Understanding Federal and State Solar Incentives in Arizona

By Mollie | June 19, 2025
Table of Contents

    If you’re a homeowner in Arizona thinking about switching to solar, you’re likely asking one big question: How much will it cost? The good news is, both federal and state solar incentives can dramatically reduce the upfront and long-term costs of going solar. With the right information, you can save thousands on your solar installation. Let’s walk through the major incentives available and how to claim them.

    Federal Solar Tax Credit (ITC)

    The Investment Tax Credit (ITC) is a federal incentive that allows you to deduct 30% of the cost of your solar installation from your federal taxes. This credit applies to residential solar systems installed between now and 2032, after which it’s scheduled to step down unless extended by Congress.

    For example, if your solar system costs $20,000, you could claim $6,000 back through the ITC.

    ✅ Key Requirements:

    • You must own the solar system (not lease)
    • The system must be installed and operational
    • The property must be your primary or secondary residence in the U.S.

    Learn more at Energy.gov

    Arizona Solar Tax Credit

    In addition to federal support, the state of Arizona offers its own tax credit to make solar more affordable. Arizona homeowners are eligible for a state tax credit of up to $1,000 for the installation of a solar energy system.

    ✅ Important Notes:

    • This is a one-time credit, not a deduction
    • The credit is applied against your state income taxes
    • You must file Form 310 with the Arizona Department of Revenue

    More info is available at the Arizona Department of Revenue

    Utility-Specific Rebates: SRP, APS, and More

    Depending on your utility provider, you may be eligible for additional solar rebates. Two of the largest utilities in Arizona Salt River Project (SRP) and Arizona Public Service (APS) have had solar rebate programs in the past. While programs vary by year and budget, it’s worth checking with your utility to see if they currently offer:

    • Per-kilowatt-hour performance-based incentives
    • Flat-rate rebates for battery storage systems
    • Rebates for energy monitoring equipment or upgrades

    Note: These programs tend to change annually and have limited funds, so it’s best to apply early.

    Get a quote from JIT Solar Arizona’s SRP Preferred Installers

    Property and Sales Tax Exemptions

    Arizona provides two important tax exemptions that reduce the overall financial burden of going solar:

    ✅ Property Tax Exemption:

    Your home’s value may increase with solar, but thanks to Arizona law, you won’t pay additional property tax on the added value from your system.

    ✅ Sales Tax Exemption:

    All solar energy systems in Arizona are exempt from state sales tax, saving you approximately 5.6% on your purchase.

    How to Claim These Incentives

    Claiming your federal and state solar incentives doesn’t have to be complicated. Here’s how:

    1. Federal ITC: Use IRS Form 5695 when you file your federal taxes. The credit is applied to your income tax liability.
    2. Arizona State Credit: Submit Arizona Form 310 with your state income taxes.
    3. Utility Rebates: Apply through your local utility’s website. Some may require documentation before installation.
    4. Sales/Property Tax: These are automatically applied during purchase and property tax assessments, respectively.

    We recommend working with a licensed solar installer, like JIT Solar, who can guide you through the paperwork and make sure you get every dollar you’re entitled to.

    FAQs on Solar Incentives in Arizona

    Do these incentives apply to leased solar systems?
     No. To claim the ITC and Arizona state tax credit, you must own the system.

    What if I don’t owe that much in taxes this year?
     The unused portion of the ITC can be rolled over to the next tax year.

    Can I combine federal, state, and utility incentives?
     Yes. Most incentives are stackable, meaning you can combine the ITC, state credit, and any rebates available to you.

    Are these incentives permanent?
     No. The federal ITC is scheduled to decrease after 2032. State and utility incentives can change annually.

    Ready to Save Thousands? Speak to a Solar Advisor

    Still not sure how much you qualify for? At JIT Solar, we help Arizona homeowners navigate every available incentive to maximize savings and reduce out-of-pocket costs.

    👉 Speak to a solar advisor today to find out how much you can save with solar!

    Posted in solar-energy, solar-energy-cost