Mesa, AZ Solar Panels

The Arizona Solar Energy Device Tax Credit is a state tax credit that rewards homeowners who install solar panels 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.

To qualify for this credit, you must install a solar energy device at your primary or secondary residence located in Arizona. The credit applies to individual taxpayers and can be claimed using Form 310 when you file your Arizona state income tax return. Since this is a nonrefundable credit, it’s most beneficial if you have sufficient Arizona state tax liability to offset. Keep in mind that the credit amount and specific eligibility requirements may vary by tax year, so it’s important to review the instructions for Form 310 for the year you’re claiming the credit to understand the exact benefit available to you.

Arizona’s Property Tax Exemption for renewable energy equipment allows homeowners to add solar panels and related equipment to their property without increasing their property tax bill. When you install a solar energy system, the added value it brings to your home is exempt from property taxation, meaning your property taxes remain based on your home’s value without the solar equipment. This exemption applies to solar panels, inverters, batteries, and other equipment that’s part of your renewable energy system.

The exemption continues for as long as you own the solar equipment, providing ongoing savings throughout your system’s lifetime. To claim this benefit, you’ll need to report your renewable energy equipment using the appropriate property tax form when filing your annual property tax return with the Arizona Department of Revenue. This exemption is available to all Arizona homeowners who install qualifying renewable energy equipment on their primary residence or other properties they own.

Arizona’s Solar and Wind Sales Tax Exemption removes 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 (currently 5.6% at the state level) on the cost of solar panels, inverters, mounting equipment, wind turbines, and related components, or on the labor costs for professional installation. This exemption applies automatically at the point of sale, reducing your upfront costs immediately.

All Arizona homeowners are eligible for this exemption when purchasing qualifying solar or wind energy devices. There are no income requirements, application processes, or deadlines to worry about—the tax exemption is built into Arizona law and applies to all eligible purchases. Your solar installer or equipment retailer should automatically apply this exemption at checkout, so you’ll see the savings reflected in your final price. Keep in mind that while the state sales tax is exempt, local city or county sales taxes may still apply depending on where you live, so your total savings will vary by location.

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 rate, net billing credits exports at a lower, fixed rate that varies by utility. Most Arizona utilities now use this system, which means you’ll pay the regular retail rate for electricity you use from the grid, but receive a reduced credit rate (typically between $0.02 to $0.07 per kWh depending on your utility) for the solar energy you export.

The financial benefit depends on which Arizona utility serves your home. For example, Arizona Public Service (APS) credits exports at $0.06857/kWh with a monthly Grid Access Charge of $0.242 per kW of your system’s DC capacity. Tucson Electric Power (TEP) offers $0.0633/kWh for exports, while Salt River Project (SRP) provides credits between $0.02-$0.06/kWh depending on the season and your chosen time-of-use rate plan. Most utilities lock you into your export rate for 10 years from interconnection, providing rate stability. However, some utilities like Mohave Electric Cooperative update their export rates annually, so your rate isn’t locked in.

Solar homeowners in Arizona are typically required to switch to a time-of-use (TOU) rate plan when they install solar panels. Some utilities also charge additional monthly fees—for instance, UNS Electric charges a $2.23/month distributed generation fee. At the end of each year (or billing cycle, depending on your utility), any excess credits on your account are either paid out to you if they exceed a certain threshold (usually $10-$25), or they roll over to the next year. Understanding your specific utility’s net billing structure is essential for accurately estimating your solar savings, as the export credit rate significantly impacts your overall financial benefit.