2023 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 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 March 14, 2023
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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 are designed to make renewable energy usage more affordable through financial incentives to help people install solar panels on their homes. Various kinds of incentives, like discounts, cash back or credit towards your monthly utility bill, may be available to you. Some incentives may be offered by the state of Arizona, by your utility company or by county or municipality, while others are federal. You might qualify for any of the following types of solar incentives:
- Rebates: Solar rebates might be offered by your state or county, or by your local utility company. These rebates work as cash back that is applied after you purchase a solar system and before tax credits are calculated.
- Net Metering: Net metering becomes relevant once your solar panels are up and running. If you have a net metering agreement with your Phoenix utility company, the company 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 other places you may get refunded a percentage of the value.
- Tax Credits: Different from tax deductions, tax credits are dollar-for-dollar reductions in the amount of income tax that you owe the government.
- Tax Exemptions: Sales tax exemptions are effective at the time of purchase for your solar system. Property tax exemptions let you ignore the value added by your solar system when you calculate the amount of property tax you need to pay.
Federal Solar Incentives
When thinking about solar incentives, you likely think of federal incentives first. 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 percentage of your solar system's cost.
The ITC is applied to the total cost of installing solar panels, including the panels themselves as well as equipment, accessories and labor. You can claim this credit for panels installed after January 1, 2006 on a primary or secondary residence that you own, as long as it is located in the United States. From its original value of 30% of the total cost, the credit has fluctuated slightly between 26-30%, and you may qualify for varying percentages depending on when your project was completed. There is no maximum claim amount.
Talking to your local Phoenix solar panel installer is the best way to learn more about how the ITC may apply to your situation.
The ITC was both renewed and expanded by the passage of the Inflation Reduction Act in August 2022. It's also now called the Clean Energy Credit. The Clean Energy Credit re-raises the credit up to 30% for solar systems installed between 2022 and 2032. After this, the credit percentage will see a slight decrease annually until the program expires in 2035. Starting in 2023, the expansion to the program will also make claiming credit for energy storage systems easier than ever before.
More information about the new Inflation Reduction Act can be found here. Your local Phoenix solar panel company can answer any questions you have and explain how the new Clean Energy Credit may apply to you.
State & Local Solar Incentives
Some solar incentives are often also provided by state and local governments. Similar to federal incentives, these can include tax credits, rebates and more. Incentives might be provided by your county or municipality, or by the state of Arizona. Some incentives may be available for only a limited time, while others are ongoing.
Next Steps for Installing Solar in Phoenix
The nationwide use of solar energy has significantly increased in the last 15 years, in part due to the growth in the number of solar incentives. You can obtain these incentives from your local utility company, the Arizona government or the federal government. Talking to your local Phoenix solar panel installer is the best first step towards getting the most money possible when you switch to solar energy.
Best Technology
Tesla Energy
- Price-match guarantee
- Sleek, efficient, and durable solar panels
- Best solar battery on the market
- Some reported issues with customer service
- Customer service varies by local dealer
Best Warranty Coverage
Sunpro Solar
- Industry-leading warranty coverage
- Expansive service area
- Some reported communication issues
- No leases or PPAs
EcoWatch's Phoenix, AZ Solar Incentives FAQs
How can I learn if I qualify for solar incentives?
Generally, solar incentives apply to:
- a new solar panel system
- installed on a property that you own
- within the U.S.
- between the dates specified by a particular incentive.
Specific incentives, including those run by the Arizona government or by your county/municipality, could have additional qualifications. Speak with your local Phoenix solar installer to find out what incentives your project may qualify for.
If I installed solar panels on my house a few years ago, can I still claim incentives?
If your solar panels were installed after January 1, 2022, you may qualify for the recently increased 30% tax credit under the Inflation Reduction Act. If you had your system installed 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 system, or any local Phoenix 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 Phoenix?
On average, homeowners in Phoenix who install solar panels save around $1,305.94 per year, or around $24,812.91 over 20 years after making the switch.
What are the top solar panel installation companies near me?
To find a top-rated solar panel installer, check out our guide to the top solar companies in Phoenix.
Can I claim incentives both towards the initial cost of solar panels, and later as reimbursement?
The order in which incentives are applied could vary depending on which incentives you are eligible for but generally yes, you can claim multiple types of incentives for your solar project. Get in touch with your solar installer or a local tax professional to ensure you are claiming all the incentives you are eligible for and applying them in the correct order.
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.