Arizona Solar Panels

The Arizona Residential Solar Energy Credit (A.R.S. §43-1083.01) allows homeowners to claim 25% of the total installed cost of a qualifying solar energy system as a credit against their Arizona state income tax. The credit is capped at $1,000 per tax year, meaning most full-sized residential solar installations will earn the maximum $1,000 benefit. This credit applies to solar panels, inverters, racking hardware, labor, and permitting costs.

If your Arizona income tax liability in the year of installation is less than $1,000, you are not penalized — any unused portion of the credit can be carried forward for up to five additional tax years, giving you a full opportunity to capture the entire benefit. The credit is claimed by filing Arizona Form 310 along with your state income tax return for the year your system was interconnected and operational.

This credit is currently active with no scheduled expiration date. It applies to both primary and secondary residences. Your solar installer will provide the cost documentation needed to complete Form 310. For official guidance, visit the Arizona Department of Revenue at azdor.gov.

Arizona’s Solar Property Tax Exemption (A.R.S. §42-11054) ensures that the increased market value resulting from a residential solar installation is completely excluded from your home’s assessed value for property tax purposes. Solar systems typically add $15,000–$25,000 to a home’s market value, but under this exemption, none of that increase affects your annual property tax bill — saving homeowners an estimated $100–$300 or more per year depending on their county’s tax rate.

The exemption is permanent for the life of the system, requires no annual renewal, and in most cases applies automatically once your system is permitted and interconnected. Eligible systems include photovoltaics (PV), solar water heating, solar thermal, passive solar, and several other renewable energy technologies. Some county assessors may request documentation of costs and equipment, so it is advisable to retain your installation contract and permit records.

This exemption is one of the most straightforward financial benefits of going solar in Arizona — it costs nothing to maintain and compounds in value over the full 25+ year life of your system. Contact your individual county assessor’s office for county-specific procedures, or visit azcc.gov for additional state-level information.

Arizona waives its 5.6% state Transaction Privilege Tax (TPT) on the purchase and installation of residential solar energy systems. This exemption covers solar panels, inverters, battery storage (when installed as part of a solar system), racking hardware, and installation labor. On a typical $25,000 solar installation, this saves homeowners approximately $1,400 in state sales tax upfront — with no application or paperwork required on the homeowner’s part.

The exemption is applied automatically at the point of sale by the solar installer or equipment seller, who is responsible for ensuring the correct tax treatment. Because Arizona’s combined state and local average sales tax rate is approximately 8.3%, the total savings — including local tax relief where applicable — can reach nearly $2,000 on a mid-sized system. Note that some cities and counties may still levy their own local sales taxes on portions of the transaction; confirm the full tax treatment with your installer.

This exemption applies to both solar-only and solar-plus-battery installations and is currently active with no expiration date. It is one of the simplest and most immediate financial benefits available to Arizona solar buyers. For official details, visit the Arizona Department of Revenue at azdor.gov.

The federal Battery Storage Tax Credit, available under the Inflation Reduction Act, provides a 30% tax credit on the full installed cost of a qualifying home battery storage system. To qualify, the battery must have a minimum capacity rating of at least 3 kWh. Unlike the now-expired residential solar ITC, this battery credit remains fully available at 30% through 2032 and applies to standalone battery installations — you do not need to pair the battery with a new solar system to claim it.

The credit covers the battery unit itself, inverter costs, installation labor, and any necessary electrical panel upgrades directly associated with the battery installation. As a concrete example, a Tesla Powerwall 3 with a fully installed cost of approximately $16,000 would generate a federal tax credit of roughly $4,800. The credit is non-refundable, meaning it reduces your federal income tax liability dollar-for-dollar, but any unused portion can be carried forward to future tax years.

To claim the credit, file IRS Form 5695 (Residential Energy Credits) with your federal tax return for the year the battery installation is completed and the system is operational. Arizona residents adding battery storage to an existing solar system — or installing a standalone battery — should prioritize this incentive, as it represents the largest single federal financial benefit currently available for home energy storage. Visit irs.gov or energy.gov for official program details.

