ArizonaSolar Incentives 2026: Tax Credits, Rebates & Net Metering

Arizona offers a 25% state income tax credit on residential solar installations, capped at $1,000. The credit applies to panels, inverters, mounting hardware, and labor. It is non-refundable but can typically be carried forward to subsequent tax years if your liability in the install year is too low to absorb the full credit.

The Arizona state credit does not stack with a federal residential credit on a 2026 install. That federal credit ended for expenditures made after Dec 31, 2025. On a typical $24,000 installation, the state credit alone is about $1,000.

Arizona requires investor-owned utilities to offer net metering on residential solar systems. The credit rate is a modified rate (typically retail rate minus a small grid utilization fee).

In practice, this means a properly sized Arizona system can drive net annual electricity costs to within tens of dollars of zero. Top utilities operating under AZ net metering rules include APS, SRP, TEP.

Arizona credits exported solar at roughly ~70–90% of retail of the retail rate. See full Arizonanet metering rates & rollover rules →

Solar installs in Arizona average $2.65 per watt in 2026. A typical 8 kW system runs about $21,200 before incentives. The federal residential credit is $0. After the Arizona state credit only, the illustrated net is about $20,200.

Your price moves with system size, roof complexity, and equipment tier. Run the Arizona savings calculator for a number matched to your actual electricity bill.

No — there is no government program handing out free solar in Arizona. “Free solar” and “no-cost solar program” ads are leases or power purchase agreements (PPAs): a company owns the panels and bills you for the power. There is no residential federal credit for a 2026 install for either you or the company to claim; a 25% state credit, if any, follows the system owner.

Buying your system — with the incentives in your name — almost always wins on lifetime savings. Read the full breakdown of “free solar” offers →

3 major utilities operate in Arizona: APS, SRP, TEP. Specific rebate availability varies year to year and is typically distributed first-come, first-served until annual budget caps are reached.

Before scheduling any installation, verify current rebate status directly with your utility — programs open and close throughout the year. Most Arizona installers will pull up-to-date rebate data during a site assessment.

Arizona excludes the added value of a residential solar system from property tax assessments. A homeowner whose property gains $15,000 in assessed value from a solar install pays no additional property tax on that increase, saving roughly $250 to $400 annually depending on local mill rates.

Arizona also exempts solar equipment from state sales tax, removing roughly 4% to 7% from the up-front cost of panels, inverters, and racking depending on local rate.

Compare Arizona's solar incentive package side-by-side with adjacent states to see whether you live in a relatively high- or low-incentive market.