Solar energy is a popular and wise 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 their customers. According to the 2006 Renewable Energy Standard and Tariff (REST) 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 in an easier way, 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.   

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.  

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 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. 

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 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. 


Renewable Energy Standard and Tariff | Arizona Corporation Commission (

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