Arizona
Arizona Solar Incentives 2026 — 25% State Credit, Tax Exemptions & Export Rates
Arizona offers a 25% state income tax credit (up to $1,000) and sales and property tax exemptions for solar. APS credits exported energy at a Resource Comparison Proxy rate ($0.06171/kWh for September 2025–August 2026), so using solar on-site matters.
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Incentive categories
4
Program entries
15.18¢
Avg rate / kWh
12.4 yrs
Simple solar payback
$45,150
25-yr net solar savings
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
Federal HEAR Framework (State Availability Varies)
Statutory household cap up to $14,000
Federal law sets measure and household caps, but consumers can use rebates only where the state or territory program is active and funded. A listed cap is not an available award.
Eligibility: Income, equipment, project, state-program, and funding rules apply; confirm availability with the administering state program before purchase.
Get Free Solar Quotes for Your Home
Open the external EnergySage marketplace to request and compare itemized solar proposals.
Your estimated 25-year savings: $45,150
We are not affiliated with EnergySage and receive no commission or referral fee. The button opens an external site; review its terms and privacy policy.
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 modeled payback to about 12.4 years.
Nationally, EnergySage reports the average U.S. homeowner saves about $60,500 over 25 years by going solar, without the expired federal credit (page updated June 2026). Actual savings vary by state, electricity rate, export rules, 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 | $28,560 |
| Net install cost | $28,560 |
| Annual energy savings | $2,305 |
| Simple payback period | 12.4 years |
| 25-year net savings | $45,150 |
The federal residential solar tax credit (Section 25D) is not available for expenditures after Dec 31, 2025 and is not included above. State and utility incentives may still apply and are listed separately.
* Planning example for an 8 kW system: $3.57/W installed (LBNL 2024 median for Arizona), 6.5 peak sun hrs/day, one 20% system derate, 0.5%/yr panel degradation from year two, and 15.18¢/kWh escalating 2.5%/yr. Arizona is a net-billing state: exported solar is credited below the retail rate (APS buys exported energy at the Resource Comparison Proxy rate, $0.06171/kWh for September 2025–August 2026 (Arizona Corporation Commission)). No published average export rate or self-consumption share is on file, so this table still assumes every kWh offsets retail-rate electricity and therefore overstates savings for systems that export heavily. Size to your own consumption or add storage. Tax credits require eligibility and sufficient tax liability.
Get Free Solar Quotes for Your Home
Open the external EnergySage marketplace to request and compare itemized solar proposals.
Your estimated 25-year savings: $45,150
We are not affiliated with EnergySage and receive no commission or referral fee. The button opens an external site; review its terms and privacy policy.
How to Go Solar in Arizona: Step-by-Step
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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.
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Size for optimal self-consumption
Arizona's summer cooling loads line up with solar production, which helps self-consumption. Because APS credits exports at the RCP rate, size your system to the energy you use rather than to your roof space.
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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 (15.18¢/kWh), production volume gives an 12.4-year modeled payback. 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. APS buys exported energy at a Resource Comparison Proxy rate ($0.06171/kWh for September 2025–August 2026).
What is APS's solar rate and how does it affect ROI?
New APS solar customers are credited for exported energy at the Resource Comparison Proxy (RCP) rate, $0.06171/kWh for September 2025–August 2026, well below the retail rate, and the RCP has stepped down in recent years. Solar you use on-site offsets the retail rate, so maximizing self-consumption, with or without a battery, improves the economics.
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
Product examples are provided for comparison only. Confirm electrical compatibility, installer requirements, warranty terms, and any current utility incentive before purchase.
Calculate Your Arizona Savings
The Solar ROI link preselects Arizona's planning inputs, including the listed electricity rate (15.18¢/kWh). Other tools open with their own defaults; review every input before calculating.
Browse Other States
Data Sources & Methodology
Incentive data: DSIRE, U.S. DOE Home Energy Rebates, IRS residential credit guidance, and linked state program pages. Electricity rates: EIA Electric Power Monthly, Table 5.6.A (June 2026). Solar resource: NREL PVWatts reference with state-level planning inputs, not an address-specific API result. Installed price: LBNL Tracking the Sun (Residential systems installed in 2024), a median rather than a quote. The 2.5% annual rate change is a model assumption, not a forecast. Sources and methodology reviewed 2026-09-06. Always verify current amounts with the administering agency and utility.