Arizona Solar Incentives, Tax Credits & Rebates 2024
Last updated: 2026-01Incentive Score
Total Savings Estimate
A typical 8kW system in Arizona costs $109,962. After the 30% federal tax credit: $76,973. Estimated annual savings: $1,500.
Federal Investment Tax Credit (ITC)
Federal Solar Investment Tax Credit (ITC)
Tax Credit30% of total system cost
The federal ITC allows you to deduct 30% of the cost of installing a solar energy system from your federal taxes. This applies to both residential and commercial systems with no cap on value.
Eligibility
Available to homeowners who own their solar system (purchased, not leased). Must have sufficient tax liability.
Expiration / Phase-Down
30% through 2032, steps down to 26% in 2033 and 22% in 2034
Arizona State Incentives
Residential Solar Energy Tax Credit
Tax Credit25% of cost up to $1,000
Arizona offers a state income tax credit of 25% of the cost of a solar system, capped at $1,000.
Net Billing (APS/TEP)
Net MeteringReduced export rate, varies by utility and time of use
APS and TEP customers receive export credits at a reduced rate rather than full retail. SRP uses demand-based rate plans.
Tax Exemptions
property tax Exemption
100% property tax exemption for solar — the added value from solar is not taxed.
sales tax Exemption
Solar equipment is exempt from Arizona's Transaction Privilege Tax (TPT/sales tax).
Utility Programs
Arizona Public Service (APS)
- Net billing
- Time-of-use rates
- Battery storage incentives
Tucson Electric Power (TEP)
- Net billing
- Renewable energy credit program
Salt River Project (SRP)
- Customer Generation Plan
- Demand-based rate schedule
Highlights & Drawbacks
Highlights
- ✓Best solar resource in the nation
- ✓Property and sales tax exemptions
- ✓State tax credit (small but helpful)
Drawbacks
- !Net billing provides less than full retail credit
- !SRP demand charges can erode savings
- !State tax credit capped at only $1,000
Source: DSIRE (Database of State Incentives for Renewables & Efficiency), U.S. Department of Energy, state energy offices. Data reflects programs available as of 2026-01.