AZ incentive guide
Arizona solar incentives in 2026
Last updated · every AZ program below is verifiable against the sources at the foot of this page.
The most valuable solar incentive in Arizona right now is 25% state tax credit (capped at $1,000). Overall, the state's incentive stack rates as moderate compared with the rest of the country.
The federal credit is gone — start here
The 30% federal residential clean energy credit (Section 25D) ended for systems installed after December 31, 2025. If you are buying a system in Arizona this year, there is no federal credit. That is a roughly $7,440 swing on an $24,800 system compared with 2025 pricing, and it is why state programs matter more now than they did a year ago.
What Arizona offers at a glance
| Incentive | Available? | Details |
|---|---|---|
| State income tax credit | Yes | 25% of system cost, capped at $1,000 |
| Rebate or performance payment | No | — |
| SREC market | No | — |
| Sales tax exemption | Yes | Qualifying solar equipment is exempt from state sales tax. |
| Property tax exemption | Yes | The value solar adds to the home is excluded from property tax assessment. |
| Federal tax credit | No | Section 25D ended for systems installed after December 31, 2025. |
Reviewed September 2026. Incentive programs change frequently and several are funding-capped — verify current status with the administering agency or DSIRE before relying on any figure.
Arizona solar tax credit
Arizona offers a residential solar income tax credit: 25% of system cost, capped at $1,000. On a typical 8 kW install at about $21,800, that is worth roughly $1,000. A credit only helps to the extent you owe AZ income tax, so check your liability and any carry-forward rules before treating it as a discount.
Arizona solar rebates and grants
Arizona runs no statewide solar rebate or grant program in 2026. Individual utilities and municipalities sometimes do, and those are rarely advertised well — ask your utility directly what they pay toward a residential install.
Arizona offers a state income tax credit of 25% of system cost up to $1,000, plus sales and property tax exemptions for residential solar. Verify current program terms.
Net metering and export rates in Arizona
Arizona replaced retail net metering with net billing. Utilities such as APS and SRP credit exported solar at an export rate below retail that can step down annually, so self-consumption drives most savings.
Compare this with net metering in every other state.
Export rules deserve to be read as an incentive. In a retail net metering state, every exported kilowatt-hour is worth the full retail rate; under net billing or avoided-cost compensation, the same kilowatt-hour can be worth a third of that. For a Arizona home at an assumed $0.16/kWh, that difference compounds across a 25-year system life.
What this means for your numbers
A typical 8 kW system in Arizona costs roughly $18,800–$24,800 installed before incentives, producing about 13,760 kWh a year and saving around $1,814 in year one — a simple payback near 10–14 years with no incentives applied. Anything in the table above shortens that.
Frequently asked questions
What are Arizona solar tax credits worth in 2026?
Arizona's solar income tax credit is 25% of system cost, capped at $1,000. On a typical 8 kW system costing about $21,800, that works out to roughly $1,000 — the cap is what binds, not the headline percentage. It is a credit against AZ income tax, so you need enough state tax liability to use it.
Does Arizona have solar rebates?
No. Arizona has no statewide solar rebate or upfront grant program in 2026. Individual utilities and municipalities occasionally run their own, so it is worth asking your utility directly.
Is there an Arizona solar property tax exemption?
Yes. Arizona excludes the value solar adds to a home from property tax assessment, so a system that raises your home's value does not raise your annual tax bill. Arizona also exempts qualifying solar equipment from state sales tax, which comes straight off the installed price.
What solar incentives are available in Arizona in 2026?
Arizona offers a state income tax credit of 25% of system cost up to $1,000, plus sales and property tax exemptions for residential solar. Verify current program terms. Because the federal Section 25D credit ended for systems installed after December 31, 2025, these state, local and utility programs are now the entire incentive picture for a purchased system.
Is there still a 30% federal solar tax credit in Arizona?
No. The 30% federal residential clean energy credit (Section 25D) ended for systems installed after December 31, 2025 under the One Big Beautiful Bill Act. Any quote or website still applying 30% to a 2026 purchased installation is out of date. Leased and PPA systems can still benefit indirectly, because the third party that owns the system may claim the commercial 48E credit through 2027 and pass some of the value through in pricing.
Does Arizona have net metering?
Arizona replaced retail net metering with net billing. Utilities such as APS and SRP credit exported solar at an export rate below retail that can step down annually, so self-consumption drives most savings. Export rules are effectively an incentive — often the largest one — because they set what every kilowatt-hour you do not use on site is worth.
How much do incentives change the cost of solar in Arizona?
Before incentives, a typical 8 kW system in Arizona runs roughly $18,800–$24,800. A state credit of 25% of system cost, capped at $1,000 comes off that, subject to the cap and your tax liability. See our full Arizona cost breakdown for payback math.
Verify before you rely on any of this
Incentive programs open, close, deplete their funding and change their caps — often mid-year. This page is a starting point reviewed September 2026, not tax advice. Confirm with: