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 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 equipment must be used primarily for renewable energy generation and meet state requirements for renewable energy systems. This exemption provides ongoing annual savings by keeping your property tax bill the same as it was before installing solar, despite the added home value from your clean energy investment.

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 contractor’s installation services.

This exemption applies automatically at the point of sale when you purchase qualifying solar or wind equipment and installation services from contractors in Arizona. There are no income limits, application deadlines, or special forms to fill out – the tax exemption is built into Arizona state law and available to all homeowners who install these renewable energy systems. The savings can add up to hundreds or even thousands of dollars depending on your system size, making clean energy more affordable for Arizona families.

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 power you export. Each major utility 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 exported, Tucson Electric Power (TEP) pays $0.0633 per kWh, and UNS Electric pays $0.0755 per kWh – all with 10-year rate locks for new customers. Salt River Project offers seasonal rates between $0.02-$0.06 per kWh, while cooperatives like Mohave Electric pay $0.0353 per kWh and Trico Electric pays $0.0368 per kWh. Most utilities require solar customers to switch to time-of-use rate plans, and some charge additional monthly fees ranging from $2.23 to higher customer charges.

Important considerations include annual credit true-ups where excess credits over $10-$25 are typically paid out and accounts reset to zero, though some utilities like Salt River Project carry credits forward indefinitely. Export credit rates can change annually for new customers, but most utilities lock existing customers into their interconnection rate for 10 years. Homeowners should carefully compare utility programs and understand that net billing generally provides lower compensation than the retail rate you pay for electricity from the grid.