Arizona

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, making solar energy more affordable for Arizona families.

While the provided information doesn’t specify the exact credit amount or percentage, this incentive is designed to offset some of the upfront costs of your solar installation. The credit applies only to solar energy devices installed at your primary or secondary residence located within Arizona. Since this is a nonrefundable credit, it can reduce your state tax liability to zero, but any unused portion cannot be refunded to you as cash.

To claim this credit, you’ll need to file Form 310 with your Arizona state tax return. The form and instructions are updated annually, so be sure to use the correct year’s version when filing. Keep all receipts and documentation related to your solar installation, as you’ll need these to support your credit claim. This state credit can be combined with federal solar incentives and utility rebates to maximize your overall savings on solar energy.

Arizona’s Property Tax Exemption for renewable energy equipment allows homeowners to exclude the added value of their solar energy 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 solar panels, inverters, batteries, and other qualifying renewable energy equipment installed on residential properties.

The financial benefit varies based on your home’s location and local tax rates, but it can save homeowners hundreds to thousands of dollars annually in property taxes. For example, if your solar system adds $20,000 to your home’s value and your local property tax rate is 1%, you would save approximately $200 per year in property taxes. To qualify, the renewable energy equipment must be installed and operational on your Arizona property. Homeowners need to file the appropriate property tax form (Form 82054REE) with their county assessor to claim this exemption, and the exemption continues for as long as you own the qualifying equipment.

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 applies to all residential solar and wind installations. The savings can add up to hundreds or even thousands of dollars depending on your system size and local tax rates, making this a valuable benefit that works alongside other solar incentives to reduce your overall investment costs.

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 major utility company 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 for exports, Tucson Electric Power (TEP) pays $0.0633 per kWh, and UNS Electric pays $0.0755 per kWh – all with 10-year rate locks. Salt River Project offers seasonal rates between $0.02-$0.06 per kWh, while cooperative utilities like Mohave Electric pay lower rates around $0.0353 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. Most utilities lock new customers into their export rate for 10 years, though rates for future customers can change annually. Solar customers generally must move to time-of-use billing, which means electricity costs vary by time of day, and some utilities impose additional monthly charges for solar customers.