How to get the Arizona Solar Tax Credit in 2025
8 min read
How to get the Arizona Solar Tax Credit in 2025
Updated: August 12, 2025
Solar energy is a popular and wise alternative for utility companies, especially in Arizona. Clean, renewable energy is now required by law for utility companies to use when providing energy to their customers. According to the Renewable Energy Standard & Tariff ruling by the Arizona Corporation Commission, utility companies in our state must generate 15% of their energy from renewable resources by 2025. So, utility companies are generating electricity more easily, but still raising their rates every year. If this doesn’t make sense to you, you’re not alone – we’re still scratching our heads too. This explains why Arizonans want to cut out the “middleman” and install solar panels on their home. Read this entire article to understand how to get the Arizona Solar Tax Credit below:
One thing that keeps residents from investing in solar panels is the myth that they are too expensive. Along with the Federal Tax Credit, Arizona offers credits 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. Please make sure to contact us at Solar Topps if you need a Commercial or Residential Quote. At Solar Topps, we service the entire state of Arizona. However, as we are located in Downtown Phoenix, we do service the areas of Scottsdale, Paradise Valley, Chandler, Mesa, Gilbert, the East and West Valleys, and many more cities in Arizona!
How the Federal Investment Tax Credit (ITC) works with the Arizona Solar 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 is a dollar-for-dollar reduction in the income taxes that you would otherwise pay the federal government.
If your system is installed between 2022 – 2032, the Solar Investment Tax Credit will reduce the price of your solar energy system by 30%. By 2033, that percentage sinks to 26%, then to 22% in 2034, and is set to expire in 2035. 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.
The Impact of the Big Beautiful Bill on Solar Tax Credits
The passing of the Big Beautiful Bill has introduced significant changes to the Solar Investment Tax Credit timeline. While the credit was originally set to expire in 2035, this legislation accelerates the cutoff date to 2026. Home and business owners planning to invest in solar energy should act promptly to take full advantage of the 30% tax credit before it is phased out.
Importance of Acting Before the 2026 Deadline
With the new expiration date fast approaching, individuals and businesses must act swiftly to avoid losing substantial savings on solar energy systems. The accelerated timeline under the Big Beautiful Bill underscores the urgency for prospective solar adopters to begin their procurement and installation processes immediately. Failing to meet this deadline could result in significantly higher upfront costs, impacting long-term energy savings.
Arizona Solar Tax Credit for AZ Residents and the Arizona Tax Rebate
When you buy your system, the Residential Arizona Solar Tax Credit gives you back part of what you paid. This refund is limited to $1000.
This solar tax credit is available to residents of AZ who are installing solar on their own properties. This can be used in conjunction with the federal solar tax credit, which offers a 26% credit for residential solar systems installed before December 31, 2022.
In addition to the state tax credit, Arizona residents may also qualify for the Arizona Tax Rebate program. This program offers a rebate of up to $1000 for residential solar installations and up to $5000 for commercial installations.
Why the Arizona Tax Credit Matters for Solar Adoption
The Arizona Tax Credit plays a critical role in encouraging residents and businesses to transition to sustainable energy solutions. By lowering the upfront cost of Phoenix solar installations, this financial incentive reduces the barrier to entry, making clean energy accessible to more individuals and organizations. Such incentives significantly contribute to better adoption rates and drive the state toward its renewable energy goals.
Arizona Solar Equipment Sales Tax Exemption
You are not required to pay sales taxes associated with going solar in Arizona. In the case of solar panels, their purchase price (or cost basis) is exempt from sales taxes. This can save you a significant amount of money when purchasing your system.
The Exemption Applies to Arizona Solar Panels, Inverters, and Batteries
This exemption applies to a wide range of solar equipment, including solar panels, inverters, mounting hardware, and energy storage systems. By eliminating the additional cost of sales tax on these components, Arizona makes the upfront investment in solar technology more affordable for homeowners and businesses alike. The exemption not only reduces the initial financial barrier to adopting solar energy but also amplifies the long-term financial savings associated with generating renewable energy.
The Tax Credit is Automatically Applied at Purchase
It is important to note that this tax exemption is automatically applied at the time of purchase, making the process seamless and hassle-free for consumers. This policy underscores Arizona’s commitment to fostering renewable energy growth and encouraging residents to transition to more sustainable energy solutions.
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.
Once installed, the additional value that solar panels add to your home does not increase property taxes in Arizona. You do not have to pay any extra taxes for having a solar installation on your property.
This exemption provides financial relief for homeowners who are concerned about the potential increase in property taxes after going solar. It also serves as an incentive for those who are considering investing in renewable energy sources.
The Main Takeaway about Arizona Tax Credits
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 can save you up to 30% on your purchase if acted upon early. 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. If you have further questions, please Contact Solar Topps.
Sources:
https://www.energy.gov/eere/solar/homeowners-guide-federal-tax-credit-solar-photovoltaics
https://www.seia.org/initiatives/solar-investment-tax-credit-itc
https://www.forbes.com/home-improvement/solar/solar-tax-credit-by-state/
Renewable Energy Standard and Tariff | Arizona Corporation Commission (azcc.gov)
