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 energy system from their property tax assessment. This means that while your solar panels may increase your home’s overall value, you won’t pay additional property taxes on that increased value. The exemption applies to the full cash value of qualifying renewable energy equipment installed on residential properties.

To qualify for this exemption, homeowners must file the appropriate property tax form (Form 82054REE) with the Arizona Department of Revenue. The form requires detailed information about your renewable energy equipment to help assessors determine the full cash value for property tax purposes. This exemption is governed by Arizona Revised Statutes sections 42-11051 through 42-11053 and related provisions, ensuring that homeowners can invest in clean energy without facing higher property tax bills as a result of their solar installation.

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 labor costs for professional installation.

This exemption applies to all residential solar and wind energy devices sold at retail in Arizona, with no income limits or system size restrictions for homeowners. The tax savings are automatic at the point of sale – you simply won’t be charged sales tax when you purchase qualifying equipment or hire a contractor for installation. There are no application deadlines or expiration dates for this ongoing state policy, making it a reliable benefit for Arizona homeowners considering clean energy upgrades. Keep in mind that while state sales tax is exempted, local sales taxes may still apply depending on your city or county.

Net Billing in Arizona is a compensation system where solar homeowners receive credits for excess electricity their solar panels send back to the electric grid. Unlike traditional net metering where you get full retail credit, net billing pays you a lower export rate for the solar energy you don’t use in your home. The credit rates vary significantly by utility company, ranging from as low as $0.0353 per kWh (Mohave Electric Cooperative) to as high as $0.0755 per kWh (UNS Electric).

Most Arizona utilities lock you into your export credit rate for 10 years once you connect your solar system, providing rate stability even if the utility changes rates for new customers. However, solar customers are typically required to switch to Time-of-Use (TOU) rate plans, which charge different amounts for electricity based on the time of day you use it. Some utilities also charge additional monthly fees – for example, APS charges a Grid Access Charge of $0.242 per kW of your solar system’s capacity each month, while UNS Electric charges a $2.23 monthly distributed generation fee.

At the end of each year (or billing cycle, depending on your utility), any remaining credits on your account are either paid out to you if they exceed a minimum threshold (typically $10-$25) or carried forward to the next year. This annual ‘true-up’ process ensures you don’t lose the value of excess solar energy your system produced throughout the year.