Gilbert, AZ Solar Panels

The Arizona Solar Energy Devices Tax Credit is a state tax credit available to homeowners who install solar panels or other qualifying solar energy systems at their Arizona residence. This is a nonrefundable credit, which means it can reduce your state tax liability to zero, but any unused credit amount won’t be refunded to you as cash.

Unfortunately, the information provided doesn’t specify the exact dollar amount or percentage of the credit available. To understand the specific financial benefit you may receive, you’ll need to review Form 310 and its instructions, which are available on the Arizona Department of Revenue website. The credit applies to solar energy devices installed at your primary or secondary residence located in Arizona, and you must be the individual taxpayer who purchased and installed the system to qualify.

When claiming this credit, keep detailed records of your solar installation costs and ensure your system meets Arizona’s requirements for qualifying solar energy devices. Since this is a state tax credit separate from any federal incentives, you can claim it when filing your Arizona state income tax return using Form 310. Be sure to consult the most current form and instructions for your tax year to ensure you’re following the latest guidelines and maximizing your available credit.

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 higher property taxes even though your home’s actual value has increased.

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. Property owners must file the appropriate renewable energy equipment property tax form with the Arizona Department of Revenue to claim this exemption. This benefit helps make solar more affordable by ensuring that your investment in clean energy doesn’t result in a higher annual property tax bill.

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 equipment, 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%, though your total rate may be higher when county and city taxes are included. For example, on a $20,000 solar installation, you could save approximately $1,120 in state sales tax alone. There are no income restrictions or application requirements—the exemption automatically applies to qualifying purchases. The exemption is ongoing with no current expiration date, making it available whenever you’re ready to install solar or wind energy equipment at your home.

Net Billing in Arizona is a compensation system where solar homeowners receive credits for the excess electricity their solar panels send to the grid. Unlike traditional net metering where exports are valued at the full retail electricity rate, net billing credits your excess solar energy at a lower, fixed rate set by your utility company. This means you’ll receive a credit on your bill for every kilowatt-hour (kWh) you export, but at a rate that’s typically much lower than what you pay to buy electricity from the grid.

The specific financial benefit depends on which Arizona utility serves your home. For example, Arizona Public Service (APS) customers receive $0.06857 per kWh exported, Tucson Electric Power (TEP) credits $0.0633 per kWh, and UNS Electric credits $0.0755 per kWh. Most utilities lock you into your export rate for 10 years from the date you connect your system, providing long-term rate certainty. However, it’s important to note that solar customers are typically required to switch to a Time-of-Use (TOU) rate plan, and some utilities charge additional monthly fees—such as APS’s Grid Access Charge of $0.242 per kW of DC capacity.

At the end of each year (or billing cycle, depending on your utility), any remaining credits on your account are handled through a “true-up” process. If your accumulated credits exceed a certain threshold (typically $10-$25), the utility will pay you out and reset your account to zero. If credits fall below this threshold, they generally roll over to the next year unless you specifically request payment. This structure means your solar system should be sized to closely match your annual electricity consumption rather than significantly overproducing, as excess generation provides limited financial return.