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 installation more affordable for Arizona families.

While the provided information doesn’t specify the exact credit amount or percentage, this incentive is available to individual taxpayers who install qualifying solar energy devices at their primary residence in Arizona. The credit is nonrefundable, which means it can reduce your tax liability to zero but won’t result in a refund if the credit exceeds what you owe. To claim this benefit, you’ll need to complete Form 310 when filing your Arizona state tax return. Since tax credits and solar incentives can change over time, it’s important to review the current year’s form and instructions to understand the specific credit amount and any eligibility requirements that may apply to your installation.

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 residential solar installations and other qualifying renewable energy systems. 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 more affordable by ensuring homeowners don’t face higher property taxes simply for investing in clean energy technology.

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. The tax savings are automatic at the point of sale – you simply don’t pay 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 this exemption covers state sales tax, local sales taxes may still apply depending on your city or county.

Net Billing in Arizona is a solar compensation program that credits homeowners for excess electricity their solar panels send back to the grid. Unlike traditional net metering where you receive full retail credit, net billing pays you a lower wholesale rate for the solar energy you export. Each major utility company in Arizona has its own net billing program with different credit rates and rules.

The financial benefits vary significantly by utility company. Arizona Public Service (APS) pays $0.06857 per kWh for exported energy, while Tucson Electric Power (TEP) offers $0.0633 per kWh, and UNS Electric provides $0.0755 per kWh. Most utilities lock you into your export rate for 10 years once you connect your system, providing rate stability. However, some utilities like Mohave Electric Cooperative can change rates annually. Solar customers typically must switch to time-of-use billing rates, and some utilities charge additional monthly fees ranging from $2.23 to higher grid access charges.

Most Arizona utilities require an annual “true-up” process where excess credits are either paid out or reset to zero if they exceed a minimum threshold (usually $10-$25). Credits below this threshold typically roll over to the next year unless you specifically request payment. The timing of this annual settlement varies by utility, occurring in September, December, or at year-end depending on your service provider.