Prescott, 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 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, your renewable energy system must be installed on residential property in Arizona and meet state requirements for renewable energy equipment. Property owners must file the appropriate forms with the Arizona Department of Revenue to claim this exemption. The exemption continues for as long as you own the qualifying renewable energy equipment, providing ongoing tax savings throughout the life of your solar system. This incentive helps make solar more affordable by ensuring homeowners don’t face higher property tax bills 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 rate on the equipment itself or the contractor’s installation services, providing immediate savings at the time of purchase.

The financial benefit varies based on your system’s total cost, as you’ll save Arizona’s state sales tax rate on both the equipment and installation. This exemption applies to all qualifying solar and wind energy devices, making clean energy more affordable from day one. The program has no income restrictions or application deadlines, and the tax savings are automatically applied at the point of sale when you purchase qualifying equipment from participating retailers and contractors.

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 energy. 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, Tucson Electric Power (TEP) pays $0.0633 per kWh, and UNS Electric pays $0.0755 per kWh – all with 10-year rate locks. Salt River Project offers seasonal rates between $0.02-$0.06 per kWh, while cooperative utilities like Mohave Electric and Trico Electric offer lower rates around $0.035-$0.037 per kWh. Most utilities require solar customers to switch to time-of-use rate plans, and some charge additional monthly fees.

Important considerations include annual credit true-ups where excess credits are either paid out or reset to zero, typically in September or December depending on your utility. Most utilities lock you into your export credit rate for 10 years from interconnection, providing rate certainty. However, new customers may face different rates as utilities can adjust export credit values annually for new solar installations.