Arizona Solar Incentives 2026 — Sales Tax Exemption + Net Metering
Arizona offers a 25% state income tax credit (up to $1,000), plus full sales and property tax exemptions for solar. With the highest sun hours in the country, Arizona has the fastest solar payback periods in the US.
$15,000+
Max potential savings
4
Total incentives
14.1¢
Avg rate / kWh
5.9 yrs
Solar payback
$38,000
25-yr solar savings
1.8%
EV fleet share
Excellent ☀️☀️☀️
Solar potential
Solar Incentives in Arizona
AZ Residential Solar Tax Credit
25% of cost, up to $1,000
Arizona state income tax credit equal to 25% of system costs, up to $1,000 per year (excess carries forward).
Eligibility: AZ resident homeowners with state tax liability.
Solar Sales Tax Exemption
100% state sales tax
Solar energy devices are exempt from AZ state and county sales tax.
Eligibility: All AZ residents.
Solar Property Tax Exemption
100% of added value
Solar installations are excluded from property tax assessments.
Eligibility: All AZ homeowners.
Heat Pump Incentives in Arizona
HEAR Rebate (High Efficiency Electric Home Rebate)
Up to $14,000
Point-of-sale rebate up to $8,000 for heat pumps, $1,750 for HPWHs, $4,000 for panel upgrades. Income-based.
Eligibility: Households < 150% of Area Median Income. Program administered by state energy offices.
Get Free Solar Quotes for Your Home
Compare bids from pre-screened local installers through EnergySage — the nation's largest online solar marketplace.
Your estimated 25-year savings: $38,000
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Solar Policy & Local Utilities in Arizona
Net Metering
Net billing (export rate)Arizona ended retail net metering in 2017 and replaced it with net billing based on an annually declining export rate (the Resource Comparison Proxy). Existing systems were grandfathered at their original rate for a set period.
Source: Arizona Corporation Commission (ACC)
Major Utilities
- Arizona Public Service (APS)
- Salt River Project (SRP)
- Tucson Electric Power (TEP)
Arizona Solar Facts
- Arizona has one of the highest solar resources (peak sun hours) of any U.S. state. (NREL)
- Arizona offers a 25% state solar income-tax credit, capped at $1,000. (Arizona Dept. of Revenue)
Last verified: 2026-06. Always confirm current terms with your utility or at DSIRE.
Is Solar Worth It in Arizona?
Arizona has the best raw solar potential in the US. Phoenix averages 6.5 peak sun hours/day — 40% more than New England. Despite moderate electricity rates, sheer production volume drives payback below 6 years in most cases.
Nationally, EnergySage reports the average homeowner saves about $61,000 over 25 years by going solar — though actual savings vary by state, electricity rate, and system size.
Key Advantage
Arizona sits at the top of NREL's solar radiation maps. The 25% state income tax credit (up to $1,000), full sales and property tax exemptions, and year-round sun make it one of the top 3 solar states.
Watch Out For
APS and SRP have both implemented demand charges for solar customers that can reduce net billing value. Verify your utility's solar rate structure before signing.
Solar Cost & Savings in Arizona (8 kW System)
| Item | Amount |
|---|---|
| Gross install cost | $20,800 |
| AZ Residential Solar Tax Credit | −$1,000 |
| Net install cost | $20,800 |
| Annual energy savings | $2,141 |
| Simple payback period | 5.9 years |
| 25-year net savings | $38,000 |
The federal residential solar tax credit (Section 25D) expired Dec 31, 2025 and is not included above. State and utility incentives may still apply and are listed separately.
* Estimates based on 2.6/W avg install cost, 6.5 peak sun hrs/day, and 14.1¢/kWh rate with 2.5%/yr escalation. Individual results vary.
Get Free Solar Quotes for Your Home
Compare bids from pre-screened local installers through EnergySage — the nation's largest online solar marketplace.
Your estimated 25-year savings: $38,000
We may earn a referral commission through EnergySage, at no cost to you.
How to Go Solar in Arizona: Step-by-Step
- 1
Check your utility's solar tariff
APS, SRP, and TEP have different solar rate structures. APS uses demand charges; SRP uses a solar plan. Review before installing — the choice of utility program significantly affects ROI.
- 2
Size for optimal self-consumption
Arizona's extreme summer cooling loads mean most homes can self-consume 90%+ of solar production June–September. Size your system to match your highest-use months.
- 3
Consider solar + battery for peak demand avoidance
A battery can discharge during the 3–7 PM peak demand window, eliminating the APS demand charge hit. The economics often justify battery storage here more than in other states.
Frequently Asked Questions — Solar & Clean Energy in Arizona
Is solar worth it in Arizona in 2026?
Absolutely. Arizona receives more solar radiation than any other continental US state (6.5 peak sun hours in Phoenix). Even with moderate rates (14.1¢/kWh), production volume drives payback under 7 years. The 25% AZ state tax credit (up to $1,000) helps reduce net cost. Note: The federal 25D ITC expired Dec 31, 2025.
What solar incentives are available in Arizona?
Arizona offers: (1) 25% AZ state income tax credit (up to $1,000), (2) Solar sales tax exemption, (3) 100% property tax exemption on solar value. Note: The federal 25D solar ITC expired Dec 31, 2025 — if installed in 2025, consult a tax professional. The APS solar rate program may also limit export credits.
What is APS's solar rate and how does it affect ROI?
APS residential solar customers are placed on a tiered rate plan with demand charges. This can reduce the value of excess solar exports. Pairing solar with a battery and self-consuming maximum production mitigates this impact significantly.
Does Arizona have net metering in 2026?
Arizona net metering status: Net billing (export rate). Arizona ended retail net metering in 2017 and replaced it with net billing based on an annually declining export rate (the Resource Comparison Proxy). Existing systems were grandfathered at their original rate for a set period. (Source: Arizona Corporation Commission (ACC).)
Which utilities in Arizona offer solar programs?
The main electric utilities in Arizona are Arizona Public Service (APS), Salt River Project (SRP), Tucson Electric Power (TEP). Confirm current offers with your utility and check DSIRE.org for Arizona programs.
Recommended Products for Arizona
SRP $250 charger + TEP $800/yr VPP for Powerwall · solar capital
Calculate Your Arizona Savings
Use our free calculators with Arizona's electricity rate (14.1¢/kWh) and gas prices ($1.51/therm) automatically applied.
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Data Sources & Methodology
Incentive data: DSIRE, U.S. DOE, IRS, and state energy offices. Electricity rates: EIA Electric Power Monthly (Feb 2026). Solar production: NREL PVWatts v8. Install costs: EnergySage National Market Report Q4 2025. Rate escalation: 2.5%/yr (20-yr EIA avg). Last updated February 2026. Always verify current amounts with the administering agency.