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 the Arizona Department of Revenue. The exemption is available for various types of renewable energy systems installed on residential properties. Property owners need to provide detailed information about their renewable energy equipment to help assessors determine the full cash value for property tax purposes. This incentive helps make solar installations more affordable by ensuring homeowners don’t face higher property tax bills simply for choosing clean energy.

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 available to all homeowners who install these renewable energy systems. The savings can add up to hundreds or even thousands of dollars depending on your system size, making clean energy more affordable for Arizona families.

Net Billing in Arizona is a solar compensation program that credits homeowners for the excess electricity their solar panels send back to the power grid. Unlike traditional net metering where you receive full retail credit, net billing pays you a lower wholesale rate for your excess solar energy. The credit rate varies by utility company, ranging from about 3.5 cents to 6.9 cents per kilowatt-hour (kWh), which is significantly less than what you pay for electricity from the grid.

The financial benefits depend on your specific utility company. For example, Arizona Public Service (APS) customers receive $0.06857 per kWh for exported energy, while Tucson Electric Power (TEP) customers get $0.0633 per kWh. Most utilities lock you into your export credit rate for 10 years once you connect your solar system, providing rate stability. However, you’ll typically be required to switch to a time-of-use rate plan, and some utilities charge additional monthly fees for solar customers, such as APS’s Grid Access Charge of $0.242 per kW of your system’s capacity.

At the end of each year, most utilities perform a ‘true-up’ process where any remaining credits on your account are either paid out to you (if they exceed a minimum threshold like $10-$25) or your account is reset to zero. Some utilities like Salt River Project allow credits to roll over indefinitely without annual true-ups. It’s important to understand that net billing generally provides less financial benefit than traditional net metering, so proper system sizing and energy usage timing become more critical for maximizing your solar investment’s value.