Scottsdale, AZ Solar Panels

The Arizona Credit for Solar Energy Devices is a state tax credit available to 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.

Unfortunately, the provided source materials don’t specify the exact dollar amount or percentage of the credit available. To understand the specific financial benefit and eligibility requirements, you’ll need to review Form 310 and its instructions, which are available on the Arizona Department of Revenue website. The form will detail how much you can claim, any income limitations, and what documentation you’ll need to provide. Since this is a state tax credit that applies to your Arizona income taxes, it’s separate from any federal incentives and can help make your solar investment more affordable.

Arizona’s Property Tax Exemption for renewable energy equipment allows homeowners to install solar panels and other renewable energy systems without increasing their property taxes. When you add solar to your home, the added value from your solar equipment is exempt from property tax assessment, meaning you won’t pay additional property taxes on the increased value that solar brings to your property.

This exemption applies to solar photovoltaic systems, solar thermal systems, and other renewable energy equipment installed on residential properties. The exemption continues for as long as you own the equipment, providing ongoing savings throughout your system’s lifetime. To qualify, you’ll need to report your renewable energy equipment using the Arizona Department of Revenue’s Renewable Energy Equipment Property Tax Form (Form 82054REE). This state-level benefit works independently of other incentives and helps make solar more affordable by ensuring your property tax bill stays the same after installation.

Arizona’s Solar and Wind Sales Tax Exemption removes the state sales tax from the purchase and installation of solar and wind energy equipment for your home. This means you won’t pay the standard Arizona sales tax (currently 5.6% at the state level) on the cost of your solar panels, inverters, mounting equipment, or the labor to install them. For a typical residential solar system costing $25,000, this exemption could save you approximately $1,400 in state sales tax.

This exemption applies to all Arizona homeowners who purchase qualifying solar or wind energy devices and have them installed at their residence. There are no income requirements or application deadlines—the exemption is automatically applied at the point of sale when you purchase eligible equipment. Keep in mind that while the state sales tax is exempted, local city or county sales taxes may still apply depending on where you live. Your solar installer should apply this exemption directly to your purchase, so you’ll see the savings immediately rather than claiming them later through a tax filing.

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. This means you’ll receive a credit on your bill for every kilowatt-hour (kWh) you export, but at a rate that’s typically much lower than what you pay to purchase electricity from the grid.

The specific financial benefit varies significantly by utility provider. For example, Arizona Public Service (APS) customers receive $0.06857 per kWh exported with a 10-year rate lock, while Tucson Electric Power (TEP) offers $0.0633 per kWh, also locked for 10 years. Salt River Project (SRP) credits range from $0.02-$0.06 per kWh depending on season and rate plan, and Mohave Electric Cooperative’s rate is $0.0353 per kWh (which can change annually). Most utilities require solar customers to switch to a Time-of-Use (TOU) rate plan, and some charge additional monthly fees—such as APS’s Grid Access Charge of $0.242 per kW DC or UNS Electric’s $2.23 monthly distributed generation fee.

Most Arizona utilities perform an annual true-up, typically in September or December, where any remaining credits exceeding a threshold (usually $10-$25) are paid out and your account resets to zero. If credits don’t exceed the threshold, you may need to request a check or the credits will roll over to the following year. Salt River Project is an exception, allowing credits to carry over indefinitely with no annual true-up. It’s important to understand your specific utility’s net billing structure, as the export credit rate and billing rules directly impact your solar savings and payback period.