Arizona Solar Incentives, Rebates & Tax Credits 2026

Reviewed by:

Samantha Greer

Last updated: April 2, 2026

It should come as no surprise that Arizona offers some of the best conditions for solar in the entire country — over 300 sunny days a year, declining equipment costs, and a stack of incentives that can cut your installation costs by thousands.

But, between federal tax credits, state credits, utility-specific net billing programs, and local rebates, it’s easy to get lost in the details. That’s especially true now, with federal policy changes creating urgency and utility rate structures constantly evolving.

I’ve spent time digging through Arizona Corporation Commission filings, utility rate schedules, and state tax code to put together this comprehensive guide. Whether you’re an APS customer in Phoenix, an SRP ratepayer in Mesa, or a Mohave Electric Cooperative member in Bullhead City, you’ll find the incentives, credits, and rebates that apply to your situation.

What Solar Incentives, Rebates & Tax Credits Are Available in Arizona in 2026?

Federal Solar Investment Tax Credit (ITC)

The Credit Has Expired

Here’s the most important thing you need to know upfront: the federal solar tax credit — the biggest financial incentive for going solar — expired on December 31, 2025. These credits can significantly offset the costs of installation and encourage environmentally friendly energy choices. Be sure to check the eligibility requirements and application process to maximize your savings.

As of January 1, 2026, the 30% Investment Tax Credit (ITC) is no longer available for residential solar installations. The tax changes signed into law in July 2025 eliminated the credit entirely with no phase-down period.

What this means:

If you’re reading this in 2026 or later, the federal tax credit is gone. For a typical 7 kW solar system in Arizona costing around $21,000, homeowners who installed in 2025 saved $6,300 through the federal tax credit. That incentive is no longer available.

Why this matters:

The federal ITC was the single largest solar incentive, representing 30% of total system costs. Without it, solar installations are significantly more expensive upfront, though the long-term economics (bill savings over 25+ years) still make solar worthwhile for most Arizona homeowners.

What still qualifies:

The residential battery storage credit (Section 25D) also expired on December 31, 2025 — the same date as the solar credit. Both ended simultaneously for homeowners who own their systems outright. Standalone battery installs in 2026 do not qualify for a federal residential tax credit. Third-party owned systems (leases/PPAs) may still access incentives through the commercial credit (Section 48E), but homeowner-owned systems have no federal credit available.

If you installed solar in 2025 and haven’t yet filed your taxes, you can still claim the credit by filing IRS Form 5695 with your 2025 federal tax return. The credit applies to the tax year when your system received utility “permission to operate.”

Going forward in 2026 and beyond, Arizona solar incentives focus on:

• Arizona state tax credit (25%, up to $1,000)
• Sales and property tax exemptions
• Utility net billing credits
• Battery storage incentives (APS, TEP, Mohave)
• SREC marketplace revenue

Solar is still financially attractive in Arizona thanks to 300+ sunny days, high electricity rates, and state/utility incentives — but the federal tax credit that used to cover 30% of costs is no longer part of the equation.

Source: IRS Form 5695, Department of Energy, “Big Beautiful Bill” federal tax legislation July 2025

Arizona Solar Tax Credit

An Extra $1,000 from the State

Arizona is one of the few states that offers its own solar tax credit on top of the federal incentive. This is a credit against your Arizona state income tax, not federal.

The details:

• 25% of your total system cost
• Capped at $1,000 maximum
• Can be claimed for primary or secondary residences in Arizona
• Available for solar photovoltaic systems, solar water heaters, and wind systems

How it works:

You calculate 25% of your total installation cost. If that number is less than $1,000, you claim that amount. If it’s more than $1,000, you only claim $1,000.

Example:

• System cost: $21,000
• 25% = $5,250
• You claim: $1,000 (the cap)

If you don’t have enough Arizona state tax liability to use the full $1,000 credit in the year you install, you can carry it forward for up to five consecutive years. This is important for retirees or anyone with lower state tax bills.

Requirements:

• You must own the system (no leases/PPAs)
• System must be installed on your Arizona residence
• File Arizona Form 310 with your state tax return

Current status: Active, no scheduled expiration as of February 2026

Source: Arizona Department of Revenue, Arizona Revised Statutes Title 43

Arizona Solar Sales Tax Exemption

Save 5.6% on Equipment Costs

This one’s automatic — you don’t need to do anything to receive it. Solar panel equipment purchased in Arizona is exempt from the state’s 5.6% sales tax.

