Solar incentives and rebates in Arizona: state tax credit, tax exemptions and export rates in 2026

Solar incentives in Arizona still exist, but they are smaller than they were. As of November 2026, Arizona homeowners can claim a state income tax credit of 25% of the cost of a solar system, capped at $1,000, and solar equipment gets sales and property tax breaks. There is no state rebate, and the federal 25D credit no longer covers new systems. Export credits from APS and TEP have stepped down almost every year since 2018.

• State tax credit: 25% of the cost of a qualifying system on your home, up to $1,000, claimed on Arizona Form 310, with unused credit carried forward up to five years.
• Tax breaks: Arizona law exempts on-site solar devices from added property tax value and exempts retail sales of solar devices from the state transaction privilege (sales) tax.
• Federal credit ended: the IRS says the 25D credit is not allowed for expenditures made after December 31, 2025.
• Export credits falling: regulators cut the APS and UNS Electric export rate 10% to about 5.55 cents per kWh on September 1, 2026; TEP's rate is 4.62 cents from October 1, 2026.
• Utility rebates are mostly gone: the Arizona Corporation Commission voted in March 2026 to repeal its renewable energy standard rules, but the Attorney General's Office disapproved the repeal and the commission said in June 2026 it was exploring next steps.

What solar incentives does Arizona offer in 2026?

Arizona's remaining help for home solar comes mainly through the tax code. The state has three tax benefits on the books, all summarized by the Arizona Commerce Authority:

1. A residential solar income tax credit under A.R.S. 43-1083.
2. A transaction privilege tax (sales tax) exemption for solar devices sold by a registered retailer.
3. A property tax exemption for solar devices that produce energy used on site.

On top of those, your utility's export rate decides how much you earn for surplus power. That rate is now one of the biggest swing factors in Arizona solar payback.

The Arizona residential solar tax credit

Arizona's Credit for Solar Energy Devices lets you subtract 25% of the cost of a qualifying solar or wind energy device from your state personal income tax. The credit is capped at $1,000 in total, no matter how many devices you install. The system must be installed on your residence.

Key details from the State of Arizona's summary:

• You claim it on Arizona Form 310 and attach it to your state return.
• If the credit is more than your tax bill, you can carry the unused amount forward for up to five years.
• The state's summary says the credit had no end date as of May 2024, and we found no later change.

On a typical home system, the $1,000 cap means the credit covers a small share of the cost. Still, it is real money that many buyers forget to claim.

Sales tax and property tax breaks for Arizona solar

Transaction privilege tax

Arizona's transaction privilege tax works like a sales tax. The Arizona Commerce Authority says the sales price of solar devices is exempt when a retailer registered with the Arizona Department of Revenue sells them. A 2017 Department of Revenue ruling notes that a separate deduction for solar installation contracting ended December 31, 2016, while the retail deduction remains. Ask your installer how the exemption is shown on your contract.

Property tax

Under A.R.S. 42-11054, solar devices that produce energy for use on the property are treated as adding no value to the home for property tax purposes. In plain terms, putting panels on your roof should not raise your property tax bill.

Federal tax credit status for Arizona homeowners

The federal residential clean energy credit (25D) used to cover 30% of system costs. That ended with 2025. The IRS says the credit "will not be allowed for any expenditures made after December 31, 2025," and that a solar expenditure is treated as made when installation is completed. A system finished in 2026 does not qualify. For more, see what happened to the 30% solar tax credit.

Arizona utility export rates and solar incentives by utility

APS says the Arizona Corporation Commission changed the way rooftop solar exports are credited in 2017, replacing retail-rate net metering for new customers. Today APS, TEP and UNS Electric pay a Resource Comparison Proxy (RCP) export rate that is usually reset every year and can fall by no more than 10% at a time. SRP sets its own solar price plans through its board.

Utility	Export credit for new solar customers	Effective	How long it is locked
APS and UNS Electric	About 5.55¢/kWh (down 10% from 6.171¢)	Sept 1, 2026	Rate in effect when you requested interconnection
Tucson Electric Power (TEP)	4.62¢/kWh	Oct 1, 2026 to Sept 30, 2027	Up to 10 years
SRP, Time-of-Use Export plan	Fixed 3.45¢/kWh	Current; plan to be discontinued as of the November 2029 billing cycle	Not a lock; plan is being retired

APS had asked for a much deeper cut to $0.04511 per kWh, PV Tech reported on August 17, 2026, but the 10% annual cap limited the reduction. The cap does not stop cuts from adding up: PV Tech put the decline in the APS rate since 2018 at about 57%.

APS solar-only monthly fee blocked in court

APS's 2024 rate case added an extra charge of about $2 to $3 a month for solar customers. In June 2026 the Arizona Court of Appeals blocked it, and on October 30, 2026 KJZZ reported that the court refused to reinstate it. APS said it plans to appeal to the Arizona Supreme Court, so check your bill and APS's current rate schedule before you rely on either outcome.

The utility incentive picture is also in flux. On March 4, 2026, the Arizona Corporation Commission voted 5-0 to repeal its Renewable Energy Standard and Tariff (REST) rules. Those rules had required part of each utility's renewable target to come from rooftop solar, and the commission says APS, TEP and UNSE spent more than $779 million on incentives under them. In a June 1, 2026 release, the commission said the Attorney General's Office had disapproved the repeal package, alleging a rulemaking process violation, and that it was exploring next steps. Either way, we found no open REST-funded rooftop rebate to apply for. Our Arizona net metering guide explains how export credits appear on your bill.

How to claim Arizona solar incentives

1. Before you sign: get a written quote that lists equipment, price and the export rate assumed. Check it with our solar quote checker.
2. Apply to connect early: with APS and TEP, the export rate you get depends on when your interconnection request is filed, so do not let paperwork slide.
3. Keep your invoice: you will need the total cost for Form 310.
4. File Form 310 with your Arizona return for the year the system is installed, and track any carryforward.
5. Check your property tax notice the next year to make sure the system did not raise your assessed value.

Common mistakes with Arizona solar incentives

Arizona's incentives are simple on paper, but buyers still trip over a few details:

• Counting the federal credit. Some older sales materials still show a 30% federal credit. For a system completed in 2026, it does not apply.
• Assuming a bigger state credit. The state credit is 25% of cost but never more than $1,000 per residence, even if you add more panels later.
• Using an old export rate. A quote prepared before September 2026 for an APS home may use the 6.171-cent rate. If your interconnection request is filed after the change, the lower rate applies.
• Forgetting the carryforward. If your Arizona tax bill is small, track the unused credit so you can claim it over the next five years.
• Leasing without asking. The state credit is based on the cost of buying a solar device for your home. If you lease or sign a power purchase agreement, ask a tax professional whether you can claim it before you count it.

Is solar still worth it in Arizona without big incentives?

Arizona has strong sun, which helps. But with lower export credits and no federal credit, the share of solar you use at home matters a lot. A few tips:

• Size the system to your daytime use rather than your total yearly use.
• Consider moving loads like pool pumps and EV charging into daylight hours.
• Ask whether a battery would let you use more of your own solar during the evening peak.
• Compare the export rate in your quote with the current utility rate shown above.

Our Arizona solar panel page shows typical production, and the Arizona electricity rates page compares local prices with the national average of 18.16¢ per kWh.

Next steps

Confirm which utility serves you, look up its current export rate, and then run real quotes through our solar quote checker. Factor in the $1,000 state credit and nothing from the federal government.