Arizona Solar
Incentives & Rebates

Updated April 5, 2021

Arizona Leads Way Thanks to Solar Incentives

One of the sunniest states in America, Arizona is ideal for solar power. So it comes as no surprise that the state tops the charts across solar metrics categories. Combine generous, year-round sunshine with Arizona’s solar incentives, along with the federal solar tax credit, and you see why there’s widespread homeowner participation moving to solar in Arizona.

Arizona Renewable Portfolio Standards

Renewable Portfolio Standards,or RPSs, are quite strong in Arizona. These standards give utilities a deadline by which they must acquire a certain percentage of the state’s power from renewable energy sources or else pay a fee. In Arizona, sources such as wind, solar, biomass, and geothermal need to account for 15% of the state’s power production by 2025. Naturally, instead of paying the fees, utilities in strong RPS states offer incentives to get homeowners into solar. Arizona's RPS mandate that 15% of all energy must come from renewable sources by 2025.

Arizona Solar Energy Carve-Out

A solar carve-out is the portion of energy in a state that needs to come from solar by a certain date. RPS, above, is about all renewable energy sources, but the solar carve-out is a requirement just for solar. In Arizona the carve-out is 2.25% by 2025.

Arizona State Electric Rates

Arizona's electric rates rank 18th in the country for high cost; 32 other states are cheaper. As you can imagine, higher electric rates make an investment in solar energy more cost-effective. Arizona's high electric rates make investing in solar power more attractive.

Arizona Net Metering

Arizona offers excellent net metering laws. When it comes to solar panels, these laws govern how the panels are connected to a public utility and how the energy is metered. Homeowners are able to lower their monthly electric bill when the utility sucks up excess power produced by the home solar energy system.

Arizona Residential Solar Energy Credit

Arizona’s Residential Solar Energy Credit allows homeowners to save a bundle on their solar panel system. This credit alone pays you back 25% of the system’s cost, capping at $1,000. If the credit exceeds your total income tax owed the year you installed the system, you can carry the credit forward for up to 5 years.

Arizona Sales Tax Exemption

Any homeowner who purchases a solar panel system in the state of Arizona is exempt from paying sales tax on it.

Arizona Property Tax Exemption

Similarly, the Energy Equipment Property Tax Exemption means you won’t have to pay any more property taxes on the value you are adding to your home by investing in a solar energy system.

Arizonans, Don’t Forget the Federal Solar Tax Credit

The Federal Investment Tax Credit (ITC) is available to Arizona homeowners who purchase their solar panel system outright. This credit currently amounts to 26% of your solar system’s cost after deducting the value of your state rebates. In 2023, the tax credits for installations will drop to 22%. This is one of many reasons why it makes sense to go solar without delay.


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