Arizona

The Credit for Solar Energy Devices is an Arizona state tax credit that rewards homeowners who install solar energy systems on their Arizona residences. This nonrefundable tax credit allows you to reduce your state income tax liability by 25% of the cost of your solar installation, up to a maximum of $1,000. If your credit exceeds your tax liability in the installation year, you can carry the unused amount forward for up to five consecutive years.

To qualify, you must install a solar energy device (such as solar panels or solar water heaters) on your primary or secondary residence located in Arizona. The installation must meet applicable fire, building, and electrical codes. Remember that this credit is separate from any federal tax incentives you might qualify for, allowing you to potentially benefit from both programs. For specific details about qualifying equipment and documentation requirements, refer to Arizona Form 310 when preparing your taxes.

Arizona offers a Property Tax Exemption for renewable energy equipment, including residential solar systems. This valuable incentive means that when you install solar panels on your home, the added value they bring to your property won’t increase your property taxes. Without this exemption, homeowners might face higher property tax bills after installing solar, potentially offsetting some of the financial benefits.

To qualify, you must own renewable energy equipment (like solar panels) installed on your property in Arizona. There’s no specific dollar limit to the exemption – it simply prevents any increase in your property taxes that would otherwise result from adding solar to your home. Homeowners should be aware that they may need to file Form 82054REE with the Arizona Department of Revenue to claim this benefit. This exemption continues for the life of your solar system, providing long-term tax savings that enhance the overall financial return of your solar investment.

Arizona’s Solar and Wind Sales Tax Exemption offers significant savings for homeowners investing in renewable energy. This state tax incentive eliminates sales tax on both the purchase of solar and wind energy devices and the installation services provided by contractors. For Arizona residents with a state sales tax rate of 5.6%, this means saving $560 on every $10,000 spent on solar panels or wind energy systems.

This exemption applies to all residential solar and wind energy equipment purchases with no income restrictions or system size limitations. The incentive has no expiration date and can be combined with other available incentives like the federal tax credit. When purchasing a solar or wind system, ensure your contractor clearly identifies the tax exemption on your invoice, as the savings should be applied at the point of sale rather than claimed later.

Arizona’s Net Billing program is a solar incentive that determines how utility companies compensate homeowners for excess solar energy sent back to the grid. Unlike traditional net metering which credits excess energy at retail rates, Net Billing typically provides credits at a lower, fixed export rate that varies by utility company.

Under this program, when your solar panels produce more electricity than your home uses, the excess energy is exported to the grid and you receive a credit on your bill. These credit rates range from approximately $0.0353/kWh to $0.0755/kWh depending on your utility provider. Most utilities lock in your credit rate for 10 years from the date your system is connected, providing long-term predictability for your solar investment.

Most Arizona utilities require solar customers to switch to Time-of-Use (TOU) rate plans, which charge different electricity rates depending on the time of day. Some utilities also apply additional fees, such as APS’s Grid Access Charge of $0.242/kW DC per month or UNS Electric’s $2.23/month DG Fee.

Each utility handles excess credits differently at year-end. Some perform annual true-ups (typically after the December or September billing cycle), where credits exceeding a certain threshold (usually $10-$25) are paid out and the balance reset to zero. Others allow credits to roll over indefinitely. Be sure to check your specific utility’s policies when planning your solar system to maximize your financial benefits.