On a recent episode of “The Ramsey Show,” personal finance expert Dave Ramsey criticized people for taking out loans with interest rates as high as 18% just to get a government incentive. “A bunch of people are running out right now and financing solar units at 18% so they don’t miss the tax break. Stupid. Mathematically stupid,” he said.
Tax Breaks Don’t Justify Bad Math, Ramsey Says
Ramsey explained that chasing a tax deduction should never be the sole reason for a financial decision, especially when the cost outweighs the benefit. “They’re spending more than the tax break because they can’t afford to finance it,” he said. “Solar actually has to mathematically stand on its own without a false tax prop.”
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He warned listeners not to be motivated solely by tax incentives, whether for solar panels, leases, or mortgages. “One hundred percent of the time that you do something only because of the tax, it’s a bad deal,” he said. “You do the smart things and get whatever tax break you can get on the smart things and you move on.”
To illustrate his point, Ramsey compared tax-related decision-making to mortgage interest deductions. He noted that only 8% of Americans itemize their deductions, meaning most don’t even qualify for a mortgage interest tax break. Yet many keep their mortgages under the illusion of tax savings.
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“I’m going to send the mortgage company $10,000 to keep from sending the government $3,000 and I’m going to strut around like I’m smart when I traded a dollar for 30 cents. No, you’re stupid,” Ramsey said.
However, Ramsey is not opposed to solar panels in general. For instance, on a recent episode that featured a caller from Phoenix, who asked whether he should install solar panels before federal tax credits expired, Ramsey clarified that “If solar makes financial sense in your region and you can pay cash, it might be worth it.” But debt is a dealbreaker.
“It never makes sense to buy solar on debt,” Ramsey insisted. So, his issue is not with solar as a technology, but with people going into debt or relying on fleeting tax breaks to justify the purchase.
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Ramsey confirmed that the credit was set to expire under the One Big Beautiful Act, but strongly cautioned against rushing into a solar purchase just for that reason. “Solar needs to have a break-even of six years or less,” he said. That caller’s projected break-even point was eight to nine years after the credit, so Ramsey's response was, “Don't do it.”
With the 30% tax credit expiring at the end of the year, Ramsey said the solar industry may soon face a reckoning. “The solar people have based their business on tax law. Now they're going to have to base it on economics,” he said.
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