Arizona is the sunniest state in the US which is great news if you are considering installing a solar panel system. This renewable energy resource is abundant in our state and is waiting for you to take advantage of it. There is no down payment required for installation and you can save a significant amount of money compared to getting your power from an electric company. Even better, there are solar tax credits that you can take advantage of to further increase your savings.
More information about current solar tax credits and incentives:
Federal Solar Tax Credit
At the federal level, the Investment Tax Credit (ITC) currently gives you a credit for 30% of the cost of your solar energy system. Through the end of 2021, the tax credit was 26%. Congress extended this program in August 2022, raising the credit to 30%. The credit will decrease to 26% in 2033 and 22% in 2034. Unless Congress passes another extension, the program will expire in 2034.
The way this incentive works is that it reduces your personal income tax bill dollar-for-dollar. This is different from a tax rebate because the credit you receive for a given tax year is dependent on your federal tax liability, whereas this is not the case for a rebate. However, if your taxes were already paid throughout the year through withholding from your paychecks, you can receive the tax credit amount as a refund, as long as it is still less than your total tax liability. If your tax liability was lower than the credit, it can roll over for up to five years.
To qualify, you must install the panels during the tax year where you want credit (2022 for the full 26%). You also need to own the panels, either outright or with a solar loan, and need to own the property where the panels are installed. The requirements are the same for a commercial tax credit.
Arizona Solar Tax Credit
In addition to the federal ITC, the State of Arizona offers an income tax credit. This is for 25% of the cost of your system with a cap of $1,000. The eligibility requirements are the same as for the federal tax credit and like the federal credit, the amount can roll over for up to five years if it exceeds your personal tax liability.
Energy Equipment Property Tax Exemptions
Beyond the tax credits, there are exemptions that reduce the taxes you will be liable for when installing solar panel systems. One of these is that in Arizona, your property tax will not increase when you install a solar energy system.
Solar Equipment Sales Tax Exemption
In Arizona, you do not need to pay any sales taxes for a new solar power system. This exemption applies to all eligible equipment for your residential solar panels.
Don’t Wait to Make the Switch
Between the tax incentives and energy savings, there is no better time to install new solar panels. If these benefits aren’t enough to convince you, we even offer six months of payments on us.