How it works:

The exemption is handled by the equipment seller. When you get your quote or invoice, sales tax simply won’t be applied to qualifying solar equipment. The savings get passed directly to you.

What it’s worth:

On a $21,000 system, this exemption saves you $1,176 in sales tax you would have otherwise paid.

It’s not a rebate you have to claim — it’s money you just don’t spend in the first place, which makes your upfront cost lower.

What qualifies:

• Solar panels
• Inverters
• Racking and mounting equipment
• Installation labor

Source: Arizona Department of Revenue, Transaction Privilege Tax ruling

Arizona Solar Property Tax Exemption

Your Home Value Goes Up, Your Property Tax Doesn’t

Installing solar panels increases your home’s value — studies show a solar system adds $15,000-$25,000 to resale value in Arizona. But here’s the good news: Arizona law excludes solar installations from property tax reassessment.

What this means:

If you install a $21,000 solar system, your property value might increase by $20,000. In most states, that would mean higher property taxes every year for as long as you own the home.

In Arizona? Your property tax bill stays exactly the same.

How it works:

The exemption is automatic. When your county assessor reviews your property, solar energy systems (and battery storage) are excluded from the valuation used to calculate property taxes.

This isn’t a one-year break — it’s permanent for as long as you own the system.

What qualifies:

• Solar photovoltaic systems
• Solar water heating systems
• Energy storage (batteries)
• Wind energy systems

Source: Arizona Revised Statutes §42-11054

Utility Net Billing Programs

Getting Paid for Your Excess Solar

Arizona utilities no longer offer traditional net metering, where you received full retail credit for every kilowatt-hour you sent back to the grid. Instead, they use net billing (also called Resource Comparison Proxy or RCP rates).

Here’s how it works: During the day, your solar panels might produce more electricity than you’re using. That excess gets exported to the grid, and you earn credits. But instead of getting credited at the full retail rate (what you pay to buy electricity), you get credited at a lower export rate set by your utility.

The difference can be significant.

Arizona Public Service (APS)

Export rate: ~$0.0617/kWh (September 2025–August 2026 rate)

Retail rate: ~$0.15/kWh

Difference: You get about 41% of retail value for exported energy

APS serves over 1.3 million customers across central and northern Arizona. The export rate is locked for 10 years once your system interconnects, which provides some stability.

APS also charges a Grid Access Fee of $0.93 per kW of your solar array capacity. For a 7 kW system, that’s about $6.50/month.

Key feature: Rate is locked for 10 years from interconnection date — each September APS applies up to a 10% reduction to the rate available for new interconnections. Locking in now captures the current Tranche 2025 rate of $0.06171/kWh. Source: APS RCP rate schedule (A.C.C. No. 6241), ACC Decision 81439, effective September 1, 2025.

Key feature: Rate is locked for 10 years from interconnection date

Salt River Project (SRP)

Export rate: $0.037–$0.063/kWh (varies by plan) Retail rate: ~$0.13–0.15/kWh Difference: You get about 25–50% of retail value

SRP operates as a public utility district (not regulated by the Arizona Corporation Commission). They offer multiple solar rate plans. All net metering plans were retired in November 2025. All new solar customers are now on time-of-use net billing plans.

SRP charges approximately $32/month in fixed charges for solar customers before you use any electricity.

Tucson Electric Power (TEP)

Export rate: $0.057/kWh (as of 2026) Retail rate: ~$0.15/kWh Difference: You get about 38% of retail value

TEP transitioned away from net metering in 2018. If you installed solar before 2018, you might still be grandfathered into the old net metering program with better rates.

Why This Matters

Because export rates are so much lower than retail rates, self-consumption becomes critical. The more solar energy you use directly in your home during the day (instead of exporting it), the more money you save.

This is why pairing solar with battery storage has become increasingly popular in Arizona. Batteries let you store excess solar production and use it during expensive evening peak hours, rather than selling it back to the grid at low export rates.

Source: Arizona Corporation Commission rate filings, utility rate schedules (APS, SRP, TEP)

Mohave Electric Cooperative Solar Rebate

Up to $2,500 for Northwestern Arizona Homeowners

If you’re a Mohave Electric Cooperative customer (serving Bullhead City, Kingman, Lake Havasu City, and surrounding areas), you have access to the SunWatts Renewable Energy and Rebate Program.

