts the median closer to $3.60 per watt, so quotes of $25,000 or more aren't unusual.
- Buy: you pay ~$20,600 and keep every dollar of bill savings for 25+ years. How long it takes to earn that back depends almost entirely on your state's electricity rate and how your utility credits exported power, so it varies widely from state to state. Our solar payback calculator runs it with your state's sun hours, rates and export rules.
- Lease or PPA: you pay nothing up front and a monthly amount or per-kWh price that should start below what the panels save you. Your savings are the difference — smaller per month than owning, but positive from the first bill if the contract is priced well.
Solar panel lease vs buy: what to check in a lease
- Escalator. Many leases and PPAs raise the payment every year. Compare it with how fast your utility's rates have risen; an escalator above that erodes your savings.
- Starting payment vs your bill. The lease payment plus your remaining utility bill should be meaningfully less than your bill today.
- Production guarantee. Good contracts promise a minimum output and pay you if the system falls short.
- Transfer and buyout. Read what happens when you sell: credit checks for the buyer, buyout pricing, and whether the company will remove the system.
- Roof work. Find out who pays to remove and reinstall the panels if you re-roof.
Buying with a loan instead of cash
A solar loan lets you own the system without paying up front, but the interest rate decides whether it beats a lease. Compare the monthly loan payment with your expected monthly bill savings: if savings cover the payment from the start, you're ahead and own the panels when the loan ends. Watch for loans with high "dealer fees" built into the price — they can add thousands of dollars to the system cost — and ask for the cash price alongside the financed price so you can see the difference.
Our recommendation
If you can pay cash or get a low-rate loan, plan to stay ten years or more, and live where exported power is credited well, buy — you'll keep the most money over the life of the system. If you'd otherwise skip solar for lack of upfront cash, a lease or PPA with a low or no escalator is a reasonable way to start saving now, especially while third-party owners can still claim the federal credit. Check how much of your bill solar can cover with the solar panel calculator, and compare your rate with others in electricity rates by state. Adding storage? The solar battery calculator prices it.
Questions people ask
What's the difference between leasing and owning solar panels?
If you own, you pay for the system (cash or loan), keep all the savings, and handle repairs after the warranties. If you lease, a company owns the panels on your roof and you pay a fixed monthly amount; with a power purchase agreement (PPA) you pay per kWh the panels produce. The owner — you or the company — claims any tax credits.
Can I still get the federal solar tax credit in 2026?
Not as a homeowner buying a system. Under P.L. 119-21, the 30% residential clean energy credit (25D) doesn't apply to systems whose installation is completed after December 31, 2025, according to the IRS. Leasing companies can still claim the commercial 48E credit on qualifying systems — which is why leases are often quoted cheaper in 2026.
What happens to a solar lease when you sell your house?
Usually the buyer takes over the lease after a credit check, or you buy out the remaining payments, or the company moves the panels. A lease can slow a sale if the buyer doesn't want it, so read the transfer clause before you sign.
Is it better to lease or buy solar panels?
Buying is better if you have the cash or a low-rate loan and will stay long enough to pass the payback point. Leasing is better if you want savings without an upfront cost or a loan, as long as the monthly payment starts well below your current bill and doesn't climb faster than your utility rates.
Where these numbers come from
- IRS — FAQs on modifications to 25C, 25D and other credits under P.L. 119-21 — 25D not allowed for expenditures/installations completed after December 31, 2025 · checked October 2026
- Public Law 119-21 (2025) — 48E solar placed-in-service deadline December 31, 2027 unless construction began by July 4, 2026 · checked October 2026
- EnergySage — how the tax changes affect leased solar — Third-party owners can still claim the 48E credit on qualifying systems · checked October 2026
- EnergySage H1 2026 marketplace report (via Mercom) — Median $2.57/W; lease quotes ~39% and prepaid PPA ~57% below cash on EnergySage's basis · checked October 2026
- Berkeley Lab — U.S. Distributed Solar and Storage Data, 2026 update — Median host-owned installed price $3.6/W; median system 7.7 kW · checked October 2026