2025 Solar Incentives Guide for Tempe, AZ - Tax Credits & Rebates
In this guide, we'll cover the latest solar incentives and rebates available in Tempe.
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 Tempe?
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 meant to encourage people to switch their home over to renewable energy by providing financial incentives that lower the burden of solar panel installation and use. The incentives may include cash back, upfront discounts or credit towards your monthly utility bill. Some incentives are given by the federal government, some by the Arizona government and some by your utility company, county or municipality. Categories of solar incentives include:
- Tax Credits: Different from tax deductions, tax credits are dollar-for-dollar reductions in the amount of income tax that you owe the federal government.
- Rebates: A solar rebate is a partial refund after the purchase of your solar system. Rebates might be offered by your local utility company, your state or your county. The discount that rebates offer is normally applied to the price of solar panels before tax credits are calculated.
- Net Metering: You can sign a net metering agreement with your Tempe utility company. This agreement may apply to all or a percentage of the excess electricity that is generated by your solar panels. Your utility company will then deduct this value from your monthly utility bill.
- Tax Exemptions: Tax exemptions may come in one of two forms. The first is sales tax exemption, which is applied at the time you purchase your solar panels. The second is property tax exemption. This allows you to exclude the value added by your solar system when calculating property tax for your house.
Federal Solar Incentives
Federal incentives are the type of incentives that you are most likely to have some knowledge of. The solar incentive that you may be most familiar with is the Federal Solar Investment Tax Credit (ITC), which gives you a credit on your taxes equal to a certain percentage of the cost of your solar system.
The ITC applies to the total cost of installing a solar system, 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 and that is located in the United States. The tax credit ranges from 26-30% of total costs depending on when your project was completed. There is no maximum claim amount.
Wondering how the ITC applies to your specific situation? Reach out to your local Tempe solar panel installation expert to get more information.
In August 2022, the ITC (now called the Clean Energy Credit) was expanded and extended by the passing of the Inflation Reduction Act. The Clean Energy Credit has increased the current credit up to 30% for solar installation projects started after January 1, 2022, and completed by the end of 2032. After 2032, the percentage will see a slight decrease annually until the end of the program in 2035. The expansion to the program also makes it easier to get credit for energy storage systems, starting in 2023.
Click here to learn more about the new Inflation Reduction Act. To fully understand how the new Clean Energy Credit applies to you, get in touch with your local Tempe 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 rebates, tax credits and more. Some incentives are ongoing, while others are offered for only a limited time. Local solar incentives could come from your county or municipality, or from the Arizona government.
Next Steps for Installing Solar in Tempe
There are many kinds of solar incentives: those given by the federal government, those given by the Arizona government and those offered by local utility companies, to name a few. Solar energy use has increased tremendously in the last 15 years, thanks to these incentives. Reach out to your local solar panel installer today to find out more information and to save the most money possible on solar panels for your Tempe home.
EcoWatch's Tempe, AZ Solar Incentives FAQs
How do I know if I qualify for certain solar incentives?
Generally, solar incentives apply to:
- a new solar panel system
- installed on a property that you own
- within the U.S.
- within the date range specified by a particular incentive.
Specific incentives, including ones handled by the Arizona government or by your county/municipality, could have additional qualifications. Speak with your local Tempe solar installer to learn more about what incentives your project may qualify for.
If my house already has solar panels, can I still claim incentives?
If your solar system was 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 Tempe solar installer, can help you learn more about what incentives you can apply for.
What are some environmental benefits of installing solar panels on my home?
Solar energy is renewable — by changing where you get your energy, you help lessen the strain on our planet's resources. A solar system can also lower the CO2 emissions from your home by 500 pounds a year, or roughly 11,000 pounds over 20 years.
I want to trade in my old appliances for ones that are more energy-efficient. Are there any credits I can apply for?
With the passage of the new Inflation Reduction Act, there are a number of new financial incentives for making eco-friendly improvements to your home. More details about these incentives, including information about incentives for purchasing new appliances, can be found here.
What if I am planning to add a solar system to a vacation home, rental property or commercial property? Can I still qualify for incentives?
Many solar incentives apply to a property located within the United States that you own; most secondary residences will fall into this category. Other solar incentives may be available for commercial properties, depending on the specifics. We recommend reaching out to your local solar installer and/or tax professional to fully understand what incentives apply to your specific situation.
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