Arizona no longer offers traditional net metering, where homeowners received full retail-rate credit for every kilowatt-hour of excess solar electricity sent to the grid. Under the current net billing framework established by the Arizona Corporation Commission, excess solar generation is credited at a lower export rate — sometimes called the Resource Comparison Proxy (RCP) rate — that is significantly below the retail electricity rate. The export rate you receive at the time your system interconnects is locked in for 10 years, providing some long-term predictability. Export rates by utility in 2025–2026 are approximately: APS ~$0.062/kWh (vs. retail ~$0.13–$0.15/kWh); SRP ~$0.057/kWh (vs. retail ~$0.15/kWh); TEP ~$0.057/kWh (vs. retail ~$0.15/kWh). Some rural electric cooperatives, including Sulphur Springs Valley Electric (SSVEC) and Navopache Electric, still offer traditional net metering in their service areas.

Because export rates are now 60–80% below retail value, solar systems sized to maximize self-consumption — using solar power directly in the home rather than exporting it — deliver the strongest financial returns. Pairing solar with battery storage is increasingly important in Arizona’s net billing environment, as batteries allow homeowners to store excess daytime solar production and use it during higher-cost evening hours instead of exporting it at low rates.

APS also charges a Grid Access Fee of approximately $0.93 per kW of solar array capacity per month, and SRP solar customers are subject to demand charges of approximately $32–$38 per kW of peak demand per month. Homeowners should carefully review their specific utility’s current rate schedule and solar plan options before installation. For official rate information and interconnection rules, visit the Arizona Corporation Commission at azcc.gov, or your utility’s website: aps.com, srpnet.com, or tep.com.

The APS Storage Rewards Pilot is an active virtual power plant (VPP) program that pays APS residential customers for enrolling their home battery storage systems and allowing APS to draw on stored energy during high-demand grid events. The program runs from May 1 through October 31 each year, during which APS may call up to 60 dispatch events per season, each lasting between one and four hours, typically occurring after 4 p.m. during peak summer demand periods.

Compensation is based on performance: participants earn $110 per average kilowatt (kW) of power their battery contributes across all events during the season. A typical 13.5 kWh battery with a 6 kW output can earn approximately $660 per season. The program is structured for up to 5,000 participants and spans five years, providing ongoing annual earning potential for enrolled homeowners. Importantly, APS’s earlier upfront battery incentive (the Residential Battery Pilot offering up to $3,750) is now closed to new applicants; the Storage Rewards Pilot is the currently active program.

To enroll or get more information, APS customers can contact the program at [email protected] or visit aps.com. Participation is subject to enrollment availability and qualifying battery system requirements. This program pairs well with the 30% federal battery storage tax credit, making battery storage an increasingly attractive investment for APS customers.

The TEP Energy Storage Rewards Program is an active utility incentive available to Tucson Electric Power residential customers who own a qualifying home battery storage system. The program operates as a virtual power plant (VPP), where TEP dispatches enrolled batteries during periods of high grid demand — both in summer and winter seasons — and compensates homeowners for the energy or load reduction provided.

Participants earn $120 per kilowatt (kW) of average performance per season. A typical home battery system earns approximately $360 per season, and with both summer and winter participation, total annual earnings can reach up to $720 per year in TEP bill credits. Tesla Powerwall owners can also enroll through the Tesla Virtual Power Plant Powered by TEP, which offers up to $800 per battery per year. Other compatible systems can enroll through the SolarEdge app or directly with TEP.

This program provides ongoing annual revenue that meaningfully improves the financial return on a battery storage investment, especially when stacked with the 30% federal battery storage tax credit and Arizona’s state solar tax credit. TEP customers interested in enrolling should visit tep.com/energy-storage-rewards for current eligibility requirements, compatible battery models, and enrollment instructions.

The SunWatts Renewable Energy and Rebate Program offered by Mohave Electric Cooperative provides residential and small commercial customers (systems under 50 kW) with a cash rebate of $0.05 per watt of installed solar capacity, up to a maximum of $2,500. Mohave Electric serves approximately 38,000 customers in northwestern Arizona, including the Bullhead City, Kingman, and Lake Havasu City areas. A typical residential solar installation through this program earns around $350, with larger systems approaching the $2,500 cap.

Importantly, customers must submit a reservation before installation begins — the rebate is not available retroactively. The program is subject to available annual funding, so it is essential to verify current availability and reserve your spot before signing a solar contract. The rebate applies to the solar array itself and is paid after installation is complete and verified by the cooperative.

To check current program availability and begin the reservation process, contact Mohave Electric Cooperative directly at (928) 758-0539 or visit mohaveelectric.com. This rebate can be stacked with Arizona’s state solar tax credit and the sales tax exemption for additional savings.

