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 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 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 solar panels, inverters, batteries, and other qualifying renewable energy equipment installed on residential properties.

The financial benefit varies based on your home’s location and local tax rates, 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 or secondary residence in Arizona and meet state requirements for renewable energy systems.

Homeowners should be aware that this exemption requires proper documentation and may need to be renewed periodically. The Arizona Department of Revenue provides specific forms (like the TY2026 Property Tax Form) that must be filed to claim this exemption. It’s important to work with your local county assessor’s office to ensure your solar system is properly classified and the exemption is applied correctly to your property tax bill.

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 rates vary 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 provider. 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 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 ranging from $2.23 to higher grid access charges based on your system size.

At the end of each year, most utilities perform a ‘true-up’ process where excess credits are either paid out to you (if they exceed $10-$25 depending on your utility) or your account resets to zero. Some utilities like Salt River Project allow credits to roll over indefinitely without annual true-ups. It’s important to size your solar system appropriately since you’ll receive less compensation for excess energy than what you pay to purchase electricity from the grid.