Arizona Residential Solar Energy Tax Credit
One of the biggest state-level benefits is the Arizona residential solar energy tax credit, worth 25% of your system’s cost. This credit is nonrefundable, but any unused portion can be carried forward for up to five years, making it a valuable tool for maximizing savings.
Federal Solar Panel Tax Credit in Arizona
In addition to state benefits, residents can claim the federal Residential Clean Energy Credit, which covers 30% of eligible installation costs. This applies to both residential and commercial solar systems in Arizona completed by December 31, 2025. With average installation costs ranging from the mid-teens to low-thirties (in thousands of dollars) depending on system size and complexity, this incentive can significantly reduce your investment.
Sales and Property Tax Exemptions
Arizona’s solar policies also include two valuable tax exemptions:
- Sales Tax Exemption – Solar equipment purchases are free from the state’s 5.6% sales tax.
- Property Tax Exemption – Any increase in your home’s value from solar panels does not raise your property tax bill.
Arizona Solar Rebates and Local Utility Programs
Alongside state and federal benefits, several Arizona solar rebates are available through local utility providers. The Mohave Electric Cooperative offers its SunWatts program, providing a rebate for qualifying solar installations. APS supports clean energy adoption through its Residential Battery Pilot, which rewards customers who add battery storage to their systems. SRP also contributes to solar savings with its Demand Management Rebate, available for approved demand management system installations.
These AZ solar incentives can be combined with tax credits and exemptions to maximize overall savings and enhance the return on your solar investment.
Net Metering in Arizona – Now Net Billing
Traditional net metering in Arizona has been replaced by net billing. While credits for excess energy are now issued at the avoided cost rate (typically lower than retail), the program still helps offset electricity purchased from the grid. For many homeowners, pairing solar with storage can further improve returns under this system.
Why Act Before the Federal Credit Changes?
With the 30% federal credit set to expire for new installations after 2025, starting your solar project soon ensures you capture the highest possible savings. Rising utility rates across Arizona also mean every month without solar could be costing more in energy bills.
Conclusion:
The combination of the Arizona tax credit for solar panels, federal incentives, and local rebates makes 2025 a smart time to go solar. Whether you’re a homeowner or a business owner, working with an experienced provider ensures you get the most from available programs. Contact solar sme inc today to explore customized solar solutions that fit your energy needs and budget.