Are Solar Panels Exempt From Sales Tax in Arizona?

Sales tax impacts the cost of everything that we buy, from food to utilities. The sales tax on solar panels can be as high as 9.5%, but there are a few states that offer exemptions on these panels. If you live in Arizona, here’s how you can completely avoid sales tax on solar energy systems.

Arizona Solar Panel Tax Exemptions

Arizona is one of the 26 states that doesn’t charge sales tax for solar panels. In some states, this exemption is limited to certain cities or cancels out after a certain number of years. However, Arizona homeowners don’t have to pay solar sales tax regardless of how much time has passed or where they live within the state. They are also 100% exempt from solar property taxes. Under this exemption, you won’t be responsible for any taxes on increased property value as a result of a solar panel installation.

Arizona residents can also take advantage of the Arizona State Residential Solar Income Tax Credit. For every new solar panel installation, you’ll get a tax credit worth up to $1,000. Select Arizona utility companies, like Trico Electric and Mohave Electric, also have local incentive programs.

What Does the Sales Tax Exemption Cover?

To qualify for the Arizona solar sales tax exemption, your solar system must be installed by an approved contractor. These contractors provide substantial warranties on all of their solar products and the labor performed. You can usually find this information, as well as certifications and license statuses, on the contractor’s website. Here, you can browse past examples of the contractor’s work and customer testimonials. 

Many solar products are eligible for the sales tax exemption, including daylights and all kinds of solar heating systems. However, this exemption has a one-time usage and only applies to the price of the initial installation. That means battery storage units or any other additional accessories are subject to taxation as usual.

How To Claim Your Sales Tax Exemption

It is the responsibility of the contractor to ensure that Arizona homeowners won’t have to pay sales tax on solar panels. Solar installers are required to register with the Arizona Department of Revenue (ADOR) by filling out Arizona Form 6015 and submitting it by mail. 

Once the form is received by the ADOR and the installer’s information is verified, it’s usually approved immediately. Remember to ask your solar installer about their status with the ADOR before you hire them. 

Maximize Your Savings on Solar Panels in Arizona

With no sales tax to worry about, Arizona homeowners can enjoy their solar panels even more. While this exemption is already applied to your solar purchase, other incentives may require additional documentation before you can receive them. At Solar Optimum, we provide instructions on how to claim every solar rebate in Maricopa County and the Greater Phoenix area. Get in touch to set up your free consultation.