Arizona Solar Incentives 2026

Arizona's Residential Solar Energy Credit (A.R.S. §43-1083.01) is the most significant remaining incentive for Arizona homeowners going solar in 2026. The credit equals 25% of the total installed cost of your solar system, capped at $1,000 per tax year.

If your Arizona income tax liability is less than $1,000 in the year you install, you can carry the unused credit forward for up to five additional tax years — meaning you'll eventually claim the full amount as long as you owe Arizona state taxes.

Under A.R.S. §42-11054, the added value of a solar energy system is fully excluded from your home's assessed value for property tax purposes. Solar typically adds $15,000–$25,000 to a home's market value — in Arizona, none of that increase affects your property tax bill.

This exemption is permanent — there's no expiration date, no annual renewal, and no application required. It applies automatically when your system is permitted and interconnected.

Arizona waives its 5.6% Transaction Privilege Tax (sales tax) on the purchase and installation of residential solar systems. The exemption covers solar panels, inverters, battery storage, racking hardware, and installation labor.

On a $25,000 system, this saves approximately $1,400 upfront. Your installer applies the exemption automatically — no action required from you. Note that some cities and counties levy their own local sales taxes that may still apply; confirm with your installer.