Arizona is one of the best states in the country for solar panels — and not just because of the ample sunlight. Arizona solar incentives abound in the Grand Canyon state, and homeowners are essentially leaving money on the table by not taking advantage.
The tax code is both generous and relatively straightforward regarding residential solar panels. But, like all exemptions, it’s worth knowing what to expect. Here are the answers to common questions homeowners ask about Arizona solar tax credits.
What Is the Arizona State Residential Solar Income Tax Credit?
The Arizona State Residential Solar Income Tax Credit is a program where the state offers a personal tax credit of up to $1,000 for new solar panel installations. This $1,000 credit cap applies to 25% of the total cost of your solar energy system.
Is the Solar Equipment Sales Tax Exemption Different From the Arizona State Tax Credit?
Yes, because the total price of the equipment is calculated by the sales price alone. The normal 5.6% state-level sales tax in Arizona is not applied to residential solar panel purchases.
This sales tax exemption applies to all equipment related to a functional home solar energy system.
How Does the Energy Equipment Property Tax Exemption Work in Arizona?
Alongside sales tax savings related directly to the equipment, the Property Tax Exemption can lead to major benefits down the road for homeowners. While increased property values can sometimes become a burden due to taxation, solar panels are purely beneficial for homeowners in Arizona.
The increase in property value associated with solar panel equipment is not reflected in the property tax burden for Arizona residents. The added value is calculated purely in the realm of buying and selling property, not in additional tax costs.
Does Arizona Have a Solar Renewable Energy Credits Market?
Solar Renewable Energy Credits (SRECs) track excess energy generated by solar panels, generating one credit for every megawatt-hour (MWh) of energy. These credits can be sold off to energy utilities, creating additional savings or even profits for homeowners.
Unfortunately, Arizona does not currently have an SREC market. Check in with the Environmental Protection Agency (EPA) for updates on whether SERC market access will expand to Arizona.
Is It More Affordable to Lease or Take Advantage of a Solar Incentive?
Leasing solar equipment is a short-term saving, long-term cost proposition. The reasons for leasing solar equipment often are:
- Little to no upfront cost
- Ongoing maintenance is covered by the payment plan
- Predictable, manageable energy bills paid to the solar provider
Leasing solar panels is associated with perpetual costs. But said costs come at regular intervals, and come with an expectation of service.
Are Solar Incentives Available for Leased Solar Systems?
No. Arizona solar incentives are earmarked for homeowners taking the plunge and buying a full system. These credits are intended to help with the larger initial investment of residential solar equipment.
Homeowners who are looking to improve their property value and save money over the years need to overcome that first hill of buying a system. Leasing programs, however, provide near-instant relief from costs associated with traditional energy utilities.
Take Advantage of Statewide Solar Incentives
Given the Arizona state tax credits available, buying a solar system is less costly than ever before. There are also federal programs available for residential solar panel buyers wanting to save big.
Looking to nail down the exact costs of your potential solar equipment investment in Maricopa County and the Greater Phoenix area? Download our Solar Federal Tax Credit Guide or contact us to speak with an energy consultant at your leisure.
