Arizona has numerous solar incentives that make going solar more affordable. Enter your zip code below to get connected with trusted providers in your area.
Updated:
Mar 30, 2024
Written by:
Faith Wakefield
Faith Wakefield
Edited by:
Sabrina Lopez
Sabrina Lopez
Solar Editor
As the second sunniest state in the U.S., Arizona is a great place to go solar, and it’s never been more affordable. Arizonans can take advantage of the statewide tax credit, tax exemptions and local rebate programs on top of the 30% federal solar tax credit to dramatically reduce their total system cost.
We’ve extensively researched all of the solar incentives in Arizona so you can understand how each one works and get the best deal on your solar system. If you’re ready to start your solar project, we recommend using our tool below to connect with top solar installers in your ZIP code.
Arizona Statewide Solar Incentives
In addition to the federal solar tax credit, Arizona residents are eligible for a 25% state solar tax credit, property tax exemption and sales tax exemption on solar equipment.
Arizona State Residential Solar Income Tax Credit
Incentive Value: Up to $1,000
Frequency: One-time tax credit
The Grand Canyon State offers a solar tax credit of 25% of your installation costs, up to a maximum of $1,000. Homeowners can apply for this personal income tax credit when they file their taxes with the state.
If the credit exceeds the amount of taxes you owe, you can carry it over for up to five years. Those who lease their systems or are part of a power purchase agreement (PPA) don’t qualify.
Energy Equipment Property Tax Exemption
Incentive Value: 100% of taxes from the additional value added to your property by a solar panel system
Frequency: Continued exemption from the time your energy equipment is installed
Installing a solar power system increases your home value, but Arizona offers a property tax exemption so that you don’t have to pay taxes on this additional value. Solar panel systems aren’t the only solar and efficiency upgrades covered under this exemption. Here’s a list of other included equipment:
- Passive solar technology, such as a Trombe wall
- Solar pool heaters
- Solar space heaters
- Solar thermal electric
- Solar water heaters
To apply for this tax exemption, you’ll need to fully document your energy system purchase, installation and costs to your county assessor. Learn more about the Arizona property tax exemption on the DSIRE website.
Solar Equipment Sales Tax Exemption
Incentive Value: 100% of sales tax on eligible solar equipment
Frequency: One-time sales tax exemption
The Department of Revenue in Arizona provides a sales tax exemption for solar energy devices and installation by approved contractors. The exemption doesn’t include solar battery storage or other accessories that aren’t a part of the initial solar power system.
To claim your sales tax exemption, your solar installer must register with the Arizona Department of Revenue (ADOR) by submitting Arizona Form 6015. As the customer, you shouldn’t have to do anything on your end.
Local Solar Incentives
There are several local solar incentives in Arizona that residents can take advantage of through their utility companies.
| Local Arizona Solar Incentive | Who’s eligible? | Estimated Savings | Description | Frequency |
| Mohave Electric Cooperative SunWatts Renewable Energy Incentive Program | Mohave Electric Cooperative customers | $0.05 rebate per watt, up to $2,5000 for solar photovoltaic installations | The SunWatts program incentivizes Mohave Electric Cooperative customers to install solar with a $0.05 rebate per watt of solar installed and $0.75 per kWh of energy saved for solar water heating for the first year. | One-time rebate for solar installations, payout for solar water heaters is through the first year of system operation |
| Trico Electric Cooperative SunWatts Incentive Program | Trico Electric Cooperative customers with solar water heaters | $0.40 per kWh savings with solar water heaters through the first year | Trico Electric Cooperative offers a SunWatts rebate program for energy saved with solar water heaters. | Payout for solar water heaters is through the first year of system operation |
| Sulphur Springs Valley EC-SunWatts Rebate Program | Sulphur Springs Valley EC customers with solar water heaters | $0.50 per expected first year of kWh savings with solar water heaters | Sulphur Springs Valley EC offers a SunWatts rebate program for energy saved with solar water heaters. | Payout for solar water heaters is through the first year of system operation |
To see if there are unique solar incentives in your city or county, check out your local utility’s and local government’s websites.
How To Claim Local Incentives
To learn more about local incentives and how to claim them, you can visit the DSIRE website. You should also contact your utility company to discuss eligibility for solar incentives and rebates.
Arizona Solar Battery Incentives
Based on our research, Arizona currently does not offer any solar battery or energy storage incentives. Additionally, the state’s available solar panel incentives do not extend to battery storage. While the Salt River Project (SRP) and Arizona Public Service (APS) had pilot incentive programs for energy storage, funding for both programs is already committed.
