Arizona Solar Tax Credit

Arizona is one of the sunniest states of America. A solar system there pays dividends. Getting one is especially easy when you make use of the Solar Tax Credit in Arizona. Here is how to claim it.

What is the Solar Tax Credit?

The Solar Investment Tax Credit (ITC) enables businesses and homeowners to receive a tax credit equal to 30% of the expense incurred for a solar panel system. Unlike a rebate, the ITC directly lowers the amount of income tax you are obligated to pay.

The Solar Tax Credit is accessible to those who install solar panels before December 31, 2034. However, it decreases to 26% in 2033 and further reduces to 22% at the start of 2034.

How does the Arizona solar tax credit work?

If you install a solar panel system worth $20,000, you can reduce your income taxes by $6,000. This brings down the net cost of the system to $14,000. You can carry over any remaining credit to future years, ensuring you eventually receive the full 30% promised by the solar incentive.

To be eligible for the Investment Tax Credit in Arizona you must own the solar energy system, and it has to be installed in the United States. The system must be new or used for the first time. If you want to claim the credit for a solar installation on your boat or RV, consider noting it as your second home.

How do I get a solar tax credit in Arizona?

To get the Solar Tax Credit, follow these simple steps after you've installed your solar system:

1. Keep good records: Save all your bills and receipts from the solar installation, like        for solar panels, inverters, mounts, and labor. You won't send them in, but they're          handy if you ever get audited.
2. Fill out IRS Form 5695: As a homeowner, this form is how you claim the Solar Tax        Credit. Complete it and attach it to your federal income tax return.
3. Include the info on Schedule 3 (Form 1040): Make sure to add your residential              energy credit details in the right place.
4. File on time: Submit your tax return by the deadline, and you're good to go!

April 15

most common National Tax Day date

Need help? Follow our guide!

We cover filling out the forms for claiming ITC step by step

Step-by-step guide

Benefits of the Arizona Solar Tax Credit

The expenses eligible for reduction through the Arizona Solar Tax Credit encompass not just the solar panels but also include all associated equipment, shipping, and labor costs. There is no limit to the amount you can claim back.

Beyond the federal solar tax credit, Arizona offers its own set of incentives and rebates for solar installations at the state level. These initiatives serve to further mitigate the initial expenses associated with the installation of a solar energy system. For additional details, refer to our guide on Arizona solar incentives.

Andrey Gorichenski
Senior Editor

Andrey had been a news editor and freelance writer for a number of medias before joining A1SolarStore team. Climate change and its impact on people's lives has always been among his interests and it partially explains his degree in Philosophy and Ethics.

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