The rebate:

• $0.05 per watt of installed solar capacity
• Maximum: $2,500

Example calculation:

• 7 kW (7,000 watt) system = 7,000 × $0.05 = $350 rebate

The program also offers rebates for solar water heating systems and wind installations.

How to apply:

• Submit reservation form before installation begins
• Complete application after installation
• System must meet program requirements

Bonus: Mohave Electric also offers a $500 battery rebate if you install energy storage with at least 5 kWh capacity, programmable controls, and WiFi connectivity.

Source: Mohave Electric Cooperative SunWatts Program guidelines

Local Utility & Municipal Rebates

Arizona has a few smaller utility-specific programs worth checking:

Sulphur Springs Valley Electric Cooperative offers limited solar incentives for members in southeastern Arizona (Willcox, Benson area).

Duncan Valley Electric Cooperative has occasional rebate programs for solar installations.

Availability varies — these programs are often subject to annual funding limits and can pause when budgets are exhausted. Always check with your specific utility before assuming a rebate is available.

Battery Storage Incentives

Arizona doesn’t have a statewide battery storage rebate like California’s SGIP program, but batteries still qualify for several incentives in 2026:

APS Battery Pilot Program: Up to $3,750 for qualifying battery installations (limited enrollment)

TEP Energy Storage Rewards: ~$720/year ongoing revenue for battery performance

Mohave Electric Cooperative Battery Rebate: $500 for systems 5+ kWh with programmable controls

Federal Tax Credit (EXPIRED for residential solar): Note: The federal battery storage credit that was available through 2025 has different rules than the expired residential solar credit. Standalone battery systems may still have limited federal incentives through different programs, but paired solar+battery systems no longer receive the 30% residential ITC. Consult a tax professional for current battery-only federal incentive availability.

Example (2026 costs without federal solar credit):

• Tesla Powerwall 3: ~$16,000 installed
• APS Storage Rewards (seasonal, not upfront): earn ~$660/season in bill credits
• Your net cost: $16,000 upfront (offset over time via seasonal earnings)

Why batteries matter even more in Arizona now:

With net billing export rates at 20-60% of retail electricity costs, using a battery to store your excess solar production (instead of exporting it) dramatically increases your savings. You charge the battery during the day when your panels are producing, then discharge it during expensive evening peak hours.

Without the federal tax credit reducing solar+battery costs, batteries have become relatively more important. They’re the primary way to maximize ROI from solar in Arizona’s net billing environment.

The economics have shifted. In 2025 with the federal credit, batteries were nice-to-have. In 2026 without it, batteries are essential for making solar financially competitive.

Source: Utility battery program documentation, tax code updates 2026

APS Battery Pilot Program

Earn Seasonal Bill Credits for Your Battery

The original APS Residential Battery Pilot — which offered an upfront incentive of up to $3,750 — is now closed to new applicants. In its place, APS runs the Storage Rewards Pilot, an ongoing program that pays battery owners for contributing stored energy to the grid during peak demand periods.

The program:

• $110 per average kW your battery contributes during events
• Program season runs May 1 – October 31 annually
• Up to 60 events per season, each lasting 1–4 hours, between 4–8 PM
• Compensation paid as a bill credit after the season ends

How it works:

You install a qualifying battery storage system and enroll in the Storage Rewards Pilot. During the summer peak season, APS signals your battery to discharge during high-demand events. At the end of October, your compensation is calculated based on your battery’s average kW output across all events and applied as a bill credit.

Example:

• 13.5 kWh battery with 6 kW average output
• 6 kW × $110 = $660 seasonal bill credit

Requirements:

• Must be an APS residential customer on a TOU rate plan
• Battery must be an eligible model with remote dispatch capability (Tesla Powerwall, Enphase, SolarEdge, and others supported)
• Battery must have Permission to Operate (PTO) from APS before enrolling

Current status: Active, open enrollment

Source: APS Storage Rewards Pilot Program (aps.com)

TEP Energy Storage Rewards Program

Earn Up to $720/Year for Your Battery

Tucson Electric Power (TEP) takes a different approach to battery incentives — instead of an upfront rebate, they offer ongoing annual payments for battery owners who participate in their demand response program.

