Solar Incentives in Arizona (2026)
Arizona homeowners pay an average of $0.13/kWh for electricity. With the right incentives, solar can offset a significant portion of that cost. Below are the 4 active programs available in Arizonaas of February 2026.
Federal ITC Update: The federal residential solar tax credit (Section 25D) expired December 31, 2025 per the One Big Beautiful Bill Act (Public Law 119-21). The commercial ITC (Section 48E) remains active at 30% for systems under 1 MW through 2032. State and utility programs listed below remain in effect.
Active Incentive Programs
| Program | Type | Authority | Amount | Description |
|---|---|---|---|---|
| Tax Credit | Arizona Department of Revenue State | 25% of system cost, capped at $1,000 | Arizona state income tax credit for residential solar installations. While modest, it stacks with other incentives. Arizona resident homeowners installing solar energy devices. | |
| Property Tax Exemption | Arizona Department of Revenue State | Solar equipment value excluded from property tax assessment | The added value of solar installations is exempt from property tax assessment. All residential solar installations in Arizona. | |
| Net Metering | Arizona Public Service (APS) Utility | Export credits at avoided cost rate (below retail). TOU rates apply. Typically $0.03-0.05/kWh depending on time of day. | APS uses net billing methodology. Solar exports are credited at avoided cost, not full retail. Battery storage recommended to maximize self-consumption. APS residential customers with grid-tied solar. | |
| Net Metering | Tucson Electric Power (TEP) Utility | Net metering available for residential systems. Credit rates vary by plan. | Tucson Electric Power offers net metering for residential solar customers. TEP residential customers with solar installations. |
Data sourced from DSIRE, EnergySage, and state energy offices. Last verified February 2026. Verify all programs directly with the administering authority.
Get a ZIP-Specific Incentive Report
Programs vary by utility and municipality within Arizona. Enter your ZIP code to see exactly which incentives apply to your address.
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Open ROI CalculatorFrequently Asked Questions
Does Arizona have a solar tax credit in 2026?
Yes. Arizona offers a state solar tax credit in 2026. See the incentives table above for current amounts and eligibility. Note: the federal residential ITC (Section 25D) expired December 31, 2025.
What is the average electricity rate in Arizona?
The average residential electricity rate in Arizona is approximately $0.13/kWh as of 2026. Higher utility rates generally improve solar ROI.
Does Arizona have net metering?
Yes. Arizona has a net metering or net billing policy that credits solar owners for excess electricity exported to the grid. See the incentives table above for current rates and program details.
Is solar equipment exempt from sales tax in Arizona?
Arizona does not currently offer a statewide sales tax exemption for solar equipment.
Does going solar increase property taxes in Arizona?
No. Arizona offers a property tax exemption for solar energy systems, meaning the added home value from solar is not included in your property tax assessment.
Did the federal solar tax credit expire?
Yes. The federal residential solar tax credit (Section 25D) expired December 31, 2025 per the One Big Beautiful Bill Act (Public Law 119-21). The commercial ITC (Section 48E) remains active at 30% for systems under 1 MW through 2032.