Arizona Solar Tax Incentives

Did you know both Arizona and the U.S. government would love to see more people using solar power? As of 2018, solar energy accounted for 7% of Arizona’s net production of electricity and 31% of that came from small scale sources like rooftop panels. That is why there are so many solar tax incentives available to you in 2021.

Only California beats Arizona in production of solar energy! Better still, in November of 2020 Arizona announced plans to be 100% carbon emissions free by 2050! 

As part of this vivacious goal, here are three tax incentives offered federally or in the state of Arizona:

  1. Investment Tax Credit (ITC) – a credit applied to your federal income tax for the amount equivalent to 22% of the cost of your solar system (Insert link to correlating section)
  2. Energy Equipment Property Tax Exemption – an Arizona based tax exemption applied to the increase of your property taxes due to the installation of solar systems (Insert link to correlating section)
  3. Solar and Wind Equipment Sales Tax Exemption – an Arizona based sales tax exemption for solar equipment and installation fees. (Insert link to correlating section)
  4. Various City & Utility Company Offered Incentives – To find a list of the vast amount of incentives offered by different cities and utility companies, click here.

Continue reading to learn more about each one and how they benefit you. 

INVESTMENT TAX CREDIT (ITC)

The solar Investment Tax Credit (ITC) is one of the most beneficial incentives available for home and business owners going solar. It is a reduction in the amount of federal income tax you would otherwise owe, based on the cost of your solar system. 

HOW DOES IT HELP YOU?

As of 2021, the ITC allows 22% of the cost of your solar system to be applied as a credit to your federal income taxes. Let’s break those numbers down and see exactly how much that translates into for you:

  • The average cost of a 13kW on-grid solar system is $23,000. Using this amount, your Investment Tax Credit would be $5,060. You would then subtract that number from the amount you owe in federal income tax. 
  • The average cost of a 13kW off-grid system is $45,000. So your tax credit would be $9,900.

As you can see, this is a substantial amount of money and can significantly reduce the costs of your solar system, making it more affordable than ever. 

WHEN DOES IT EXPIRE?

Soon! Though it was initiated in 2006, we are in the LAST year of its existence. This means to qualify for this sizable tax credit, you must install your solar system by the end of 2021. 

LEARN MORE:

Visit the U.S Department of Energy’s Homeowners Guide to the Federal Tax Credit for Solar Photovoltaics or their Guide to the Federal Investment Tax Credit for Commercial Solar Photovoltaics.

There you will find everything you need to know including:

  • How to qualify
  • How to apply
  • What is considered an eligible cost in calculating your tax credit amount
  • Frequently Asked Questions 

ARIZONA ENERGY EQUIPMENT PROPERTY TAX EXEMPTION

The Energy Equipment Property Tax Exemption is a tax credit for Arizona residents to cover the amount of money owed in property taxes that were affected by the increase in property value due to solar system installations. 

In other words, when you install a solar system on your home or business, the property value will rise causing you to pay more in property tax. Don’t worry, though! Arizona has you covered. This tax credit will cover the increase you experience. 

HOW DOES IT HELP YOU?

It ensures that regardless of the increase in the value of your home or business by the installation of solar systems, you will not pay more in property taxes. 

WHEN DOES IT EXPIRE?

Never! There is no expiration on this tax exemption. 

LEARN MORE

ARIZONA SOLAR AND WIND EQUIPMENT SALES TAX EXEMPTION

HOW DOES IT HELP YOU?

The Solar and Wind Equipment Sales Tax Exemption is pretty much exactly as it states. Rest assured the money spent on buying and installing solar power systems will be sales tax free. 

This is not limited to photovoltaic systems either. It also includes solar space heating, solar water heating, solar thermal electric systems and all wind power systems, as well. 

WHEN DOES IT EXPIRE?

It doesn’t! This sales tax exemption has no expiration date.   

LEARN MORE

GO GREEN TO SAVE GREEN!

As you can see, there are many incentives available to financially help you purchase and install your solar system. Combine that with the ever-decreasing price of new and efficient solar technologies, solar powered electricity is more affordable than ever before!

Updated May 2021

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1 Comment

  1. Billy

    Thanks for linking this facts sheet! It is definitely so important for all of those interested in getting involved in solar investments and going solar to know. Will definitely share this with friends.

    Reply

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