The program:

• $120 per kilowatt of average battery output
• Up to ~$720 per year for typical residential batteries
• Ongoing annual revenue for participating

How it works:

You install a battery storage system. You enroll in TEP’s Energy Storage Rewards program. TEP can call up to 100 “control events” per year, each lasting no more than 4 hours. During these events, TEP remotely discharges your battery to help meet peak demand. You receive annual payment based on your battery’s performance.

Example:

• 13.5 kWh battery with 6 kW average output
• 6 kW × $120 = $720/year
• Over 10 years = $7,200 in revenue

Key features:

• Advance notice sent via app or email before dispatch events
• You maintain backup power capability — TEP doesn’t drain your battery completely
• Transforms your battery from a cost center into a revenue generator
• Helps stabilize the grid during peak demand

Why this is valuable:

Unlike one-time rebates, this creates recurring annual income from your battery investment. Combined with self-consumption savings and state incentives, the economics of battery storage still improve meaningfully — even without the federal tax credit, which expired December 31, 2025.

Requirements:

• TEP customer with qualifying battery installation
• Battery must have remote dispatch capability
• Minimum capacity requirements apply
• Program enrollment required

Current status: Active for TEP service territory (Tucson area)

Source: Tucson Electric Power Energy Storage Rewards Program

Solar Renewable Energy Credits (SRECs) Marketplace

Turn Your Solar Production Into Cash

Here’s an incentive most Arizona homeowners don’t know exists: you can now sell Solar Renewable Energy Credits (SRECs) generated by your home solar system through a new marketplace platform.

What are SRECs?

For every 1,000 kWh (1 megawatt-hour) your solar panels produce, you earn one SREC. These are tradable certificates that utilities and companies buy to meet renewable energy requirements.

Historically, only commercial solar operators could access SREC markets. But new platforms like Brytr now allow homeowners to monetize their solar production.

How it works:

1. Install solar panels (any size system)
2. Connect your inverter’s monitoring portal to Brytr (free, secure platform)
3. Brytr tracks your production and generates SRECs automatically
4. Sell your SRECs for cash, gift cards, or other rewards

What it’s worth:

SREC values fluctuate based on market demand, but Arizona homeowners can expect:

• $20-50 per SREC depending on market conditions
• Typical 7 kW system produces 8-10 SRECs/year
• Potential revenue: $160-500/year

This isn’t massive money, but it’s passive income from solar production you’re already generating. Over a 25-year system life, that’s $4,000-12,500 in additional value.

Requirements:

• Must own your solar system (not leased)
• System must have internet-connected monitoring
• Account setup with SREC marketplace platform

Availability: Currently available through select platforms; check if your installer participates or sign up directly with Brytr or similar services.

Important note: SREC markets are relatively new for Arizona residential customers. Availability and pricing can change. This is a bonus opportunity, not a primary financial driver for going solar.

Source: Brytr marketplace, Solar Renewable Energy Credit trading platforms

Mohave Electric Solar Water Heating Rebate

Additional Savings for Solar Hot Water Systems

Beyond solar electricity, Mohave Electric Cooperative also offers rebates for solar thermal water heating systems through their SunWatts program.

The rebate:

• $0.75 per kilowatt-hour of estimated first-year energy savings
• Applies to solar water heating installations
• Separate from the solar PV rebate

How it works:

Solar water heating systems use the sun to heat your domestic hot water (for showers, dishwashing, etc.) rather than using electric or gas water heaters. The system’s estimated first-year energy savings are calculated, then multiplied by $0.75/kWh to determine your rebate.

Example:

• Solar water heater saves 3,000 kWh in first year
• 3,000 kWh × $0.75 = $2,250 rebate

Solar water heating can be more cost-effective than solar PV for hot water needs in some cases, especially for homes with high hot water usage (large families, pools/spas).

Requirements:

• Mohave Electric Cooperative customer
• System must meet program technical standards
• Application and reservation required before installation

Current status: Active, subject to program funding

Source: Mohave Electric Cooperative SunWatts Program

City of Scottsdale Green Building Incentives

Non-Cash Support for Solar Projects

The City of Scottsdale offers a suite of technical and educational support for homeowners pursuing green building projects, including solar installations.

