Arizona is renowned for its sunny skies, which make the state a prime location for solar energy. But while lowering electric bills is a clear benefit, the real financial advantage often comes from available tax incentives. Homeowners and businesses in Arizona have access to both federal and state-level tax credits that make switching to solar more affordable. If you’re asking, “What are the tax incentives for installing solar panels in Arizona this year?” you’re in the right place.
How Does the Federal Solar Tax Credit Work?
The federal solar tax credit, also known as the Investment Tax Credit (ITC), is one of the most valuable incentives available. In 2025, homeowners and businesses can deduct 30% of the total cost of their solar installation from their federal income taxes. This includes not just the panels themselves but also equipment, labor, and permitting fees.
Here’s an example: If your system costs $20,000, you could reduce your tax bill by $6,000. This credit applies whether you install solar on a home, rental property, or commercial building, as long as you own the system.
What Arizona State Incentives Are Available?
Arizona offers its own solar incentives in addition to the federal ITC, making solar energy even more attractive. Two major programs stand out:
- Arizona Solar Energy Credit: Homeowners can claim a 25% state tax credit, up to $1,000, for the purchase and installation of a solar energy system. This credit directly reduces your state tax liability.
- Property Tax Exemption: Adding solar panels increases the value of your home, but thanks to Arizona law, the added value from renewable energy equipment is exempt from property taxes. That means you enjoy a higher home value without paying extra taxes.
These incentives combined can cut thousands off the cost of going solar.
Why Do These Incentives Matter for Homeowners and Businesses?
Switching to solar isn’t just about reducing your carbon footprint—it’s also a smart financial move. With rising energy costs, the ability to save money on utilities while also earning tax credits makes solar one of the most reliable investments you can make.
For homeowners, this means greater energy independence, lower bills, and stronger property values. For businesses, installing solar can reduce operating costs and demonstrate a commitment to sustainability, which can appeal to eco-conscious customers.
How Do Solar Incentives Impact Long-Term Savings?
The upfront savings are only the beginning. With Arizona’s average of over 300 sunny days per year, solar panels generate significant energy over time. When combined with tax credits, rebates, and utility bill savings, many systems pay for themselves within 7 to 10 years. After that, most of the electricity you generate is essentially free.
On top of that, solar panels often last 25 years or more, which means decades of financial returns and environmental benefits.
What Should You Do to Take Advantage of These Incentives?
Timing is everything. Federal tax credits and state incentives can change, and waiting too long may mean missing out on maximum savings. To qualify, you need to have your solar installation completed within the tax year you plan to claim the credit.
Ready to Save with Arizona’s Solar Incentives?
The tax incentives for installing solar panels in Arizona this year make now the perfect time to switch. By working with Solar Pros, you can take full advantage of both federal and state programs while ensuring your system is installed for maximum efficiency and savings. Don’t wait until incentives phase out—invest in solar today and enjoy the financial, environmental, and lifestyle benefits.
Call Solar Pros now at (520) 549-6200 to schedule your consultation and start saving.
Frequently Asked Questions
Can I claim both the federal and Arizona state solar tax credits?
Yes, homeowners in Arizona can claim both, maximizing their savings.
Do I need to install solar before the end of the year to qualify?
You must have your system installed and operational within the tax year to claim that year’s credit.
Are solar incentives only for homeowners?
No, businesses in Arizona can also claim both federal and state incentives.
Will installing solar panels increase my property taxes in Arizona?
No, Arizona law exempts the added value from property tax assessments.
Do these incentives apply to leased solar panels?
No, only solar systems you own (not leased) qualify for the federal or state tax credits.