2023 Solar Incentives Guide for Cottonwood, AZ - Tax Credits & Rebates
In this guide, we'll cover the latest solar incentives and rebates available in Cottonwood.
You'll learn about:
- Local & State Solar Incentives
- Federal Tax Credits (Updated for 2023 and beyond)
- Ways to optimize your solar investment
Solar installers are experts in maximizing your solar tax credits and rebates.
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Updated September 15, 2023
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What Solar Tax Credits, Incentives, and Rebates are Available in Cottonwood?
Solar and Wind Equipment Sales Tax Exemption
Residential Solar and Wind Energy Systems Tax Credit
Qualifying Wood Stove Deduction
Energy Equipment Property Tax Exemption
Federal Residential Renewable Energy Tax Credit
Source: https://www.dsireusa.org/
Solar incentives are meant to help mitigate the cost of installing a solar panel system on your home. These financial incentives are in place to encourage more Americans to convert their home partially or fully to renewable energy. Solar incentives could include cash back, upfront discounts or credit towards your monthly utility bill. Some incentives are offered by the federal government, some by the Arizona government and some by your utility company, county or municipality. You might qualify for any of the following types of solar incentives:
- Rebates: Solar companies may help you claim a rebate, or partial refund after purchase, for your solar panels. States or counties will also sometimes offer limited-time rebates. Any rebates you receive will usually be deducted from the total price before tax credits are calculated.
- Tax Exemptions: These may come in the form of property tax exemptions, which would allow you to ignore the value of your solar system when paying property tax on your house. You could also look for exemptions on sales tax at the time of purchase.
- Tax Credits: Unlike tax deductions, tax credits are dollar-for-dollar reductions in the amount of income tax that you owe the government.
- Net Metering: Net metering factors in once your solar panels are up and running. If you have a net metering agreement with your Cottonwood utility company, they will subtract the value of the excess energy your solar system produces from your monthly utility bill. In some locations, this is a dollar-for-dollar credit, while in others you may make back a percentage of the value.
Federal Solar Incentives
Federal incentives are the kind of incentives that you are most likely to have some familiarity with. The solar incentive that you're most familiar with is probably the Federal Solar Investment Tax Credit (ITC), which provides a credit on your taxes equal to a predetermined percentage of your solar system's cost.
The ITC initially applied to 30% of the total cost of solar panel installation, and has fluctuated slightly over the last few years between 26-30%. The installation date of your solar system will determine what percentage you qualify for. The total installation cost includes the panels themselves as well as the cost of labor, accessories and equipment. There is no maximum claim amount. The ITC can be applied to solar panels installed after January 1, 2006 on your primary or secondary residence. The residence must be owned by you and in the United States.
Curious how the ITC might apply to your specific situation? Reach out to your local Cottonwood solar panel installation expert to get more information.
In August 2022, the ITC (now titled the Clean Energy Credit) was expanded and extended by the passage of the Inflation Reduction Act. Homeowners can now receive a credit equal to 30% of the total costs of solar system installation for projects that began after January 1, 2022 and will be finished by the end of 2032. This percentage will then begin to decrease yearly until the Clean Energy Credit ends in 2035. Starting in 2023, the expansion will also make credits for energy storage systems even easier to claim.
More information about the new Inflation Reduction Act can be found here. To fully understand how the new Clean Energy Credit might apply to you, talk to your local Cottonwood solar installation expert.
State & Local Solar Incentives
Some solar incentives may be provided by state and local governments. Similar to federal incentives, these might include tax credits, rebates and more. Incentives might be offered by the state of Arizona, or by your county or municipality. Some incentives might only be available for a limited time, while others are ongoing.
Next Steps for Installing Solar in Cottonwood
You can receive solar incentives from the federal government and the Arizona government, as well as from your local utility company. The growing availability of solar initiatives in the past 15 years has helped increase nationwide solar energy use enormously. We recommend talking to your local Cottonwood solar installation company for more information about these incentives and to ensure that you're getting the most money possible for your solar panels.
EcoWatch's Cottonwood, AZ Solar Incentives FAQs
Can I get any financial incentives when I add solar panels to a rental property, vacation home or commercial property?
Many solar incentives apply to a property you own that is located within the United States, and most secondary residences fall into this category. Other solar incentives may be available for commercial properties, depending on the specifics. We recommend talking to your local solar installer and/or tax professional to better understand what incentives apply to your specific situation.
I already have solar panels. Does my system qualify for any incentives?
If your solar panels were installed after January 1, 2022, you may qualify for the newly increased 30% tax credit under the Inflation Reduction Act. If you installed your system between 2006 and 2021, you may qualify for a tax credit between 26% and 30%, depending on the exact installation date. Talking to the company that installed your solar system, or any local Cottonwood solar installer, can help you understand what incentives you might want to apply for.
How much will a solar system save me annually on my electric bill in Cottonwood?
Generally, homeowners in Cottonwood who install solar panels save around $1,360.10 per year, or around $25,841.89 over 20 years after making the switch.
What are some environmental benefits of installing solar panels on my home?
Solar energy is renewable — by changing where you get your energy, you can help reduce the strain on our planet's resources. You can also reduce the CO2 emissions from your home by 500 pounds annually, or roughly 10,000 pounds over 20 years.
How long until the federal solar tax credit ends?
The federal solar tax credit, previously called the ITC and now called the Clean Energy Credit, is scheduled to end on January 1, 2035. The current 30% credit will end in 2032, replaced by a 26% credit in 2033 and a 22% credit in 2034.
Our goal is to reach as many people as we can with sensible solutions like solar energy. Our team of full-time local researchers collects solar price and installation data for every city in America then compiles it to create these digestible city guides. If you want to read our solar expert's opinion on the top solar companies featured here, follow this link.
Solar incentive research was conducted by Melissa Smith and Karsten Neumeister. Local data analysis was conducted by James Savino. See something we missed or could do better? Email the editor.