Tucson, 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 eliminates state sales tax on the purchase and installation of solar and wind energy systems for your home. This means you won’t pay Arizona’s standard sales tax rate (which varies by location but is typically around 5-10%) on the equipment itself or the contractor’s installation services.

The exemption applies to all residential solar and wind energy devices, including solar panels, inverters, mounting equipment, and wind turbines. Both the equipment purchase and professional installation services are covered under this tax exemption. There are no income limits, system size restrictions, or application deadlines – the exemption is available to all Arizona homeowners who install qualifying renewable energy systems. This incentive works automatically at the point of sale, so you’ll see the savings immediately when you purchase your system rather than waiting for a rebate or tax credit.

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 utility company in Arizona has its own specific 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 credit rate for 10 years once you connect your system, providing rate stability. However, some utilities like Mohave Electric Cooperative can change rates annually.

Most Arizona utilities require solar customers to switch to time-of-use (TOU) rate plans, which charge different amounts for electricity based on when you use it. Some utilities also charge additional monthly fees – for example, APS has a Grid Access Charge of $0.242 per kW of your system size monthly, and UNS Electric charges a $2.23 monthly distributed generation fee. At the end of each year, most utilities will either pay out excess credits above a certain threshold (typically $10-$25) or reset your account to zero, so unused credits don’t carry forward indefinitely.