Christmas Lights Are Squeezing Homeowner Budgets More Than Ever, but There’s a Way To Pay Less and Still Be Festive

Christmas lights can bring holiday cheer to your home and neighborhood, but they don’t come cheap.

The U.S. Energy Information Administration projects the national average residential electricity price at about 18 cents per kilowatt-hour in 2026—roughly 37% higher than in 2020. This translates to the highest utility bills some homeowners have ever seen, made worse during times of the year when more electricity is needed.

Like the holiday season.

According to a recent study by Payless Power, running a full display throughout December costs $15.36 with LED lights and $92.03 with incandescent lights at the typical electricity rate. That’s a $76.67 difference.

Where you live can affect your electric bill, too.

Hawaii is the most expensive state for holiday lighting, at $42.53 for a full LED display and $254.84 for the incandescent version. Rhode Island ($31.85), Massachusetts ($31.47), Maine ($30.98), and New Hampshire ($26.81) also make the list of the five most expensive states for a full LED display.

Meanwhile, homeowners in North Dakota ($11.25), Nebraska ($11.49), and Missouri ($12.02) pay the least.

The good news is there are ways to lower your electric bill without sacrificing curb appeal or holiday spirit, regardless of where you live. All it takes is a bit of planning and creativity.

Payless Power priced 13 common lights and decorations individually, each running for six hours per night for 31 nights at the typical U.S. rate of 15 cents per kilowatt-hour. (Payless Power)

What’s causing the hikes?

A variety of factors are contributing to high electric bills these days.

“The grid is outdated. Infrastructure is old, and utility companies need to replace and upgrade equipment,” says Brandon Young, CEO of Payless Power in Fort Worth, TX.

Extreme weather plays a huge role as well, as the lines and equipment can’t always handle conditions like freezing temperatures and high winds.

Increased electricity demand adds to the problem.

“Demand is growing, and the grid can’t always keep up. Data centers and industrial use are large consumers of energy, and it takes a lot to power those facilities,” Young explains.

Fuel costs also fluctuate and affect how much it costs to generate electricity.

“Prices for residential customers in 2025 went up more than twice the rate of inflation,” says Young.

These high costs are particularly noticeable during the holiday season. Young points out that many homeowners often forget that a higher utility rate doesn’t take December off.

“The higher rate is there all year, and every kilowatt-hour is more costly. The oven and lights for holiday gatherings all cost more to use,” Young adds.

How to trim your electric bill without skimping on holiday fun

Fortunately, you don’t have to forgo Christmas lights altogether.

These tips can help you enjoy them while keeping your electricity costs in check.

Use LED lights

While you don’t get to choose your utility rates, you do get to choose your light bulbs. And LEDs are much cheaper than incandescent bulbs.

“One hundred bulb C9s cost about $19.57 in December to run, and if they're swapped with LEDs, you’ll pay $2.80,” says Young.

LED lights aren’t hard to find either. You'll notice a variety of options at just about any home improvement store.

Give your lights a break

You don’t have to keep your lights on all day, every day.

Consider displaying them only from 5 to 10 p.m., for example. You could use a timer or smart plug that allows you to turn them on or off manually when you want to.

Also, if you plan to leave town, keep them off until you return.

Don’t go overboard

Lighting every bush in your yard will cost you. Instead, be selective about where you hang lights.

Highlighting your front door, roof line, and a tree in your yard can make just as big of an impact.

Unplug your inflatables (or use light projectors instead)

If you have inflatables, there’s no reason to keep them on 24/7.

“Unplugging inflatables when you go to bed saves a few dollars. The cost to leave one up for the month is about $1.68, which is a lot to pay [compared with] a 100-bulb LED light strand at 14 cents,” says Young.

In addition, you don’t have to use inflatables for your home to stand out. A light projector can do the trick at a fraction of the cost.

The study says that a projector costs only 17 cents per month to run, compared to $1.68 for an inflatable.