Residential solar panel incentives in Arizona
State tax credits, property tax exemptions and utility rebates can reduce your initial investment and accelerate the payback period (which is how soon you break even on the installation costs with electricity bill savings).
Statewide Arizona solar tax breaks
- State income tax credit: Homeowners in Arizona may claim the state’s Residential Solar and Wind Energy Systems Tax Credit on their taxes. This credit lets you claim 25% of the cost of solar devices on your personal income taxes, up to $1,000. Leased systems and power purchase agreements (PPAs) are not eligible. See Form 310 instructions for more qualifications and how to file properly to claim the credit.
- Sales tax exemption: Arizona offers a 100% state sales tax exemption on the purchase and installation of solar energy equipment, up to a limit of $5,000 per device. Solar panels, solar water heaters and lithium-ion battery storage technologies are eligible. Solar retailers fill out Form 6015 before starting the installation, which lets them reduce the taxable portion of their sales, resulting in lower tax liability for them and cheaper devices for you.
- Property tax exemption: Solar technology and devices are exempt from Arizona state property tax. For the purpose of property tax assessment, solar technology adds no taxable value. To qualify, property owners must provide their county assessor with documentation of purchase and installation, along with costs.
» MORE: Will solar panels increase my home’s value?
Mohave Electric Cooperative solar rebate
Mohave Electric’s SunWatts Renewable Energy Incentive Program encourages customers to install renewable energy systems in their homes and businesses. A homeowner with solar panels can earn 5 cents/watt, up to a system size of 50 kilowatts and a maximum incentive of $2,500. Leased systems don’t qualify, and members who add battery storage to their system can also apply for a separate battery rebate.
City of Scottsdale Green Building Incentives
The City of Scottsdale has incentives to support energy-efficient construction through its Green Building Program. The City offers technical assistance, green building permitting and inspection, educational lectures, a green homeowner’s manual, recognition on the city website and free promotional green building materials.
What to know about net billing in Arizona
Most new Arizona solar customers use net billing rather than traditional net metering. When your panels produce more electricity than your home uses, the extra power goes to the grid and you receive a credit on your electric bill.
Rates vary by utility
Arizona’s three largest utilities have different solar rates and billing plans:
- Arizona Public Service: APS uses a Resource Comparison Proxy export rate for most new rooftop solar customers.
- Tucson Electric Power: TEP also uses a Resource Comparison Proxy rate, which is generally updated each year for new customers.
- Salt River Project: SRP offers several solar price plans with different export rates and charges.
The Arizona Corporation Commission approves rates for APS and TEP. SRP is a public power utility that sets its own rates through its elected board rather than the commission.
The credits can still make a noticeable difference. After one full billing cycle, Roland in Parker said, “We got a $130 credit on our power bill instead of a $130 bill this last month.”
A solar battery may help you save more by storing extra energy for use later instead of sending it to the grid at a lower rate. However, batteries can add thousands of dollars to the upfront cost of a solar system.
Pro tip
Export rates and solar price plans can change. Check your utility’s current credit rate, fees and plan requirements before estimating your savings.
How much are solar panels in Arizona?
Before considering incentives, solar panel costs in Arizona typically range from $10,686 to $21,372. On the higher end, Joel in Buckeye, Arizona, said he spent $38,000 on a system.
Average solar panel costs by system size in Arizona
| 5 kW | 6 kW | 7 kW | 8 kW | 9 kW | 10 kW | |
|---|---|---|---|---|---|---|
| Statewide | $10,686 | $12,823 | $14,961 | $17,098 | $19,235 | $21,372 |
| Phoenix | $10,333 | $12,399 | $14,466 | $16,532 | $18,599 | $20,665 |
| Tucson | $10,839 | $13,006 | $15,174 | $17,342 | $19,510 | $21,677 |
| Scottsdale | $10,241 | $12,289 | $14,337 | $16,385 | $18,433 | $20,482 |
How can I pay for solar panels?
The most obvious way to pay for solar panels is upfront, but many people don’t have that kind of money saved up. If you’re one of those people, you can finance solar panels with a solar loan. It works a lot like any other type of loan — there’s an application and approval process, and you pay it back over time (with interest). You could also go with a lease or power purchase agreement (PPA).
Federal solar loan programs
Even though the 30% residential federal solar tax credit is no longer available, a few standing federal programs can still make solar and other home energy upgrades more affordable for Arizona homeowners:
- Energy-Efficient Mortgages: FHA-backed Energy Efficient Mortgages let eligible homebuyers and homeowners roll the cost of solar panels and other energy improvements into their home loan rather than paying for them separately.