What’s included:

• Technical assistance from city staff
• Streamlined permitting for renewable energy systems
• Educational materials on energy-efficient living
• Homeowner’s manual for green building best practices

While not direct cash rebates, these services have real value:

• Faster permit approvals save time and hassle
• Technical guidance helps avoid costly mistakes
• Educational resources improve long-term energy savings

Availability: Scottsdale residents, applies to both residential and commercial projects (though more geared toward commercial)

Source: City of Scottsdale Green Building Program

Other Cooperative and Municipal Programs

Arizona has several smaller electric cooperatives and municipal utilities that occasionally offer solar incentives:

Sulphur Springs Valley Electric Cooperative (SSVEC)

• Serves southeastern Arizona (Willcox, Benson area)
• Offers net metering for qualifying solar installations
• Limited rebate programs subject to annual funding
• Check with SSVEC directly for current program availability

Duncan Valley Electric Cooperative

• Serves eastern Arizona near New Mexico border
• Occasional solar rebate programs when funding is available
• Programs vary year to year based on cooperative budget

Navopache Electric Cooperative

• Serves White Mountains region (eastern Arizona)
• Still offers traditional net metering (one of the few remaining)
• No specific upfront solar rebates, but favorable net metering terms

Important note: These smaller utility programs are subject to funding availability and can pause or change annually. Always verify current program status before making installation decisions.

Stacking Incentives: The Total Savings (2026)

Let’s look at a real example of how incentives stack for Arizona homeowners in 2026 without the federal tax credit:

System: 7 kW solar array + 13.5 kWh battery Base cost: $21,000 (solar) + $14,000 (battery) = $35,000

Available incentives in 2026:

• Federal ITC (30%): EXPIRED
• Arizona state credit: -$1,000
• Sales tax exemption (5.6%): -$1,960
• APS Storage Rewards (if APS customer, seasonal): ~+$660/year in bill credits
• Mohave Electric solar rebate (if applicable): -$350
• Property tax exemption: $400-800/year (ongoing, not counted upfront)

Your net upfront cost: $35,000 – $1,000 – $1,960 = $32,040

Without federal credit: $32,040 upfront vs. $17,790 with the 2025 federal credit

Additional ongoing value:

• TEP Energy Storage Rewards (if TEP customer): +$720/year
• SRECs marketplace: +$200-400/year
• Electricity bill savings: ~$1,800-2,400/year
• Avoided property taxes: ~$500/year

Total annual value: $3,200-4,400/year

25-year savings: $80,000-110,000

Payback period: 9-12 years (was 5-7 years with federal credit)

The reality check:

Without the federal tax credit, payback periods are longer and upfront costs are higher. But solar in Arizona still makes economic sense over 25+ years:

• Total 25-year savings still exceed $80,000
• Electricity rate increases improve ROI over time
• Energy independence and backup power (with batteries) have non-financial value
• State and utility incentives still reduce upfront costs by 15-20%

The economics shifted in 2026, but solar isn’t dead — it just requires more patience to reach payback.

Important Deadlines & Timeline (2026)

December 31, 2025: Federal solar tax credit expired (no longer available)

November 2025: SRP retired all net metering plans, transitioned to net billing

Ongoing in 2026: State tax credit, sales tax exemption, and property tax exemption have no expiration dates

Current priorities:

Since the federal tax credit expired, there’s no urgent deadline driving solar decisions in 2026. Instead, focus on:

1. Locking in current utility net billing rates (they can decrease over time)
2. APS Storage Rewards enrollment (open enrollment, earn $110/avg kW each season)
3. State tax credit (no expiration, claim when you install)
4. Rising electricity rates (the longer you wait, the more you pay in utility bills)

How to Claim Arizona Solar Incentives

Arizona State Tax Credit:

1. Complete Arizona Form 310
2. Include with your Arizona state tax return
3. Claim up to $1,000
4. Roll over unused credit for up to 5 years if needed

Sales Tax Exemption: Automatic — handled by your installer/equipment seller

Property Tax Exemption: Automatic — applied by county assessor

Net Billing Credits: Automatic — applied monthly by your utility to your bill

APS Storage Rewards Pilot:

1. Install a qualifying battery system and obtain Permission to Operate (PTO) from APS
2. Enroll through your battery manufacturer’s portal or directly at aps.com
3. Participate in seasonal dispatch events (May–October)
4. Receive bill credit after October 31 based on your battery’s performance

TEP Energy Storage Rewards:

1. Install qualifying battery
2. Enroll in TEP program
3. Receive annual payments based on performance

Mohave Electric Rebate:

1. Submit reservation form before installation
2. Install system
3. Submit completion application
4. Receive rebate check

Note on 2025 Federal Tax Credit:

If you installed solar in 2025 and haven’t yet filed your taxes, you can still claim the expired 30% federal credit by filing IRS Form 5695 with your 2025 federal tax return. But for installations in 2026 or later, the federal credit is not available.

