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With over 6 peak sunlight hours, solar systems in Arizona get more sunlight than anywhere in the USA. Is there a better place to install solar panels? If you are worried that installation will turn into an expensive undertaking, read our article about solar incentives in Arizona.
Key takeaways
- Over 6 peak sunlight hours make Arizona the sunniest state in the USA.
- Arizona residents can claim a 30% federal tax credit on the total cost of their residential and commercial solar system installation, reducing your tax liability and including solar panels, battery, and installer’s work.
- Arizona Solar Tax Credit offers 25% of the system cost, with a maximum of $1,000. Independent of the federal ITC.
- Tax Credit for Generated Energy (Large Systems) for commercial systems of at least 5MW of power installed before January 1, 2021. Tax credit based on electricity production (1-4 cents/kWh). Credit cannot exceed $2 million per year.
- Excess energy is sold back to the grid. Utility rates vary and decrease by approximately 10% each October. Rates are locked in for 10 years for new customers.
- Solar equipment is exempt from property taxes. Property value increases by approximately 4%.
- Electric cooperatives like Mohave offer rebates. Mohave offers 5 cents/watt, up to $2,500. Application required before installation.
- Solar energy harvesting equipment is exempt from sales tax. Reduces system costs by 5-6%. Batteries and controls are not included.
Save 30% of your PV system cost with Federal Solar Tax Credit
The US government wants more people to go solar: it’s a modern and green way of getting energy. This is why the Solar Investment Tax Credit (ITC) program was developed. It allows American citizens to claim 30% of the cost of their installation as an income tax deduction. The cost here is not only solar panels but also shipping, installation expenses and more. For example, if your system overall made you spend $10,000, the government returns you $3,000. To claim the ITC, complete all the necessary forms and submit them when filing your taxes.
U.S. Climate Bill: 30% Solar Tax Credit comes backSave another $1,000 with Arizona solar tax credit on top of ITC
Arizona has its own state tax program to encourage people to go solar. It is similar to the ITC: you can get a return of 25% of the cost of your system with a maximum cap of $1,000 – whichever is lower. This program runs independently from the ITC, so you can apply for both and lower the price of your PV system even further. You can find full instructions and all necessary forms on Arizona Department of Revenue website. After you fill in the papers, submit them when filing your taxes. Please note that installers must furnish you with a certificate stating that your solar equipment complies with Arizona's solar energy device requirements.
Get a tax credit for generated energy if your solar system is bigger than 5 MW
This program was designed for commercial solar installations of at least 5,000 kilowatts (5 Megawatts) capacity installed before January 1, 2021. This date has passed, but if you already have an installed system, you can apply for this credit until your installation is 10 years old. According to the guidelines, first you have to get a certificate from the Arizona Department of Revenue. To get one, send them an application: the Department accepts applications from January 2 to January 31 each year until 2030. Tax credit by itself depends on the amount of electricity you produce. With a solar system, you get from 4 to 1 cent for kWh, depending on the age of your system, but the tax credit can’t surpass $2 million dollars in one year.
Sell your energy in Arizona with net billing
You can sell into the grid all the excess energy that your system produces, which is called net billing in Arizona. Utility companies offer different rates for electricity but unfortunately, they decrease by about 10% every October: the consequences of the 2016 shift from net metering to net billing in Arizona. The good news is that once a new customer joins in on the program, the rates lock in for him for 10 years.
Save up to $1,000 a year trading RECs
Renewable Energy Credits are certificates granted to any person or entity upon generation of each Megawatt-hour of clean electricity. Unlike with net metering, you don’t need to sell any electricity to get credits. The value of RECs is always changing, which makes them similar to stock market assets. Based on the available data, selling RECs could mean anywhere from $300 to $1,000 annually for a 10kW solar system. To participate, you have to contact the Arizona Corporation Commission. After that, you can create a REC account with the Western Renewable Energy Generation Information System (WREGIS) to begin storing and selling your credits.
Update 2025: Unfortunately, RECs trading program in Arizona was discontinued.
Freeze property tax with an exemption for solar panels
Any solar equipment or solar elements don’t add any value to property, according to Arizona Revised Statutes, and thus you don’t have to pay taxes for it. The Arizona property tax exemption program was established in 2006, and so far there is no expiration date in sight for it. Basically, it allows you not to worry about what a solar system might cost you in terms of taxes. Keep in mind that while having solar panels in Arizona doesn’t change your taxes, it still increases the market value of your house.
4%
this is how much solar panels increase the value of your house
Save up to $2,500 with solar rebates in Arizona
Electric cooperatives in Arizona also try to incentivize their customers to go solar. For example, Mohave offers rebates for solar products through Sunwatts program for their customers.
Mohave cooperative gives a rebate of 5 cents per watt with a system size cap of 50kW. The maximum discount is $2,500. The application for the program has to be submitted before the installation of your system. Start with submitting a reservation form with copies of cost estimate and work plan from the contractor. For any questions on the program feel free to contact Mohave by email energysavings@mohaveelectric.com or phone: (928) 758-0539.
Sales tax exemption makes going solar 5-6% cheaper
In Arizona, there are no sales taxes applied to any equipment for harvesting solar energy. This program has been in place since 1997. Overall, it makes solar panels in Arizona 5-6% cheaper than in other states with no sales tax exemption program. Note that the sales tax exemption does not apply to batteries, controls, etc., that are not part of the solar system.
Another way they help is by giving you money back after you've installed the panels. This lowers the total amount you paid.
If your solar panels make more electricity than you use, you can sell that extra power back to the electric company. This can actually earn you money, which helps pay for the panels.
Why are they giving out all this money? Because solar energy is good for everyone. It helps us avoid using dirty energy, which protects the environment. It also creates jobs and makes us less dependent on other countries for energy.
For you, this means you can save a lot of money. You get help paying for the solar panels, you pay less for electricity each month, and you might even earn money by selling your extra power. These deals are like a big discount on solar, making it easier and cheaper to save money and help the planet.
Check out solar panels near you!
Looking to build a home solar system? Check out solar panels that we have for sale in Arizona
SHOP SOLAR PANELS
Years of experience in translation and a love of nature help Julia find the right words to encourage going solar. She joined the team in 2023 and is happy to make her contribution to a greener future.
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