Arizona Solar Panels

The Arizona Credit for Solar Energy Devices is a state tax credit that rewards homeowners who install solar panels at their Arizona residence. This is a nonrefundable credit, which means it can reduce your state tax liability to zero, but any remaining credit amount won’t be refunded to you as cash.

To qualify for this credit, you must be an individual taxpayer who installs a solar energy device at your primary or secondary residence located in Arizona. You’ll need to complete Form 310 and submit it with your Arizona state income tax return for the year the solar system was installed. The credit applies only to the portion of costs not covered by other incentives or rebates, and it can help reduce your state tax bill when you file your annual return.

Keep in mind that this is a state-level benefit separate from other solar incentives. Be sure to save all receipts and documentation related to your solar installation, as you’ll need these records when claiming the credit. If you have questions about your specific situation or how much you might save, consider consulting with a tax professional familiar with Arizona solar incentives.

Arizona’s Property Tax Exemption for renewable energy equipment allows homeowners to install solar panels and other renewable energy systems without increasing their property taxes. When you add solar to your home, the added value from your solar equipment is exempt from property tax assessment, meaning you won’t pay additional property taxes on the increased home value that results from your solar installation.

This exemption applies to solar photovoltaic systems, solar thermal systems, and other renewable energy equipment installed on residential properties. The exemption continues for as long as you own the equipment, providing ongoing savings throughout your system’s lifetime. To claim this benefit, you’ll need to report your renewable energy equipment using the appropriate property tax form when filing your annual property tax return with the Arizona Department of Revenue. This exemption works alongside other solar incentives to make clean energy more affordable for Arizona homeowners.

Arizona’s Solar and Wind Sales Tax Exemption removes the state sales tax from the purchase and installation of solar and wind energy equipment for your home. This means you won’t pay Arizona’s sales tax when you buy solar panels, wind turbines, or related components, and you also won’t pay sales tax on the contractor’s labor to install these systems. This exemption applies at the point of sale, providing immediate savings on your clean energy investment.

The financial benefit depends on the total cost of your system and your local sales tax rate. Arizona’s state sales tax rate is 5.6%, and when combined with local rates, total sales tax can reach 10% or more in some areas. For example, on a $25,000 solar installation, this exemption could save you $1,400 to $2,500 or more in sales taxes. The exemption is available to all Arizona homeowners who purchase qualifying solar or wind energy devices, with no income restrictions or application process required. Your solar installer should automatically apply this exemption at the time of purchase, so be sure to confirm that sales tax is not included in your final contract price.

Net Billing in Arizona is a compensation structure where solar homeowners receive credits for the excess electricity their system sends to the grid. Unlike traditional net metering where exports are valued at the full retail electricity rate, net billing programs credit exports at a lower, predetermined rate set by each utility company. This means you’ll save the most money by using your solar energy as it’s generated rather than sending it back to the grid.

The financial benefit varies significantly by utility provider. Arizona Public Service (APS) credits exports at $0.06857/kWh with a monthly Grid Access Charge of $0.242 per kW DC. Salt River Project (SRP) offers credits between $0.02-$0.06/kWh depending on season and rate plan. Tucson Electric Power (TEP) provides $0.0633/kWh, while UNS Electric credits at $0.0755/kWh plus a $2.23/month distributed generation fee. Cooperative utilities like Mohave Electric ($0.0353/kWh), Trico Electric ($0.0368/kWh), and others have their own rates. Most utilities lock customers into their export rate for 10 years upon interconnection, though rates for new customers can change annually.

Solar customers are typically required to switch to a Time-of-Use (TOU) rate plan, which charges different prices for electricity based on the time of day. Most utilities conduct an annual true-up, usually in September or December, where excess credits above a certain threshold (typically $10-$25) are paid out and the account resets to zero. Understanding your utility’s specific net billing structure is essential for accurately estimating your solar savings and choosing the right system size for your home.