Is Solar Worth It in Arizona in 2026?

Let’s be honest: solar in Arizona is less attractive in 2026 than it was in 2025. The federal tax credit represented 30% of system costs — that’s $6,000-10,000 in savings that are now gone.

But that doesn’t mean solar is dead. It means the financial case has changed.

The math that still works:

Arizona’s 300+ sunny days per year mean your panels produce at peak efficiency. Even with export rates at 20-60% of retail, you’re still offsetting expensive grid electricity during the day.

Average Arizona electricity bills are $130-220/month — and rising. Over 25 years, that’s $39,000-66,000 in electricity costs. Solar can offset 70-90% of that.

Equipment costs have dropped 60% over the past decade, which partially offsets the loss of the federal credit.

State incentives (tax credit, sales/property tax exemptions) still reduce upfront costs by 10-15%.

When it makes sense in 2026:

• You have high electricity bills ($150+/month)
• You plan to stay in your home 10+ years
• Your utility offers decent export rates (APS > TEP > SRP)
• You’re willing to add battery storage to maximize self-consumption
• You can take advantage of state credits and utility programs
• You view solar as a long-term investment, not a quick payback

When to reconsider in 2026:

• Your payback expectations are under 7-8 years (unlikely without federal credit)
• You’re primarily a nighttime electricity user with very low daytime use
• Your roof needs replacement in the next 5 years (do that first)
• You’re planning to move within 5-7 years (won’t reach payback)
• Your electricity bills are low ($80-100/month or less)

The honest assessment:

Solar payback periods in Arizona went from 5-7 years (with federal credit) to 9-12 years (without). That’s a significant change. For homeowners who plan to stay long-term, solar still delivers $80,000-110,000 in 25-year savings. But the upfront cost is higher and patience is required.

If you were waiting until 2026 hoping for a “better deal,” you missed it. The federal credit was the better deal. What’s left are state/local incentives and the fundamental economics of offsetting expensive utility electricity with solar production.

Solar in Arizona isn’t as obvious a financial decision as it was in 2025, but for the right homeowner with the right expectations, it still works.

Next Steps (2026)

If you’re ready to explore solar in Arizona despite the higher upfront costs:

1. Recalibrate your expectations Without the federal tax credit, payback periods are 9-12 years, not 5-7. Make sure you’re comfortable with that timeline.

2. Get your consumption data Pull 12 months of utility bills to understand your usage patterns. This is critical for sizing a system correctly and determining if solar makes sense for your specific situation.

3. Check your roof South-facing is ideal, but east/west works too. Minimal shade. Good condition. If your roof needs work soon, do that first.

4. Get multiple quotes Talk to 3-5 installers. Compare equipment, warranties, and total system cost. Don’t just go with the lowest price — quality matters for a 25-year investment.

5. Understand your utility’s program Know your export rate, fixed charges, and time-of-use structure before signing a contract. These details significantly impact your ROI.

6. Seriously consider battery storage In Arizona’s net billing environment without federal tax credits, batteries are often essential to make solar financially competitive. Get quotes both with and without storage and run the numbers carefully.

7. Take advantage of state incentives The Arizona state tax credit, sales tax exemption, and property tax exemption are still available. Make sure your installer is helping you claim everything you qualify for.

8. Don’t rush, but don’t wait forever There’s no deadline pressure like there was in 2025. But electricity rates continue rising, and net billing export rates can decrease annually. Waiting doesn’t necessarily improve the economics.

Frequently Asked Questions

Can I still claim the federal tax credit in 2026?

