Solar Guide

Arizona’s Credit for Solar Energy Devices is a state tax credit that helps homeowners save money when they install solar panels on their Arizona residence. This nonrefundable tax credit reduces the amount of state income tax you owe, dollar-for-dollar, making solar energy more affordable for Arizona families.

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. The credit is nonrefundable, which means it can reduce your Arizona state tax liability to zero, but any unused credit amount cannot be refunded to you as cash. You’ll need to file Form 310 with your Arizona state tax return to claim this benefit.

While the official source doesn’t specify the exact credit amount or percentage, this incentive has been available for many years and continues to be offered for recent tax years through 2024. The credit applies to solar energy devices installed at your Arizona home, helping you take advantage of the state’s abundant sunshine while reducing your tax burden. Be sure to keep all receipts and documentation related to your solar installation, as you’ll need these when filing your tax return.

Arizona’s Property Tax Exemption for renewable energy equipment allows homeowners to exclude the added value of their solar panel system from their property tax assessment. This means that while your solar installation may increase your home’s overall value, you won’t pay additional property taxes on that increased value. The exemption applies to the full value of qualifying renewable energy equipment, including solar panels, inverters, and related components.

To qualify for this exemption, homeowners must file the appropriate property tax form (Form 82054REE) with their county assessor. The renewable energy equipment must be installed and operational on residential property in Arizona. This exemption helps make solar more affordable by ensuring that the investment in clean energy technology doesn’t result in higher annual property tax bills. Homeowners should work with their tax professional or county assessor’s office to ensure proper filing and documentation of their renewable energy system for this valuable tax benefit.

Arizona’s Solar and Wind Sales Tax Exemption removes state sales tax from the purchase and installation of solar and wind energy systems for your home. This means you won’t pay the standard Arizona sales tax (which varies by location but is typically around 5-10%) on your solar panels, inverters, batteries, and other system components, as well as the contractor’s installation services.

This exemption applies automatically at the point of sale when you purchase qualifying solar or wind equipment and installation services from contractors in Arizona. There are no income limits, application deadlines, or special forms to fill out – the tax exemption is built into Arizona state law and applies to all residential solar and wind installations. The savings can add up to hundreds or even thousands of dollars depending on your system size and local tax rates, making this a valuable benefit that works alongside other solar incentives to reduce your overall investment costs.

Net Billing in Arizona is a compensation system where solar homeowners receive credits for excess electricity their panels send to the grid. Unlike traditional net metering where you get full retail credit, net billing pays you a lower wholesale rate for your excess solar power. Each major utility in Arizona has its own net billing program with different credit rates and rules.

The financial benefits vary significantly by utility company. Arizona Public Service (APS) pays $0.06857 per kWh for exports, Tucson Electric Power (TEP) pays $0.0633 per kWh, UNS Electric pays $0.0755 per kWh, while cooperatives like Mohave Electric pay as low as $0.0353 per kWh. Most utilities lock you into your export rate for 10 years when you connect your system, providing rate certainty. However, you’ll typically need to switch to a time-of-use rate plan and may face additional monthly fees ranging from $2.23 to higher grid access charges.

Important considerations include annual credit settlements where excess credits above certain thresholds ($10-$25 depending on your utility) are either paid out or zeroed out at year-end. Solar customers must generally move to time-of-use rates, which can affect your overall electricity costs. The export credit rates for new customers can change annually, so timing your solar installation may impact your long-term benefits.