Arizona Solar Tax Incentives
There are numerous incentives for Arizona home and business owners to go solar. Here’s a look at the current tax incentives available in the state.
1. Federal Solar Tax Credit
The majority of Arizona residents are eligible to receive the Federal Tax Credit, which is also known as the Residential Clean Energy Credit. This credit allows eligible homeowners to reduce the amount of tax they owe up to 30% of their solar panel installation cost from federal income taxes.
Battery storage systems can also qualify for the Residential Clean Energy Credit, as well as residents who install solar panels. Many Arizona homeowners opt for battery storage systems when investing in solar energy.
While this tax credit does not directly lower the cost of your newly-installed system, it will help offset the cost by lowering your tax liability for the year of the installation. It’s important to note that tax credits are not a rebate or a refund. Homeowners will need to have a federal tax liability first in order to benefit from this tax break.
2. Arizona State Residential Solar Tax Credit
In addition to the Residential Clean Energy Credit, most valley residents are eligible for the state solar tax credit. This credit is valued at 25% of your total system cost, up to a maximum amount of $1,000.
Anyone who is eligible can claim the credit for up to five years, with the amount never able to exceed $1,000. Arizona homeowners must have a state tax liability in order to qualify for the solar tax credit.
3. Energy Equipment Property Tax Exemption
Solar power installation has been proven to increase your home’s value. In this state, solar panels are eligible for a property tax exemption. This means that if your solar system increase your home’s value, then you may be exempt from paying taxes on the recently increased value.
In addition to the installation of solar panels, this tax exemption can be applied to the following:
- Solar water heaters.
- Solar pool heaters.
- Passive solar technology.
- Solar space heaters.
- Solar thermal electric.
- Solar thermal process heaters.
- Other solar-powered appliances.
4. Solar Equipment Sales Tax Exemption
The state of Arizona currently offers a sales tax exemption for the retail sale of solar energy devices, and for the installation of these energy-saving devices by contractors.
Is Going Solar Worth It In Arizona?
As the sunniest state in the U.S., Arizona consistently ranks as one of the best states to make the transition to solar power. It’s best to first access your monthly energy bills, determine how much sun your home receives per day, then calculate the size and expense of the solar panels you wish to install.
You must also consider your financing options and the expected return on investment. Contact a solar installer for an accurate estimate in your area.
How Much Do Solar Panels Cost?
The typical cost for a 7kW solar system of panels runs around $24,500. This price is dependent on how many watts of power your home will use, multiplied by the current rate of solar panels (per watt) in Arizona. An average home in the valley of the sun will use around 7 kW. The cost of $24,500 includes installation costs and materials.
According to HomeGuide, solar panels will cost about $7 per square foot in Arizona. Prices will range from $4-$10 per square foot, typically. Meanwhile, commercial solar panels in Arizona will cost between $2.50-$3.50 per watt, meaning business owners can expect to pay $3.00 per watt, on average.
How Much Money Can You Save?
Aside from saving on taxes, some estimates say you could save up to 99% on your electricity bill. Now, this figure may sound unrealistic, but with 300 sunny days per year and a powerful solar system, your average monthly bill could come out to just $35.
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