Mohave Electric Cooperative offers a $500 rebate to residential customers who install a qualifying battery storage system as part of their home solar setup. To be eligible, the battery must have a minimum power capacity of at least 5 kWh, include programmable controls and WiFi connectivity, and be configured so that it cannot be charged during on-peak hours. These requirements ensure the battery can support grid management goals during periods of high demand.

This rebate is available to customers in Mohave Electric’s service territory in northwestern Arizona (Bullhead City, Kingman, Lake Havasu City area) and is subject to available program funding. As with the cooperative’s solar rebate, availability can change — it is strongly recommended to verify the program is currently funded before planning your installation around this incentive.

To confirm eligibility and apply, contact Mohave Electric Cooperative at (928) 758-0539 or visit mohaveelectric.com. When stacked with the 30% federal battery storage tax credit, this rebate further reduces the net cost of adding battery storage to a home solar system.

The SRP Battery Partner Program is an active virtual power plant (VPP) incentive available to Salt River Project residential customers who own a compatible home battery storage system. Through this program, SRP — in partnership with EnergyHub — can dispatch enrolled batteries during periods of peak grid demand, and homeowners receive financial compensation for their participation. The program is designed to help SRP manage grid stability while providing battery owners an ongoing revenue stream.

Compatible battery systems include those from manufacturers supported by the EnergyHub platform, such as FranklinWH and other major brands. Enrollment and dispatch are managed through the EnergyHub platform, which coordinates battery response during grid events while ensuring homeowners’ backup power needs are protected. Specific compensation rates and program terms should be confirmed directly with SRP, as they may vary by enrollment period and battery system.

SRP solar customers should note that as of November 2025, SRP retired all traditional net metering plans and transitioned all new solar customers to net billing with time-of-use rates and demand charges. In this environment, battery storage — combined with the Battery Partner Program incentive and the 30% federal battery storage tax credit — can significantly improve the economics of a home solar-plus-storage system. Visit srpnet.com or contact SRP directly for current enrollment details and compatible equipment lists.

The USDA Rural Energy for America Program (REAP) provides grants and guaranteed loans to help rural Arizona residents and agricultural businesses finance solar energy installations. Eligible applicants can receive grants covering up to 50% of total installed solar costs, with guaranteed loan financing available for the remaining balance. The Inflation Reduction Act funded REAP with $2.5 billion through 2031, making it one of the most substantial federal solar incentive programs currently available for qualifying rural customers.

Eligible applicants include farms, ranches, rural small businesses, and agricultural operations located in rural areas of Arizona — including communities such as Yuma, Casa Grande, and Safford. The program is particularly valuable for energy-intensive agricultural operations where solar can dramatically reduce operating costs. Both new solar installations and solar-plus-battery storage systems may qualify.

Applications are submitted to the USDA Arizona State Rural Development office. Because REAP grants are competitive and subject to funding availability, applicants are encouraged to apply early and work with a qualified energy auditor or solar installer familiar with the program requirements. Visit rd.usda.gov/az for current application deadlines, eligibility criteria, and contact information for the Arizona Rural Development office.

The Solar for All Arizonans Program is a new initiative funded by a $156 million award from the U.S. Environmental Protection Agency under the EPA’s Solar for All program. Administered through Arizona’s Governor’s Office of Resiliency, the program is currently in development and is expected to begin accepting participants in 2026. Its primary goal is to dramatically expand rooftop solar access for low-income, rural, and Tribal communities across Arizona that have historically been underserved by solar incentive programs.

The program includes a Rural and Tribal Solar + Storage pilot that will prioritize distributed residential solar and battery storage installations in unelectrified and underserved areas. Additional components include workforce development initiatives to train new solar workers and upskill existing workers in Arizona’s clean energy sector. Program goals include increasing statewide rooftop solar capacity from 7 MW to over 61 MW, lowering electricity bills for eligible households by at least 20%, and avoiding over 96,000 tons of CO₂ annually.

Eligibility details, application processes, and income thresholds will be announced as the program launches. Arizona residents interested in this program — particularly those in rural areas, on Tribal lands, or with lower incomes — should monitor the AZ Clean Energy Hub for updates. Visit resilient.az.gov for the latest program information and to sign up for notifications when enrollment opens.