2025 Solar Incentives Guide for Phoenix, AZ - Tax Credits & Rebates
In this guide, we'll cover the latest solar incentives and rebates available in Phoenix.
You'll learn about:
- Local & State Solar Incentives
- Federal Tax Credits (Updated for 2024 and beyond)
- Ways to optimize your solar investment
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What Solar Tax Credits, Incentives, and Rebates are Available in Phoenix?
Solar and Wind Equipment Sales Tax Exemption
Residential Solar and Wind Energy Systems Tax Credit
Qualifying Wood Stove Deduction
Energy Equipment Property Tax Exemption
SRP - Solar Water Heating Program
Federal Residential Renewable Energy Tax Credit
Source: https://www.dsireusa.org/
Solar incentives encourage people to switch their home over to renewable energy by providing financial incentives meant to lower the burden of solar panel installation and use. You may be eligible for several kinds of incentives, such as cash back, discounts or credit towards your monthly utility bill, depending on your situation. Some incentives come from your specific utility company, county or municipality, some from the Arizona government and others from the federal government. You might qualify for any of the following types of solar incentives:
- Tax Credits: Tax credits decrease, dollar-for-dollar, how much income tax you owe the government. Tax credits differ from tax deductions.
- Rebates: A rebate is a partial refund given after you've purchased your solar panels. These may be offered by your local utility company, your county or your state. The discount that rebates offer is normally applied to the price of solar panels before calculating tax credits.
- Tax Exemptions: These could come in the form of property tax exemptions, which let you ignore the value of your solar system when paying taxes on your home. You could also look for exemptions on sales tax at the time of purchase.
- Net Metering: Be sure to speak to your Phoenix utility company about signing a net metering agreement. This allows you to get a credit towards your monthly utility bill for the value of excess energy your solar panels generate. You could receive either a dollar-for-dollar credit or a percentage of the value.
Federal Solar Incentives
When thinking about solar incentives, federal incentives are likely the first thing that comes to mind. One of the incentives many people are probably familiar with is the Federal Solar Investment Tax Credit (ITC). The ITC is a tax credit for a predetermined percentage of your solar system's cost.
The ITC applies to the value of a solar system installed on your primary or secondary residence in the United States. The solar panels must have been installed on a property you own after January 1, 2006, for you to claim the credit. The ITC originally paid out 30% of all costs (panels, equipment, accessories and labor), although the total amount has fluctuated over the years between 26-30%. The installation date of your solar system will determine what percentage you are eligible for. There is no cap on the claim amount.
Wondering how the ITC applies to your specific situation? Reach out to your local Phoenix solar panel installation expert to get more information.
The ITC was renewed and increased in scope after the passage of the Inflation Reduction Act in August 2022. It's also now called the Clean Energy Credit. The Clean Energy Credit runs until 2035. Solar installation projects started after January 1, 2022, and completed by the end of 2032 may qualify for a 30% tax credit. The amount will then decrease slightly on a yearly basis until the current program ends. The expansion also makes it easier to get credit for energy storage systems, starting in 2023.
More information about the new Inflation Reduction Act can be found here. To understand how the new Clean Energy Credit applies to you, reach out to your local Phoenix solar installers.
State & Local Solar Incentives
Some solar incentives may be provided by state and local governments. As with federal incentives, these may include tax credits, rebates and more. These solar incentives — which may be given by your county or municipality, or by the state of Arizona — may be offered for only a limited time, or on an ongoing basis.
Next Steps for Installing Solar in Phoenix
Solar incentives might come from your local utility company, the Arizona government or the federal government. The growing number of solar incentives available has facilitated the nationwide growth of solar energy use in the last 15 years. Call your local solar panel installer today to discover more about the various programs and to save the most money possible on a solar system for your Phoenix home.
EcoWatch's Phoenix, AZ Solar Incentives FAQs
How do I know if I qualify for different solar incentives?
It's a smart idea to get in touch with your local Phoenix solar installer for a better understanding of which incentives your project will qualify for. In most cases, solar incentives apply to new solar panel systems installed on a property you own (in the U.S.) between the dates specified by the incentive. Some incentives, such as those offered by the government of Arizona, may have other requirements.
I already have solar panels installed. Are there any incentives that I qualify for?
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 your system was installed between 2006 and 2021, you may qualify for a tax credit between 26% and 30%, depending on the exact installation date. Reaching out to the company that installed your system, or any local Phoenix solar installer, can help you learn what incentives you might want to apply for.
When does the federal solar tax credit end?
The Clean Energy Credit (previously called the federal solar tax credit, or the ITC), is scheduled to end on January 1, 2035. Currently set at 30%, the credit will drop to 26% in 2033 and to 22% in 2034.
Can I qualify for incentives both towards the up-front cost of solar panels, and later as reimbursement?
The order in which incentives are applied may vary depending on which incentives you are claiming but typically yes, you can receive multiple types of incentives for your solar project. Get in touch with your solar installer or a local tax professional to verify you are claiming all the incentives you're eligible for and applying them in the correct order.
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