No. The 30% federal solar tax credit expired on December 31, 2025. If you installed solar in 2025 and haven’t filed taxes yet, you can still claim it on your 2025 tax return. But for installations in 2026 or later, the federal residential solar credit is no longer available. You can only claim the Arizona state tax credit (25%, up to $1,000).

Homeowners in Texas can still take advantage of solar rebates available in Texas, which can significantly reduce the upfront costs of installation. These local incentives can complement federal benefits, making solar energy an even more attractive option. With the growing focus on renewable energy, many Texans are realizing the long-term savings and environmental benefits of switching to solar power.

What if I don’t have enough tax liability to use the state credit?

The Arizona state tax credit can roll forward for up to 5 consecutive years. If you don’t have enough Arizona state tax liability to use the full $1,000 credit in the year you install, you can claim the remaining amount over the next 5 years. You don’t lose it — you just claim it over multiple tax years.

Do leased solar panels qualify for incentives?

Partially. Leases and PPAs don’t qualify for tax credits (federal is expired anyway, and you can’t claim the Arizona state credit if you don’t own the system). The leasing company owns the system and claims any available tax credits, theoretically passing savings to you through lower lease payments. However, you still benefit from net billing credits automatically, as those are based on the electricity your system produces regardless of ownership.

How long does it take to install solar in Arizona?

From signing a contract to flipping the switch: typically 2-4 months. That includes permitting (4-8 weeks), installation (1-3 days), inspection, and utility interconnection approval. In 2025, there were significant delays due to the rush before the federal tax credit expired at year-end. In 2026, timelines have largely normalized back to 2–4 months.

What happens to my incentives if I sell my house?

Tax credits you already claimed are yours — they’re based on the year you installed the system, not ongoing ownership. The Arizona state tax credit was claimed on your personal tax return and doesn’t transfer. Property tax exemption transfers to the new owner automatically. Net billing credits and rates typically transfer too, though specifics vary by utility. Solar panels generally increase home value by $15,000-25,000 in Arizona, making them an asset in a sale even without the federal credit boost.

Are solar panels worth it with net billing instead of net metering in 2026?

It depends on your situation. Net billing pays less for exported energy than net metering did, AND the federal tax credit is gone. This means payback periods are now 9-12 years instead of the 5-7 years they were in 2025. However, you’re still offsetting expensive retail electricity with solar production. Combined with state incentives and Arizona’s sunshine, solar can still deliver $80,000-110,000 in 25-year savings — but requires more patience and a longer-term mindset than it did when the federal credit was available.

Does homeowners insurance cover solar panels?

Usually, yes. Most homeowners policies cover solar panels as part of your dwelling. However, you should notify your insurer when you install solar and confirm coverage. Some insurers may slightly increase premiums, but the increase is typically minimal ($50-100/year).

What’s the difference between the APS Storage Rewards and TEP Energy Storage Rewards?

Both are performance-based programs where you earn compensation for allowing your utility to dispatch your battery during peak demand. APS pays $110/avg kW as a seasonal bill credit (May–October season), while TEP pays $120/kW annually (~$720/year for a typical battery). Note: the original APS Battery Pilot offering an upfront $3,750 incentive is closed to new applicants. TEP = slightly higher ongoing rate; APS = seasonal billing structure.

Can I participate in both SREC marketplace sales and utility net billing?

Yes. SRECs are separate from net billing credits. Net billing compensates you for the electricity you export to the grid, while SRECs are environmental attributes you can sell in addition. They stack — you get both the net billing credit AND SREC revenue from the same solar production.

Can I install solar panels myself to save money?

Technically possible, but not recommended. DIY installations don’t qualify for utility interconnection in most Arizona jurisdictions, won’t pass inspection, and void equipment warranties. Plus, if you’re not a licensed contractor, you can’t legally pull permits. The labor cost is typically 10-15% of total project cost — not worth losing professional installation, warranties, and utility approval.

Sources: U.S. Department of Energy, IRS Form 5695 and guidelines, Arizona Department of Revenue, Arizona Corporation Commission rate filings, Arizona Revised Statutes Title 43 and §42-11054, Arizona Public Service rate schedules and Battery Pilot Program, Salt River Project solar program documentation, Tucson Electric Power rate schedules and Energy Storage Rewards Program, Mohave Electric Cooperative SunWatts Program, Brytr SREC marketplace, Solar Energy Industries Association market reports, City of Scottsdale Green Building Program