\nArizona, known as the second sunniest state in the U.S., offers a prime opportunity for residents to harness the power of solar energy. With a combination of statewide tax credits, tax exemptions, and local rebate programs, along with the 30% federal solar tax credit, going solar in Arizona has become more affordable than ever before. \nArizona Solar Tax Exemptions\nFederal Solar Tax Credit\nThe federal solar tax credit, also referred to as the Investment Tax Credit (ITC), is a national incentive that allows individuals to obtain a tax credit for the costs associated with installing solar panels. This credit offers solar owners a 30% deduction on their total system expenses. For example, if you buy a 10 kilowatt (kW) system for $33,000, your tax credit would equal $9,900. \nAdditional local incentives can be utilized, including exemptions from Texas’ sales and property taxes.\nIn 2020, the federal tax credit for solar decreased to 26% but was reinstated to its original rate of 30% in 2022 by the Inflation Reduction Act. This credit will remain accessible until 2034, with a gradual phase-out planned. Here is the schedule: \n\nThe credit will decrease to 26% in 2033\nThe credit will decrease to 22% in 2034\nUnless renewed by Congress, the credit will phase out entirely in 2035\n\n\nArizona Local Solar Exemptions\nArizona residents can use several incentives to make going solar more affordable. In addition to the federal solar tax credit, which allows for a 30% reduction in system costs, Arizona offers its own state solar tax credit. \nResidents can receive a 25% state solar tax credit on the total cost of their solar system, including installation. This credit can significantly reduce the overall expense of going solar.\nArizona also provides property tax exemptions and sales tax exemptions on solar equipment. \n \nArizona State Residential Solar Income Tax Credit\n\n\nIncentive Value: Up to $1,000\n\n\nFrequency: One-time tax credit\n\n\nIn Arizona, residents can take advantage of a generous solar tax credit, which reduces 25% of their installation costs up to a maximum of $1,000. \nThis personal income tax credit can be claimed when filing taxes with the state. If the credit exceeds the taxes owed, it can be carried over for up to five years. It's important to note that this credit does not apply to those who lease their solar systems or are part of a power purchase agreement (PPA).\n \nEnergy Equipment Property Tax Exemption\n\n\nIncentive Value: 100% of taxes from the additional value added to your property by a solar panel system.\n\n\nFrequency: Continued exemption from the time your energy equipment is installed.\n\n\nBy installing a solar power system in Arizona, not only can you benefit from the cost savings and environmental advantages, but you can also increase the value of your home. The good news is that the state offers a property tax exemption, meaning you won't have to pay taxes on this additional value. It's important to note that this exemption extends beyond just solar panel systems. Other solar and efficiency upgrades are also covered. Here's a list of other equipment that falls under this exemption:\n\nPassive solar technology, such as a Trombe wall\nSolar pool heaters\nSolar space heaters\nSolar thermal electric\nSolar water heaters\n\nTo apply for this tax exemption, you must fully document your energy system purchase, installation, and costs to your county assessor. You can learn more about the Arizona property tax exemption on the DSIRE website.\n \nSolar Equipment Sales Tax Exemption\n\n\nIncentive Value: 100% of sales tax on eligible solar equipment\n\n\nFrequency: One-time sales tax exemption\n\n\nIn Arizona, residents can benefit from a sales tax exemption on solar energy devices and their installation, provided by the Arizona Department of Revenue. This exemption applies to approved contractors and covers the cost of solar panels and associated installation expenses. It's important to note that the exemption does not include solar battery storage or additional accessories not part of the initial solar power system.\nTo claim the sales tax exemption, your solar installer must register with the Arizona Department of Revenue (ADOR) by submitting Arizona Form 6015. As the customer, you don't need to take any specific action as the process is handled by the installer.\n \nNet Metering in Arizona\nMost rooftop solar installations in Arizona are eligible for the state's net billing program, which replaced net metering in December 2016. Similar to net metering, the net billing program allows homeowners to earn credits on their electricity bills for any excess energy produced by their solar power systems.\nHowever, unlike net metering, customers are credited at a non-retail rate for surplus energy generation. In Arizona, the credit is based on the avoided cost rate, representing the wholesale cost for the utility to generate electricity. This rate is typically lower than the full retail rate provided by net metering.\nThese credits have no expiration date and are paid out annually if they exceed a certain balance, usually between $10 and $25, depending on the utility company.\nThe 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. For more detailed information about Arizona's net billing program, you can visit the DSIRE website.\n\nArizona Solar Resources\nAZDOR - Income Tax Credit for Residential Solar Devices\nAZDOR - Renewable Energy Production Tax Credit\nForbes - Arizona Solar Incentives: Tax Credits \u0026amp; Rebates 2023\nArizona Solar Center\n \n\nLet US Solar Supplier guide your solar energy project! Consult with us today to match the perfect system to your needs.