The Best Arizona Solar Incentives in 2025
Installing solar panels saves you money on your electric bills, but that isn’t the only financial benefit of solar panels. You’ll also qualify for incentives like tax credits when you install solar panels for your home in Arizona.
Researching solar incentives and figuring out which ones you qualify for can be confusing. To make it easier, we put together this comprehensive guide to the best incentives for solar panels in 2025. Keep reading to learn more about Arizona solar panel tax credits, rebates, and incentives so you can save as much as possible when you go solar.
Quick Overview of Solar Energy Rebates & Incentives in AZ
| Incentive | Description | Incentive Amount |
| Federal Solar Tax Credit | Reduces federal income tax liability by 30% of solar installation costs. | 30% of total costs with no limit |
| Arizona Solar Tax Credit | Reduces state income tax liability by 25% of solar installation costs. | 25% of total costs up to $1,000 |
| Energy Equipment Property Tax Exemption | Exempts solar energy systems from property tax assessments. | 100% of increased home value |
| Solar Equipment Sales Tax Exemption | Exempts solar energy equipment from sales tax. | 100% of sales tax on eligible equipment |
Federal Solar Tax Credit
The Residential Clean Energy Credit (also known as the solar tax credit or ITC) is the best solar incentive available to Arizona homeowners. The tax credit reduces your federal income tax credit liability by 30% of your solar installation costs for the year you install your system. Almost all costs associated with a solar installation are eligible for the credit, including solar panels, battery storage, labor costs, and permitting fees. If your credit is worth more than you owe in taxes, you can roll the remainder over to the following year.
Who Qualifies? Any taxpayer in the United States who installs solar panels and/or battery storage for their home can claim the federal solar tax credit in 2025.
Arizona Solar Tax Credit
Arizona has its own solar tax credit that homeowners can claim in addition to the federal solar tax credit. The Arizona solar tax credit is worth 25% of your solar installation costs, up to $1,000. Most residential solar installations qualify for the full $1,000 credit. The Arizona solar tax credit reduces your state income tax liability for the year you install your solar panel system. You can claim it when you file your annual tax return.
Who Qualifies? Any Arizona resident and taxpayer who installs solar panels on their home can claim the Arizona tax credit for solar panels.
Solar Panel Property Tax Exemption
Solar panels are considered an improvement that can (and likely will) increase the value of your home. Usually, when you install an upgrade that increases your home’s value, your property taxes go up as a result. But that isn’t the case with solar panels. Residential solar energy systems are eligible for the Energy Equipment Property Tax Exemption in Arizona, which states that for property tax assessment purposes, solar energy systems are considered to add no value to the property.
Who Qualifies? Any Arizona property owner who installs solar panels on their property can receive the Energy Equipment Property Tax Exemption.
Solar Panel Sales Tax Exemption
Most solar energy equipment is exempt from sales tax in Arizona. That saves you at least 5.6% on your solar equipment!
Who Qualifies? Anyone who purchases solar energy equipment in Arizona can receive the Solar Equipment Sales Tax Exemption.
Can You Sell Power Back to the Electric Grid in Arizona?
In some states, grid-tied solar system owners can sell the excess power their systems produce to the electric grid. In exchange, they receive a credit valued at the full retail rate of electricity for the power they send to the grid.
Unfortunately, net metering is not available in Arizona. Instead, Arizona utility companies offer net billing. Net billing is similar to net metering, but solar customers are not credited at the full retail rate for the power they send to the grid. Instead, rates are determined by the Resource Comparison Proxy (RCP). Rates vary by utility and customer but are always lower than the retail rate. While the benefits are less than they would be with full retail rate net metering, net billing still provides value to Arizona solar customers and can help you save more with solar panels over time.
Find Out How Much You Can Save with Arizona Solar Incentives
Solar incentives and tax credits make solar energy significantly more affordable for Arizona residents. If you want to take advantage of these savings, reach out to SouthFace Solar & Electric. We can help you determine whether solar makes sense for your home and walk you through the incentives you qualify for. Our goal is to provide you with the best solar installation for your specific needs to maximize savings and bring more power to you! Whether you have questions or you’re ready to start your installation today, we are here to help!
