Arizona Solar Incentives & Rebates Guide 2026

The federal Investment Tax Credit (ITC) allows Arizona homeowners to deduct 30% of the total cost of a solar energy system from their federal income taxes. For a typical 6kW system costing $15,660 in Arizona, that's a direct tax credit of $4,698. This isn't a deduction — it's a dollar-for-dollar reduction of your tax bill.

The 30% ITC is available through 2032 under the Inflation Reduction Act, then steps down to 26% in 2033 and 22% in 2034. There's no maximum cap on the residential credit. If your tax liability is less than the credit amount, you can roll the remaining credit forward to the next tax year. The system must be installed on your primary or secondary residence, and you must own it (leased systems don't qualify for the homeowner credit).

In addition to the federal ITC, Arizona offers its own state solar tax credit: 25% of costs, up to $1,000. This state credit can be claimed alongside the federal credit, stacking your total tax savings. For a 6kW system, the Arizona state credit saves you approximately $1,000.

Combined with the federal ITC, your total tax credits amount to $5,698 — reducing your net system cost to just $9,962. That's a 36% reduction from the gross cost.

Great news for Arizona homeowners: Solar energy systems are exempt from property tax assessments. 100% property tax exemption for solar Studies show solar adds 3-4% to home values. For a $300,000 home, that's roughly $12,000 in added value — and with Arizona's property tax exemption, you save approximately $132 per year in property taxes you'd otherwise owe on that increased value.

Arizona exempts solar energy equipment from state sales tax. On a 6kW system costing $15,660, this saves you approximately $1,018 at the point of purchase. This is an immediate, upfront savings that reduces your out-of-pocket cost before even accounting for tax credits.

Net metering policy: Varies by Utility. Transitioning from full retail to export rate; varies by utility (APS uses net billing since 2017)

Net metering policies in Arizona vary by utility. Contact your local electric provider to understand the specific buyback rate and any system size limitations that apply to your service territory.

Some utility rebates available (TEP, SRP)

Utility rebates and state programs can change frequently. We recommend checking with your local utility and the Database of State Incentives for Renewables & Efficiency (DSIRE) for the most current programs available in your area.

Arizona has a mandatory Renewable Portfolio Standard (RPS) target of 15% by 2025. This legally binding target drives continued investment in renewable energy infrastructure and often supports solar-friendly policies like net metering and SREC programs. A strong RPS is generally good news for solar homeowners, as it creates market demand for renewable energy and helps maintain favorable solar policies.