Summary of Arizona Incentive Programs
·Federal Tax Credit 30%
·State Tax Credit: 25% residential
·6 Utility Rebate Programs
In Arizona, as of 2023, homeowners can benefit from several incentives for installing solar systems:
Federal Solar Tax Credit (Investment Tax Credit – ITC)
This national incentive allows for a 30% tax credit on the total cost of installing solar panels. Initially reduced to 26% in 2020, it was reinstated to 30% in 2022 by the Inflation Reduction Act and will remain accessible until 2034, with a gradual phase-out planned: 26% in 2033 and 22% in 2034, potentially phasing out entirely in 2035 unless renewed by Congress??.
Arizona State Residential Solar Income Tax Credit
Arizona offers a state-specific solar tax credit, allowing residents to claim a 25% credit on their solar system costs, including installation, up to $1,000. This is a one-time tax credit that can be carried over for up to five years if it exceeds the taxes owed. This credit does not apply to leased systems or those under a power purchase agreement (PPA)??.
Energy Equipment Property Tax Exemption:
Homeowners in Arizona who install solar power systems are eligible for a property tax exemption on the additional value added to their property by the solar system. This exemption is continuous from the time the energy equipment is installed and covers not only solar panel systems but also other solar and efficiency upgrades like passive solar technology, solar pool heaters, and solar water heaters??.
Net Billing Program:
Replacing net metering in 2016, Arizona’s net billing program allows homeowners to earn credits on their electricity bills for excess energy produced by their solar power systems. These credits are based on a non-retail rate, representing the wholesale cost for the utility to generate electricity. The export compensation rates for excess energy generated by solar panels in Arizona currently range from 7.81 to 10.45 cents per kilowatt-hour (kWh), depending on the utility company. These credits have no expiration date and are paid out annually if they exceed a certain balance??.
These incentives make installing solar systems more affordable for Arizona residents, encouraging the adoption of renewable energy sources.