Prescott, AZ Solar Panels

Arizona offers a state tax credit for homeowners who install solar energy devices at their primary or secondary residence located in Arizona. This is a nonrefundable individual income tax credit that helps reduce the upfront cost of going solar. The credit applies to solar panels and related equipment installed at your Arizona home.

While the provided information confirms this credit exists and requires filing Form 310 with your Arizona state tax return, the specific dollar amount or percentage of the credit is not detailed in the source material. To claim this credit, you must be an individual taxpayer who installs qualifying solar energy equipment at your Arizona residence. Since this is a nonrefundable credit, it can reduce your Arizona state tax liability to zero, but any excess credit amount cannot be refunded to you. Be sure to keep all receipts and documentation related to your solar installation, as you’ll need to complete and submit Form 310 when filing your Arizona state income taxes for the year the system was installed.

Arizona’s Property Tax Exemption for renewable energy equipment allows homeowners to exclude the added value of their solar energy system from their property’s assessed value for tax purposes. This means that while your solar installation increases your home’s actual value, you won’t pay higher property taxes because of it. The exemption applies to solar panels, inverters, batteries, and other equipment that’s part of your renewable energy system.

To qualify, your solar equipment must be installed and operational on your Arizona property. You’ll need to report your renewable energy equipment using the state’s Property Tax Form (Form 82054REE) to ensure the exemption is properly applied. This exemption continues for as long as you own the equipment, providing ongoing savings by preventing your property tax bill from increasing due to your solar investment. This makes going solar more affordable by eliminating what would otherwise be an annual cost increase tied to your home’s enhanced value.

Arizona’s Solar and Wind Sales Tax Exemption removes the state sales tax from the purchase and installation of solar and wind energy systems for your home. This means you won’t pay Arizona’s sales tax (currently 5.6%) on the equipment itself or the contractor’s labor to install it. For a typical residential solar system costing $20,000, this exemption could save you over $1,000 at the time of purchase.

This exemption is available to all Arizona homeowners who purchase qualifying solar or wind energy devices. There are no income requirements, and the exemption applies automatically at the point of sale—you don’t need to file for a refund or submit additional paperwork. The exemption has no expiration date under current state law, so it remains available for future installations. 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. Be sure to confirm the total tax savings with your solar installer when getting quotes.

Net Billing in Arizona is a compensation structure where solar homeowners receive credits for the excess electricity their system sends to the grid. Unlike traditional net metering where exports are valued at the full retail rate, net billing programs credit exports at a lower, predetermined rate set by each utility company. This means you’ll pay the standard retail rate for electricity you use from the grid, but receive a reduced credit rate for the solar energy you export.

The financial benefit varies significantly by utility provider. Arizona Public Service (APS) credits exports at $0.06857/kWh with a 10-year rate lock, though customers face a Grid Access Charge of $0.242/kW DC per month and must switch to a time-of-use rate. Tucson Electric Power (TEP) offers $0.0633/kWh with a 10-year lock, while UNS Electric credits at $0.0755/kWh (also locked for 10 years) but charges a $2.23/month distributed generation fee. Salt River Project (SRP) credits range from $0.02-$0.06/kWh depending on season and rate plan, with credits applied to both volumetric and demand charges. Cooperative utilities like Mohave Electric ($0.0353/kWh in 2024, no rate lock) and Trico Electric (3.68 cents/kWh in 2024, 10-year lock) generally offer lower export rates.

Most Arizona utilities require solar customers to move to time-of-use rate plans, which means your electricity costs will vary based on when you use power throughout the day. At the end of each year (typically following your September or December bill), most utilities perform a “true-up” where excess credits above a certain threshold ($10-$25 depending on the utility) are paid out, and your account resets to zero. SRP is an exception, allowing credits to carry forward indefinitely with no annual true-up. The export credit rates for new customers can change annually with most utilities, though customers are typically locked into their interconnection rate for 10 years, providing long-term predictability for your solar investment.