2023 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 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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By EcoWatch Local Advisors
Data Analysis: James Savino
Ranking Methodology: Karsten Neumeister
Updated May 04, 2023
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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
Solar incentives are meant to help mitigate the cost of installing a solar panel system on your home. This category of financial incentives is designed to encourage more Americans to make the switch to renewable energy. Various kinds of incentives, including discounts, cash back or credit towards your monthly utility bill, might be available to you. Certain incentives may be provided via the state of Arizona, by your utility company or by county or municipality, while other incentives are federal. You might qualify for any of the following types of solar incentives:
- Net Metering: Net metering factors in after your solar system is up and running. If you've signed a net metering agreement with your Tempe utility company, the company will subtract the value of the excess energy produced by your solar system from your monthly utility bill. In some places, this is a dollar-for-dollar credit, while in other areas you may make back a percentage of the value.
- Tax Credits: Different from tax deductions, tax credits reduce, dollar-for-dollar, the amount of income tax that you owe the federal government.
- Rebates: Rebates, or partial refunds after a purchase, are usually applied before any solar tax credits are calculated. Rebates might be given by your local utility company, by your state or by your county.
- Tax Exemptions: Sales tax exemptions are effective at the time of purchase for your solar panels. Property tax exemptions let you exclude the added value of your solar system when you're calculating how much property tax you need to pay on your home.
Federal Solar Incentives
Federal incentives are the kind of incentives that you are most likely to have some knowledge of. The solar incentive that you're most likely to have heard of is the Federal Solar Investment Tax Credit (ITC), which provides a credit on your taxes equal to a certain percentage of your solar system's cost.
The ITC can be applied to solar panels installed after January 1, 2006 on a primary or secondary residence in the United States that you own. Originally, the tax credit was for 30% of the total cost — for panels, accessories, labor and equipment — although it may range from 26-30%, depending on when your solar project was undertaken. There is no cap on the claim amount.
Have questions about how the ITC applies to your specific situation? Contact your local Tempe solar panel installer to get more information.
In August 2022, the ITC (now referred to as the Clean Energy Credit) was bolstered by the passage of the Inflation Reduction Act. For solar system installations that begin after January 1, 2022 and are completed by the end of 2032, homeowners may be eligible for a credit equal to 30% of the total cost. After 2033, the percentage will decrease annually until the Clean Energy Credit expires in 2035. Starting in 2023, it will also be easier to qualify for credits for energy storage systems under this new program.
More information about the new Inflation Reduction Act can be found here. The best way to understand how the new Clean Energy Credit might apply to you is to speak with your local Tempe solar panel installers directly.
State & Local Solar Incentives
There are often also state solar incentives in addition to those provided by the federal government. Tax credits, rebates and more may be available at a more local level. Some incentives are ongoing, while others are only available for a limited time. Solar incentives might be given by the Arizona government, or by your county or municipality.
Next Steps for Installing Solar in Tempe
The expanding number of available solar incentives has helped tremendously increase the nationwide adoption of solar energy over the last 15 years. You might qualify for solar incentives from the federal government, the Arizona government or from your local utility company. Speaking with your local Tempe solar panel installation expert is a great first step towards getting all the incentives you qualify for when you switch to solar energy.
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EcoWatch's Tempe, AZ Solar Incentives FAQs
How can I learn if I qualify for different solar incentives?
It's a good idea to talk to your local Tempe solar installer to get an understanding of which incentives your project may qualify for. In most cases, solar incentives apply to new solar panel systems installed on a property you own (in the U.S.) within a specified date range. Some incentives, such as those provided at the level of the Arizona government, might have additional requirements.
If I already have a solar system installed on my house, can I still claim incentives?
An excellent idea would be to talk to someone from the company that installed your solar panels — or get in touch with a local Tempe solar installer — to better understand which incentives you might qualify for. If your solar panels were installed after January 1, 2022, you likely qualify for the recently increased 30% tax credit under the Inflation Reduction Act. Solar panels installed between 2006 and 2021 may qualify for a tax credit of 26-30%.
Who installs solar panels near me?
To find the top solar panel installation companies near you, read our article on the best solar companies in Tempe.
When does the federal solar tax credit end?
The federal solar tax credit, formerly called the ITC and now titled the Clean Energy Credit, is slated 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.