Should You Buy Solar Now or Wait? 2025 Tax Credit Analysis

Timing matters when investing in solar panels. With the federal Investment Tax Credit (ITC) offering 30% back through 2032 and electricity rates climbing steadily, many homeowners wonder: should I install solar now, or will waiting pay off? The short answer for most situations is clear—waiting costs more than it saves.

The Current 30% Federal Tax Credit

The Inflation Reduction Act locked in a 30% federal tax credit for residential solar installations through 2032. This means you can claim 30% of your total system cost—including equipment, labor, and permitting—directly against your federal tax liability.

On a $25,000 solar installation, that’s $7,500 back in your pocket. This isn’t a deduction that reduces taxable income; it’s a dollar-for-dollar credit that reduces what you owe.

The current credit represents the most generous federal solar incentive in history. But it won’t last forever.

The Coming Tax Credit Step-Downs

After 2032, the residential solar tax credit begins a scheduled phase-out:

• 2032 and earlier: 30% credit
• 2033: 26% credit
• 2034: 22% credit
• 2035 and beyond: 0% for residential systems

For a $25,000 system, the difference between the 30% and 26% credit is $1,000. Between 30% and 22%, it’s $2,000. And installing in 2035 or later means losing the entire $7,500 incentive.

While 2033 seems far away, homeowners planning renovations, roof replacements, or new construction should factor these deadlines into their timelines.

Panel Prices: The Waiting Game Myth

A common argument for waiting is that solar panel prices will continue dropping. While this was true historically, the reality in 2025 looks different.

Solar panel prices have largely stabilized. After dramatic declines from 2010 to 2020, manufacturing efficiencies have plateaued. Polysilicon costs, labor, and logistics now represent a larger share of total expenses, and these inputs aren’t following the same deflationary curve.

Average installed costs in 2024-2025 hover around $2.75-$3.50 per watt. Industry analysts project modest 2-4% annual decreases at best—far less than the 15-20% drops seen in the early 2010s.

Here’s the math that matters: if you wait one year hoping for a 3% price reduction on a $25,000 system, you might save $750. But during that same year, you’ve lost roughly $1,500-$2,000 in electricity savings you would have generated. The waiting “savings” actually cost you $750-$1,250.

Rising Electricity Rates Work Against Waiting

Electricity costs don’t stand still. The U.S. Energy Information Administration reports average residential electricity rates have increased 2-4% annually over the past two decades, with some regions experiencing 6-8% spikes in recent years.

This trend shows no signs of reversing. Grid infrastructure upgrades, renewable energy integration costs, and increased demand from electric vehicles and heat pumps all put upward pressure on rates.

Every year you wait, your baseline electricity costs increase. A homeowner paying $150/month in 2024 might pay $156-$162 by 2025. Over 25 years, the compounding effect of these increases makes solar savings substantially larger than static calculations suggest.

Installing solar locks in your energy costs. The sun doesn’t send rate increase notices.

The True Opportunity Cost of Waiting

Opportunity cost represents what you give up by choosing one option over another. For solar, the opportunity cost of waiting includes:

Lost electricity savings: Every month without solar is another utility bill paid at increasing rates. A system that saves $150/month costs you $1,800 in the first year of waiting.

Reduced tax credit value: If waiting pushes your installation past 2032, each year of credit reduction (4% in 2033, then another 4% in 2034) represents hundreds to thousands of dollars lost.

Inflation on installation costs: Labor, permitting, and balance-of-system costs often rise with inflation. Even if panel prices dip slightly, total installed costs may not follow.

Delayed home value increase: Solar panels add approximately $4 per watt to home values. On a 7kW system, that’s $28,000 in added equity you’re postponing.

2025 Timing Analysis: Why Now Makes Sense

For homeowners with suitable roofs and reasonable electricity costs, 2025 represents an optimal installation window. Here’s why:

Full 30% credit availability: You’re years away from any step-down, ensuring maximum incentive capture.

Mature technology: Modern panels offer 20-25% efficiency with 25-year warranties. You’re not adopting unproven technology.

Established installer network: Competition among installers keeps pricing competitive. You can obtain multiple quotes and negotiate effectively.

Favorable financing: Solar loans and leases remain widely available at reasonable rates, making $0-down installations accessible.

Net metering still exists: Many utilities still offer favorable net metering policies, though these are under increasing pressure. Installing now may grandfather you into better compensation structures.

When Waiting Might Make Sense

To be fair, a few scenarios justify waiting:

Roof replacement needed: If your roof has less than 10-15 years of life remaining, replace it first. Solar installations require roof removal and reinstallation during reroofing, adding significant cost.

Major shading issues: If trees or structures create substantial shading, and you’re planning to address this, waiting until after clearing makes sense.

Imminent move: If you’re selling within 2-3 years, the payback timeline may not work, though solar does increase home sale prices.

Utility rate structure changes: If your utility is about to implement time-of-use rates or improve net metering, waiting a few months to understand new economics could help—but rarely more than a few months.

The Bottom Line

For most homeowners considering solar in 2025, waiting costs more than it saves. The 30% federal tax credit remains fully available, panel prices have largely stabilized, electricity rates continue climbing, and every month of delay is a month of lost savings.

Run your specific numbers, get quotes from reputable installers, and make a decision based on your actual circumstances. But if the math works today, it almost certainly won’t work better tomorrow.

The best time to go solar was five years ago. The second-best time is now.