Arizona Solar Incentives, Tax Credits & Rebates 2026
State-program snapshot: 2026-01 · Federal status reviewed: 2026-08-06Cost Context
An illustrative 24.6 kW system using the historical observed average cost in Arizona is $109,962. New federal residential credit for a 2026 installation: $0. Modeled annual savings before financing: $7,484.
Federal Residential Credit Status
Residential Clean Energy Credit
Ended for new 2026 systems0% for property placed in service in 2026
IRS guidance states that the 30% credit applied to qualified residential clean-energy property installed from 2022 through December 31, 2025. It is not available for property placed in service after that date.
Eligibility
No new residential credit for a system first placed in service in 2026. A previously earned unused credit may be eligible for carryforward under IRS rules.
Primary source
IRS Residential Clean Energy Credit guidance ↗Arizona State Program Snapshot
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.
State and utility programs can change between reviews. Confirm eligibility, funding and deadlines with the administering agency or utility before relying on this snapshot.
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
State-program sources: DSIRE, state energy offices and utilities; snapshot dated 2026-01. Programs, funding and eligibility can change without notice. Federal residential status reviewed against IRS guidance on August 6, 2026.