Arizona Net Metering Explained
Most rooftop solar installations in Arizona qualify for their utility company’s net billing program. Net billing replaced net metering in December 2016. Like a net metering program, net billing allows homeowners to earn credits on their electricity bills for unused energy generated by their solar power systems.
However, unlike net metering, customers are credited for their excess energy generation at a non-retail rate. In Arizona, customers receive the avoided cost rate for the excess energy generated by their solar panels, which is worth the wholesale cost for the utility to generate the electricity. This is typically worth significantly less than full retail rate net metering.
Credits last indefinitely and are paid out annually when they exceed a certain balance, typically between $10 and $25, depending on your utility.
Export compensation rates are currently between 7.81 and 10.45 cents per kilowatt-hour (kWh) of excess energy generated by your solar panels. This rate depends on your utility company. Learn more about Arizona’s net billing program on the DSIRE website.
How To Enroll in Net Metering (Net Billing)
Your solar installer will complete the following steps for you to enroll in net billing:
- Once your solar system is installed, you’ll apply for interconnection through your utility company.
- Once your interconnection application is approved, you’ll sign your net billing agreement outlining the terms of the arrangement.
- Finally, to measure how much energy you use from and supply to the grid, your solar technician will install a bi-directional meter.
- Once your solar panels are on and running, you’ll be able to start earning credits with Arizona’s net billing.
Federal Solar Tax Credit
Arizona homeowners also qualify for the federal solar investment tax credit, also known as the ITC. This provides a deduction equal to 30% of your solar panel installation costs on your federal taxes. If you are a homeowner, condo owner or cooperative housing corporation member and you own your solar panel system, you are eligible for this credit. Under the Inflation Reduction Act, this credit will decrease to 26% in 2033 and 22% in 2034 before expiring in 2035.
The ITC is not a tax refund; it reduces the amount of taxes you owe. Unlike the state tax credit, there is no maximum amount that you can claim. It also rolls over for up to five years if your tax liability is less than the credit.
You will claim your credit on your federal tax return using IRS Form 5695. Your solar installer should help you apply.
Estimated Solar Savings in Arizona
If you live in Arizona, you are eligible for both a statewide solar tax credit and the federal solar tax credit that will save you thousands of dollars on a new solar installation. Net billing, solar rebates from your utility and tax exclusions can help you save even more.
Arizonans have an average payback period of six and a half years for solar panels. Considering the average solar system lasts 25 years or more, you’ll be generating free energy for more than 18 years after your system pays for itself.
Overall, if you live in Arizona, you stand to save thousands of dollars in energy costs over the lifespan of your solar energy system.
The Bottom Line
Although the upfront cost of solar panels is high, there are many financial incentives offered in Arizona to dramatically reduce the total cost of installing solar. Most Arizonans will enjoy many years of free solar energy after their solar panels are paid off.
Between the ample sunshine and numerous tax incentives, there are many reasons to go solar in Arizona while saving money. Use our tool below to match with respected and dependable solar providers in your area.
Get a quote from some of our top solar energy providers in Arizona using the table below:
| Company | Star Rating | Cost of an 8 kW System* | BBB Rating | Visit Site |
|---|---|---|---|---|
| $24,000–$36,000 | A+ | GET QUOTE | ||
| $25,000–$27,500 | A+ | GET QUOTE | ||
| $20,000–$25,000 | A+ | GET QUOTE | ||
| $20,000–$25,000 | A- | GET QUOTE |
| Company | BBB Rating | Star Rating | Cost of an 8 kW System* | Visit Site |
|---|---|---|---|---|
| A+ | $24,000–$36,000 | GET QUOTE | ||
| A+ | $25,000–$27,500 | GET QUOTE | ||
| A+ | $20,000–$25,000 | GET QUOTE | ||
| A- | $20,000–$25,000 | GET QUOTE |
Frequently Asked Questions About Arizona Solar Incentives
Arizona offers property tax exemption, sales tax exemption, utility rebates and a state tax credit equal to 25% of your system’s cost. Arizona homeowners are also eligible for the federal solar tax credit.
In Arizona, solar is well worth the investment for most homeowners. The state has an abundance of sunshine and numerous incentives and rebates to reduce costs upfront and save money on your electric bill long term.
The average cost of solar panels in Arizona is $2.31 per watt. Most homes require a 5-kilowatt system, totaling $11,550 before applying incentives.
Your property taxes will not increase after you install a solar system in Arizona. Solar panels increase property value, but the state has a solar property tax exemption. However, you must purchase your system in full or take out a loan to qualify. Lease and power purchase agreement customers aren’t eligible.
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