Why State Incentives Matter Now
With the 30% federal residential solar tax credit no longer available as of January 2026, your state and local incentives are now the biggest factor in your solar savings. Some states offer tax credits, others have rebate programs, SRECs, or net metering that pays you back every month. The difference between states can mean thousands of dollars — and that is exactly what Solar Incentive Finder helps you uncover. Enter your ZIP code to see what is available in your area →
The credit lets you deduct 30%. It is not a deduction — it is a real dollar-for-dollar credit.
If your system costs $30,000, you get $9,000 back. The credit is active through 2032, so you still have time.
The Federal Credit Has Ended — Here Is What Matters
How it works: Install panels in 2026, claim the credit on your 2026 tax return (filed in 2027). The credit covers the full installed cost — panels, labor, permits, batteries, and inverters.
- ✅ Valid through 2032
- ✅ state percentage of total system cost
- ✅ Applies to Arizona homeowners
- ✅ Includes battery storage
(Example — your amount may vary)
Property Tax Exemption for Solar
One of the best incentives for Arizona homeowners is the property tax exemption for solar panel systems.
Here is why this matters: when you install solar panels, your home value goes up. In many states, that means your property taxes go up too.
But Arizona law says that the added value from solar cannot increase your property tax assessment. You get the full benefit of a more valuable home without paying more in taxes.
This is a permanent benefit. As long as you own the home, the solar value is excluded.
Solar Property Tax Exemption
Solar installations are exempted from property tax assessments under Arizona state law. The increase in home value from going solar is 100% excluded from your property tax bill.
Note: Arizona has no personal state income tax, so there is no separate state income tax credit for solar.
Arizona Solar Access Rights
Arizona passed Arizona Revised Statutes § 33-446 — also known as the Solar Access Law. This law protects your right to install solar panels.
What does this mean for you?
- ✅ HOAs cannot ban solar panels on your home. They can set rules for placement and appearance, but they cannot block your installation entirely.
- ✅ Local governments cannot deny you the right to use solar energy.
- ✅ Your neighbor cannot complain about glare and force you to remove your panels.
This law gives you peace of mind. You can install solar without worrying about your neighborhood association stopping you.
Arizona Utility Programs: APS, SRP & TEP
Arizona has three main utility companies for most homeowners. Each one handles solar credits differently. This is important — it affects how much money you save after your panels go on the roof.
APS Arizona Solar Choice & Net Energy Billing
Arizona Public Service (APS) is the largest utility in the state. It serves the Phoenix metro area and much of the state outside of certain eastern communities.
What's changed: APS moved away from traditional net metering. Instead, they use a Net Energy Billing (NEB) system. This means:
- 📌 You earn credits for extra power you send to the grid, but the rate is lower than what you pay for electricity.
- 📌 A monthly service fee is charged for solar customers.
- 📌 Adding a battery makes a big difference — it lets you store your solar power and use it when rates are highest.
APS also offers the Energy Storage Incentive program, which provides rebates for adding battery storage to your solar system.
SRP Solar Buyback & Programs
Salt River Project (SRP) serves much of the Phoenix and Mesa area. Like APS, SRP does not offer traditional 1:1 net metering.
- 📌 SRP pays for excess solar at a lower export rate than the retail price of electricity.
- 📌 They offer a time-of-use rate plan for solar customers. This means power is cheaper during off-peak hours.
- 📌 SRP also has an Avoided Cost Rate that determines how much you're credited for exported power.
SRP offers a battery buyback program. If you add a battery, SRP may pay you for energy stored and discharged during peak hours.
Tucson Electric Power Net Metering
Tucson Electric Power (TEP) serves Tucson and southern Arizona. TEP is one of the friendliest utilities for solar in the state.
- 📌 TEP offers net metering with credits for excess solar energy sent to the grid.
- 📌 Credits can roll over month to month.
- 📌 TEP also runs rebate programs that can provide extra money for solar installations (when funding is available).
- 📌 The utility has a goal of 100% clean energy by 2050, so solar is encouraged.
If you live in the Tucson area, TEP makes it easier to save with solar than many other Arizona utilities.
Arizona Net Metering Explained
Net metering is the process where your utility company credits you for extra solar power you send to the grid. Think of it like a bank — you deposit power when the sun shines, and withdraw when it doesn't.
Here is how it works across Arizona's big three utilities:
| Utility | Net Metering Type | Best With Battery? |
|---|---|---|
| APS | Net Energy Billing (NEB) — lower export rate | ✅ Highly Recommended |
| SRP | Avoided Cost Rate buyback | ✅ Highly Recommended |
| TEP | Net Metering with rollover credits | 👍 Helpful, not required |
The bottom line: Arizona's biggest utilities (APS and SRP) have moved away from traditional net metering. This makes battery storage much more valuable than in some other states.
Action Step: Check your exact utility's current solar rate plan before signing with an installer. Policies can change.
How Much Does Solar Cost in Arizona?
| System Size | Before Incentives | After 30% Credit |
|---|---|---|
| 6 kW | $16,500 – $19,500 | $11,550 – $13,650 |
| 10 kW | $27,500 – $32,500 | $19,250 – $22,750 |
| 12 kW | $33,000 – $39,000 | $23,100 – $27,300 |
These are average ranges. Your actual cost depends on roof type, equipment, and installer. Get a custom quote for your home →
Frequently Asked Questions
Does Arizona have a state solar tax credit in 2026?
No. Arizona used to have a state income tax credit for solar (up to $1,000), but that credit expired several years ago. Arizona has no personal state income tax, so there is no state-level solar tax credit. However, the 30% tax credit is still very generous and available through 2032.
How many sun hours does Arizona get?
Arizona averages about 300 sunny days per year, which is the most of any state. Phoenix gets approximately 5.5 to 6.5 peak sun hours per day on average. This makes Arizona one of the best places in the country for solar — panels produce a lot of electricity here.
Is it worth adding a battery in Arizona?
If you have APS or SRP, yes — a battery is highly recommended. Both utilities offer lower buyback rates for solar, so storing your power and using it yourself saves more money. If you have TEP in Tucson, it is less critical but still helpful for backup during outages.
How much can I save with solar in Arizona?
Most Arizona homeowners save $1,500 to $2,500+ per year on their electric bills. With the 30% tax credit and no extra property taxes, the payback period is typically 6 to 9 years — among the fastest in the country.
Can my HOA block my solar panels in Arizona?
No. Arizona Revised Statutes § 33-446 (the Solar Access Law) protects your right to install solar. Your HOA can set rules about placement and appearance, but they cannot ban solar panels on your home.