The best states for solar combine high electricity rates, strong net metering policies, state-level incentives, and adequate sunshine — and these factors matter more than peak sun hours alone. Massachusetts, New York, and New Jersey often deliver better solar economics than sunnier states like Arizona or Nevada because high electricity rates make every kWh of solar production more valuable. This guide ranks the top states for solar and explains exactly why they rank where they do.
What Makes a State Good for Solar?
Five factors determine solar ROI for a homeowner:
1. Electricity rates: The higher your local utility rate, the more valuable each kWh your solar system produces. A homeowner paying 30 cents/kWh saves twice as much per kWh as one paying 15 cents/kWh from the same system. Rates vary from about 10 cents/kWh (Louisiana, Oklahoma) to 30–35 cents/kWh (California, Hawaii, New England).
2. Net metering policy: Net metering determines how your utility compensates you for excess solar electricity exported to the grid. Full retail-rate net metering (most states) gives you the full electricity rate as credit. Avoided-cost net metering (California NEM 3.0) pays only 5–8 cents/kWh for exports. Full retail-rate net metering dramatically improves solar economics.
3. State incentives: Some states offer substantial additional incentives: state income tax credits, utility rebates, Solar Renewable Energy Credit (SREC) markets, and sales or property tax exemptions on solar equipment.
4. Solar resource (peak sun hours): More sunshine means more production from the same system, but this factor is less important than commonly assumed. High electricity rates in cloudy states can produce better economics than abundant sunshine in low-rate states.
5. Installation cost competitiveness: States with established solar markets (many certified installers competing for business) tend to have lower installed costs. States with limited solar markets may have higher prices due to fewer competitive bidders.
Top 10 Best States for Solar in 2026
1. Massachusetts
Average electricity rate: 28–33 cents/kWh (among the highest in the continental US)
Net metering: Retail rate under SMART program, transitioning to competitive compensation
State incentives: 15% state income tax credit (up to $1,000), net metering, property and sales tax exemptions, SREC II program
Solar resource: Moderate (4.0–4.5 PSH) but high rates make it financially excellent
Payback period estimate: 7–10 years
Why it ranks #1: The combination of very high electricity rates, retail net metering, tax credits, and active SREC market creates outstanding solar economics despite moderate sunshine.
2. New York
Average electricity rate: 22–26 cents/kWh
Net metering: Retail rate net metering
State incentives: 25% state tax credit (up to $5,000), NY-Sun initiative incentives, NY-Bridge program for low-income, property and sales tax exemptions
Solar resource: Moderate (4.0–4.7 PSH)
Payback period estimate: 7–11 years
Why it ranks: $5,000 state tax credit combined with high utility rates produces strong returns even in areas with moderate sunshine like Buffalo or Syracuse.
3. New Jersey
Average electricity rate: 18–22 cents/kWh
Net metering: Retail rate net metering
State incentives: Transition Renewable Energy Certificate (TREC) program, Solar Successor Incentive (SuSI) for residential ($90/MWh for 15 years under direct installs), property and sales tax exemptions
Solar resource: Moderate (4.2–4.6 PSH)
Payback period estimate: 6–9 years
Why it ranks: New Jersey’s SuSI payment program provides additional recurring income on top of bill savings, dramatically improving payback. NJ is one of the most supportive solar states for policy.
4. California
Average electricity rate: 25–35 cents/kWh (rising annually)
Net metering: NEM 3.0 (avoided cost 5–8 cents/kWh for exports)
State incentives: No state income tax credit (expired). Self-Generation Incentive Program (SGIP) for battery storage. Property and sales tax exemptions.
Solar resource: High (5.0–7.0 PSH depending on location)
Payback period estimate: 9–14 years (longer than pre-NEM 3.0)
Why it ranks: California’s very high electricity rates still make solar compelling, but NEM 3.0’s dramatically reduced export credits have shifted the calculus — battery storage paired with solar is now near-essential for optimal economics. Self-consumption is critical.
5. Connecticut
Average electricity rate: 25–30 cents/kWh
Net metering: Retail rate net metering
State incentives: Zero-emission renewable energy credits (ZRECs), RSIP incentive program, property and sales tax exemptions
Solar resource: Moderate (4.0–4.5 PSH)
Payback period estimate: 8–12 years
Why it ranks: Very high utility rates and retail net metering produce strong economics. ZREC and RSIP programs provide additional financial support for qualifying installations.
6. Rhode Island
Average electricity rate: 24–28 cents/kWh
Net metering: Retail rate for systems under 25 kW
State incentives: Renewable Energy Growth (REG) Program, Affordable Solar Coalition resources, property and sales tax exemptions
Solar resource: Moderate (4.0–4.4 PSH)
Payback period estimate: 8–11 years
Why it ranks: Small state, high rates, retail net metering. REG program provides value-based rates above retail for qualifying installations.
7. Maryland
Average electricity rate: 16–19 cents/kWh
Net metering: Full retail rate
State incentives: Maryland Energy Administration (MEA) $1,000 residential grant, 30% state tax credit up to $5,000 for installations under MEA program, strong SREC market, property and sales tax exemptions
Solar resource: Moderate-good (4.5–5.0 PSH)
Payback period estimate: 7–10 years
Why it ranks: $5,000 state tax credit combined with a robust SREC market and full retail net metering positions Maryland as one of the best value states for solar despite moderate electricity rates.
8. Illinois
Average electricity rate: 15–18 cents/kWh
Net metering: Full retail rate
State incentives: Illinois Shines incentive program (Adjustable Block Program) provides additional revenue via Renewable Energy Credits. Moderate property and sales tax exemptions.
Solar resource: Moderate (4.0–4.6 PSH)
Payback period estimate: 9–13 years
Why it ranks: Illinois Shines program has provided substantial additional income for solar adopters, effectively reducing net system cost by 20–40% in good incentive allocation periods.
9. Florida
Average electricity rate: 14–17 cents/kWh
Net metering: Full retail rate net metering (currently)
State incentives: No state income tax credit (FL has no income tax). Strong property tax exemption. Full sales tax exemption on solar equipment.
Solar resource: High (5.0–5.5 PSH statewide; more in South Florida)
Payback period estimate: 9–13 years
Why it ranks: High solar resource and full retail net metering produce solid economics. Florida’s solar market has grown rapidly. Limited state cash incentives compared to Northeast states, but sunshine compensates.
10. Texas
Average electricity rate: 13–16 cents/kWh
Net metering: Deregulated market — many Texas utilities offer buyback rates, but not all. Rates vary by provider. Some providers offer only avoided-cost buyback.
State incentives: Property and sales tax exemptions. No state income tax. Competitive installer market with relatively low installed costs.
Solar resource: High (5.0–6.0 PSH, higher in West Texas)
Payback period estimate: 10–14 years
Why it ranks: Large solar installations, competitive pricing, strong sunshine. Net metering terms vary by provider — some Texas consumers have excellent buyback rates, others don’t. Research your specific utility before committing.
Worst States for Solar
While solar works financially in every state, some states offer significantly weaker economics:
Louisiana (10–12 cents/kWh rates, weak net metering): Very low electricity rates mean each kWh of solar saves little. Net metering policy has been weakened. Payback periods extend to 20+ years in some areas.
Oklahoma: Low electricity rates (10–13 cents/kWh) combined with limited state incentives and a historically less-supportive policy environment. Better solar economics than utilities in many Southeast states but below the national average.
Alabama and Mississippi: Low electricity rates (11–14 cents/kWh), limited state incentives, and dominant utility monopolies that have been slow to support solar interconnection. Net metering policies have been reduced or eliminated in some service territories.
Frequently Asked Questions
What state has the best solar incentives?
New Jersey and New York have the strongest combination of state incentives in 2026. New Jersey’s SuSI program provides $90/MWh for 15 years for direct installs, while New York’s 25% state tax credit (up to $5,000) provides significant upfront financial support. Maryland’s 30% state credit (up to $5,000 under the MEA program) is also outstanding. Massachusetts’s SREC market and Connecticut’s ZREC program provide additional ongoing value beyond initial installation incentives.
Is solar worth it in a state with less sunshine?
Often yes. The financial return from solar depends more on electricity rates and net metering policy than sunshine. Massachusetts and New York consistently offer better payback periods than Arizona despite having half the peak sun hours, because electricity in Massachusetts costs 2–3× what it costs in Arizona. If you’re paying above 20 cents/kWh for electricity, solar is likely financially attractive regardless of your state’s solar resource.
Does California still make sense for solar after NEM 3.0?
Yes — but the economics have changed. Under NEM 3.0, solar systems sized purely for self-consumption (not export) remain excellent investments given California’s high electricity rates (25–35 cents/kWh). Adding battery storage (Powerwall 3, Enphase IQ) to maximize self-consumption and leverage TOU rate arbitrage has become essential for optimal California solar returns. The payback period has increased from 5–7 years (NEM 2.0) to 9–14 years (NEM 3.0) for systems without batteries.
Summing Up
The best states for solar in 2026 are Massachusetts, New York, New Jersey, Maryland, and Connecticut — not because they’re the sunniest, but because high electricity rates combined with retail net metering and state incentives produce the fastest payback periods. Sunny states like Arizona and Florida are also strong markets, but slightly longer payback due to lower electricity rates. The worst states for solar have low electricity rates that make each kWh of solar production less financially valuable. For a free quote and ROI estimate specific to your state and utility, call (855) 427-0058 or visit us.solarpanelsnetwork.com.
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