Arizona Solar Panel Incentives for 2025 & Beyond
Arizona clocks in at No. 5 in national solar capacity, making properties throughout “The Grand Canyon State” a perfect candidate for solar power. It’s something that nearly 1.4 million Arizona households already know, as the state generates enough solar power (11.15 percent of its total electricity output) to power that volume of properties.
And Arizona isn’t done. Over the next five years, it’s estimated that solar power will grow by 43 percent in Arizona. You too can take advantage of this growing renewable energy source by working with SolarTech on your next project. We specialize in more than just installing industry-leading solar systems, but making sure you’re capturing all the incentives you qualify for too. Read on to learn more or contact us today to schedule a consultation.
Current State of Solar in Arizona
Arizona has plenty of sunshine for its residents, one of the factors that makes the state so appealing. Additionally, its 300 days of sun each year makes it a prime candidate for solar installations, something that 1.4 million Arizona households are already realizing. What’s more is that solar installations in Arizona are more affordable than ever thanks to various incentives that property owners may be eligible for. This, combined with a projected surge in solar installations over the next five years, has Arizona poised to become even more of a player in renewable energy.
What are the Top Arizona Solar Panel Incentives?
Arizona residents may qualify for several solar panel installation incentives, including:
Federal Solar Investment Tax Credit (ITC)
Arizona Residential Solar Energy Tax Credit
Solar Equipment Sales Tax Exemption
Energy Equipment Property Tax Exemption
Net Billing Program
Utility-specific incentives
Federal Solar Investment Tax Credit (ITC)
The Federal Solar Investment Tax Credit, sometimes known as just the Federal Investment Tax Credit, or ITC, allows property owners to claim up to 30 percent of the cost of solar energy system installation against their federal taxes. For example, if your system costs $10,000 to install, you can claim up to $3,000 of it on your federal income tax filing. Currently, the 30 percent federal tax credit applies for installations made between 2022 and 2032, before it’s reduced to 26 and 22 percent in 2033 and 2034, respectively. It’s expected to expire in 2035 unless Congress renews it.
If you’re an Arizona resident who files a federal income tax, you qualify for this solar benefit. At SolarTech, we’ll help you maximize it.
Arizona Solar Incentives
Residential Arizona Solar Tax Credit
Arizona also has a state solar tax credit – 25 percent of your solar panel system costs up to $1,000 total toward your state income tax. When you combine this state tax credit with the 30 percent federal tax credit, the incentive to transition to solar on your property becomes even more appealing. In addition to the 30 percent tax credit from the federal government, there’s the potential to receive up to an additional $1,000 credit from the Arizona state government. The credit can be claimed for up to 5 tax years.
Solar Equipment Sales Tax Exemption
In Arizona, there’s a sales tax exemption for the retail sale of solar energy devices and installation of such devices and equipment by qualified contractors. That means you won’t pay the standard 5.6 percent sales tax on solar equipment or installation.
Energy Equipment Property Tax Exemption
Rooftop Solar panels, solar pool heaters and other solar-powered appliances all qualify for Arizona’s Energy Equipment Property Tax Exemption, which provides a 100 percent tax credit for any increase in property resulting from the installation of this – and other – energy-efficient equipment. It’s estimated that solar panels can increase property value by 3 to 6.8 percent on average, meaning you’ll be able to benefit from this increase in value.
Net Billing in Arizona
Arizona’s net billing system compensates solar owners for excess solar energy they send to the grid, credits that are often used to offset any future energy costs. Typical credit rates range from $7.81 to $10.45 per kWh that is sent back to the grid. It represents additional potential for solar savings.
Utility-Specific Solar Incentives
Keep your eye out for renewable energy programs and Arizona solar rebates, as utility companies also offer solar incentives. While Salt River Project no longer offers incentives for rooftop installations, it does offer a $250 rebate for the purchase and installation of a demand management system (DMS).
Arizona Public Service also offers a $30 rebate on smart thermostat purchase and installation.
SolarTech works to stay up to date on all utility offers to ensure you maximize your savings potential.
How Arizona Residences Can Maximize Incentives
Looking to get the most return on investment out of your solar installation? SolarTech is here to help in the following ways:
We stay up to date on all incentive opportunities and will assist you with various applications.
We optimize system design to ensure that it meets the requirements for maximum incentives.
We offer ongoing support for claiming benefits, largely thanks to our expertise in navigating the complex incentive landscape.
FAQs
How do I qualify for the Arizona solar tax credit?
The credit is good for 25 percent of the total system cost, but cannot exceed a total of $1,000. It can be claimed for up to five tax years. You’ll need to complete Arizona Form 301 and include it with your state tax filing.
Can I combine federal and state solar incentives?
Yes! To maximize your incentive potential, combining your federal solar tax credit and state solar sales tax exemption is something that property owners should do following a solar installation.
How does net metering work in Arizona?
Net metering pays Arizona solar power owners to distribute excess energy generated back to the grid, usually to offset future energy costs. Typical credit rates range from $7.81 to $10.45 per kWh.
Are there any income limits for solar incentives in Arizona?
No, there is no income limit for solar incentives in Arizona.
How long do solar panels typically last in Arizona's climate?
With proper maintenance, solar panel systems can last anywhere from 25 to 30 years under normal operating conditions in Arizona.
Hurry Before it's Too Late
The solar incentives offered now aren’t likely to be in place forever. In fact, the Federal Solar Investment Tax Credit – which is currently 30 percent of the cost of solar system installation – will reduce to 26 percent for installations starting in 2033 and then 24 percent for installations in 2034. It expires in 2035 unless Congress renews it.
Additionally, there’s a potential for the state government to revisit the state credit. Make sure you’re acting soon to ensure you maximize the benefits of going solar.
If you’re interested in going solar, contact SolarTech today for a personalized assessment of your property. When you schedule a free consultation, we’ll help you understand how much you can potentially save from going solar. You can also use an online savings calculator to ballpark your potential savings.
Steps to Claim Solar Incentives in Arizona
SolarTech will help guide you through the process of claiming each available solar incentive that you qualify for.
If you’re filing for the Federal Solar Investment Tax Credit, you’ll need to fill out IRS Form 5695 with your taxes and include it with your federal taxes. For the state solar energy credit, you’ll need to complete Arizona Form 301 and include it with your state tax filing.
To qualify for the Arizona sales tax exemption, you must ensure that your panels are installed by an approved contractor. It’s the responsibility of the contractor to ensure property owners don’t pay sales tax for this.
To qualify for the property tax exemption, property owners must provide their assessor with documentation on the purchase and installation. This must be submitted within 6 months before the notice of full cash value is issued for the initial valuation year.
SolarTech