Glendale, AZ

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 offset the upfront costs of going solar while supporting the state’s clean energy goals.

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

The financial benefit varies based on your local property tax rate and the value of your solar system, but it can save homeowners hundreds to thousands of dollars annually in property taxes. For example, if your solar system adds $20,000 to your home’s value and your local property tax rate is 1%, you would save approximately $200 per year in property taxes. To qualify, the renewable energy equipment must be installed on your primary residence or other qualifying property in Arizona. Homeowners need to file the appropriate property tax form (Form 82054REE) to claim this exemption, and it’s important to work with your local county assessor’s office to ensure proper documentation and compliance with reporting requirements.

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 paperwork required – 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 and local tax rates, making clean energy more affordable for Arizona families.

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. The credit rate varies by utility company, ranging from about 3.5 cents to 6.9 cents per kilowatt-hour, which is significantly less than what you pay for electricity from the grid.

Most Arizona utilities lock you into your export credit rate for 10 years once you connect your solar system, providing rate stability. However, you’ll typically need to switch to a time-of-use rate plan, and some utilities charge additional monthly fees for solar customers. At the end of each year, most utilities will either pay out excess credits above a certain threshold (usually $10-$25) or reset your account to zero, though some allow credits to roll over indefinitely. This system means your solar savings come primarily from using the power you generate during the day rather than from selling excess power back to the utility.