Arizona Solar Tax Rebates: What You Need to Know
Solar energy is a popular and logical alternative for utility companies, especially in Arizona. In fact, clean renewable energy is now becoming required by law for utility companies to use when providing energy to customers. So utility companies are generating electricity in an easier way, but still increasing their rates every year. If that makes zero sense to you, you’re not alone. We’re still scratching our heads too. It makes sense why Arizonans want to cut out the “middleman” and have solar panels installed on their home.
One thing usually keeping residents from purchasing solar panels is the myth that it is too expensive. In addition to the Federal Tax Credit, Arizona offers rebates and incentives that make solar technology within everyone’s reach. Here is a breakdown of all the ways you can reduce the cost of solar.
Federal Investment Tax Credit
At the Federal level, solar goers are entitled to a tax credit. According to the Solar Energy Industries Association (SEIA), a tax credit as a 1:1 ratio (you pay a dollar, they pay a dollar) reduction in the income taxes that you would otherwise pay the federal government.
In 2021, the Solar Investment Tax Credit will reduce the final price of your solar energy system by 26 percent. By the year 2023, that percentage sinks to 22 and then zero by 2024. This credit will only apply to home or business owners who are purchasing their solar panels. This does not apply to those who are trying to lease their panels.
Arizona Solar Tax Credit for Residents
When you purchase your system, the Residential Arizona Solar Tax Credit takes what you will initially pay for your panels and returns a fraction of the total system price, capped at $1000.
Arizona Solar Equipment Sales Tax Exemption
You are not required to pay sales taxes associated with going solar in Arizona.
Arizona Energy Equipment Property Tax Exemption
In most instances, making changes to your home will change its overall value. In turn, this will change the taxes you pay on your home as well. Adding solar panels to your home will increase the value of your home, but this exemption relieves you from paying any additional taxes on your property due to the increase in values by the solar panels.
The Main Takeaway
Utility companies use solar panels to generate a fraction of their electricity. Why should you pay them for something you can do yourself? Arizona offers three different types of incentives when you purchase your solar panels. These credits and rebates help you save on the initial purchase or prevent you from paying any extra money in taxes in the future. There is a federal tax credit which if acted upon early, will save you 26 percent on your purchase. If you want to save the most money by purchasing solar panels, begin today. The federal investment tax credit will not last forever. Please contact a tax professional for more information on how the ITC will impact your taxes. To claim the credits listed above, fill out the forms here, and you should be on your way.