- Fannie Mae Green Financing: Fannie Mae offers green financing to help multifamily property owners cut utility costs through solar and other efficiency upgrades. This is less relevant to single-family homeowners but may apply to larger residential properties, such as condo or co-op buildings.
Find solar companies in Arizona
Read our guide to the top solar companies in Arizona for more information on comparing all your options and getting the best deal.
| Company | Customer rating | Professional installation | Payment options | Warranty | Year founded | |
|---|---|---|---|---|---|---|
 Sunrun | Learn More | 4.3 |  | Cash, loan, lease, PPA | 25 years | 2007 |
 Project Solar | Learn More | 3.9 | | Cash, loan | 25 years | 2020 |
 Elevation | Learn More | 4.2 | | Not disclosed | 10 to 25 years | 2014 |
 ShopSolar | Learn More | 4.5 |  | Cash, loan | Varies | 2018 |
 Tesla Energy | Learn More | 1.9 | | Cash, loan and lease | 10-25 years | 2015 |
 Sunnova | Learn More | 1.1 | | Cash, loan, lease and PPA | 25-year system warranty | 2012 |
FAQ
How much can I save with solar panels in Arizona?
On average, Arizona homeowners with solar panels avoid $42,844 in total utility costs over 25 years.
How much you save per month depends on the efficiency of your system, whether you finance and other factors. For instance, Lawrence in Scottsdale told us his monthly bill dropped from $300 to $84; Billy in Surprise said his bill dropped from $300 to $50. In Arizona, solar panels usually pay for themselves within 11.66 years.
How do I know if my house is a good candidate for solar?
It’s important to ensure your home is a good candidate before investing in solar panels. For instance, many older homes need new roofs to support solar panels in the first place. Here are the main factors to consider:
- Roof orientation: A south-facing roof with minimal tilt is ideal for maximizing solar production; north-facing, steeply pitched roofs are least compatible with solar panel efficiency.
- Roof condition: If your roof needs replacement soon, do that first. Solar panels last 25 to 30 years, so you want a roof that will last equally as long. Otherwise, you have to pay for costly removal and reinstallation.
- Appliance efficiency: It’s smart to upgrade old appliances like refrigerators and AC units to reduce your electrical loads before installing solar.
- Sun exposure: Arizona gets ample peak sun hours, but shading from trees or buildings can reduce solar panel efficiency.
What is the difference between net metering and net billing?
Net metering and net billing are two different approaches to compensating solar energy system owners for the electricity they generate and send back to the grid. Both involve crediting solar system owners for excess electricity production, but they have distinct mechanisms and implications:
- Net metering: Net metering allows owners of solar energy systems to earn credits at retail rates for the surplus electricity they feed into the local power grid. These credits can offset costs when solar production is low, with any extra credits rolling over to future bills.
- Net billing: Net billing credits solar system owners for excess electricity, but often at a rate lower than retail. The setup may use the same bidirectional meter as net metering or a different one, with specific policies and rates varying by location.
Since solar energy policies and regulations can change over time and differ by location, it’s crucial to consult local utility companies or relevant authorities to understand the specific net metering or net billing policies applicable in a particular area.
What has Arizona’s investment in solar been so far?
Arizona’s total solar investment is $24.1 billion, according to the Solar Energy Industries Association.
Bottom line
Buying solar panels is a big upfront investment, but Arizona’s personal tax exemption, legalized power purchase agreements and other solar-friendly policies help make it cheaper. The ConsumerAffairs Research Team conducted an in-depth analysis to determine the average costs of going solar. Turns out, it's worth it for many homeowners, particularly in Arizona.
Solar panel costs vs. savings: Arizona and nearby states
| Average cost per watt | 6 kW system cost (before incentives | 10 kW system cost (before incentives) | Typical system size needed* | Total utility power cost savings** | |
|---|---|---|---|---|---|
| Arizona | $2.14 | $12,823 | $21,372 | 7 kW | $42,844 |
| California | $2.44 | $14,669 | $24,449 | 7.2 kW | $136,109 |
| Colorado | $2.79 | $16,729 | $27,882 | 4.9 kW | $31,582 |
| Nevada | $2.34 | $14,049 | $23,414 | 7.2 kW | $36,225 |
| New Mexico | $2.82 | $16,898 | $28,164 | 5.2 kW | $22,365 |
| Utah | $3.02 | $18,120 | $30,200 | 5.8 kW | $31,768 |
Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
- Arizona Department of Revenue, "Renewable Energy Production Tax Credit." Accessed July 20, 2026.
- Tucson Electric Power, "What You Should Know About Residential Solar Systems." Accessed July 20, 2026
- SRP, "SRP solar price plans." Accessed July 20, 2026
- Solar Energy Industries Association, "Arizona Solar." Accessed July 20, 2026.
