State solar guide
Arizona has strong solar fundamentals in 2026. The federal residential credit expired December 31, 2025, but state incentives and net-metering rules still support solid payback timelines for qualified homeowners.
Sources: ElectricChoice June 2026 | NREL PVWatts (Phoenix averages 5.5 to 6.5+ peak sun hours per day, among the highest in the continental United States) | EnergySage May 2026 | Federal residential credit: Section 25D expired December 31, 2025, H.R.1 (One Big Beautiful Bill Act).
Net metering
Arizona eliminated traditional net metering. APS (Arizona Public Service) credits excess exports at an avoided-cost rate set annually by the Arizona Corporation Commission. The current rate (September 2025 through August 2026) is approximately $0.0686 per kWh. Tucson Electric Power (TEP) credits exports at approximately $0.0570 per kWh. UniSource Energy Services credits at approximately $0.0680 per kWh. Self-consumed solar retains full retail value at 16.03 cents per kWh. Oversizing systems is inadvisable because export value is well below the retail rate - system design should target consumption offset, not surplus export.
APS, TEP, and UniSource are all regulated by the Arizona Corporation Commission; their export rates are reviewed and reset each October 1. SRP (Salt River Project) is not regulated by the ACC and operates a separate net billing price plan with export at approximately $0.0345 per kWh - the weakest of the major Arizona utilities. Mohave Electric Cooperative offers a $0.05 per watt upfront rebate on solar installations up to a $2,500 maximum instead of ongoing export credits.
Program: NM2_avoided_cost. Last verified: June 1, 2026. DSIRE source (opens in new tab).
Verify with your utility
Net-metering rules change by utility and program cycle. Confirm current export credit rates and eligibility with your specific Arizona utility before contracting. Current program details at DSIRE (opens in new tab).
State incentive stack
The federal residential credit expired December 31, 2025. The programs below are what remains for Arizona homeowners. Amounts and availability change; every program is date-stamped and linked to its DSIRE source.
Federal residential solar credit (Section 25D): expired. The Section 25D residential investment tax credit expired December 31, 2025. The residential credit rate is 0%. State and local incentives below may still significantly reduce your net system cost. Commercial systems still qualify for Section 48E (30%).
| Program | Benefit | Eligibility | Status | Source |
|---|---|---|---|---|
| Arizona Solar Energy Credit State income tax credit The $1,000 cap makes this credit largely symbolic on systems over $4,000. Verify current program status and eligibility with the Arizona Department of Revenue or your tax advisor before relying on this credit. | $1,000 maximum per installation 25% of the total cost of a solar energy device purchased and installed in Arizona, capped at $1,000 per installation. Credit carries over up to 5 years. Non-refundable. | Arizona residential property owners purchasing and installing a qualifying solar energy device. Non-refundable - applies only against Arizona income tax liability. | Active | DSIRE (opens in new tab) |
| Arizona Solar Energy Device Sales Tax Exemption Sales tax exemption Verify that your contractor properly codes the transaction as exempt. Local TPT rates vary by city and may or may not be exempt independently of the state exemption. | Varies by jurisdiction; typically $1,200 to $3,000 on a typical residential installation Solar energy devices and installation labor are exempt from Arizona transaction privilege tax (sales tax equivalent). Saves 5.6% state rate plus applicable local rates. | Purchases of qualifying solar energy devices for residential or commercial installation in Arizona. | Active | DSIRE (opens in new tab) |
| Arizona Residential Solar Property Tax Exemption Property tax exemption Confirm with your county assessor that the system is properly coded as exempt at the time of installation. | Full exclusion of solar-added assessed value from property taxes The added value of a solar energy system is excluded from residential property tax assessment under ARS Section 42-11054. | Arizona residential properties with qualifying solar energy systems installed. | Active | DSIRE (opens in new tab) |
Data last verified June 1, 2026. Incentive programs change; verify current amounts and availability at dsireusa.org (opens in new tab) before committing to a project.
Savings example
This example uses real Arizona market data. No federal residential credit is applied. Figures are illustrative; your in-home assessment uses your actual utility bills and the current rate schedule for your specific utility.
System size 11 kW at market average of $2.27 per watt. Annual production estimated at 17,600 kWh based on Phoenix at 5.5 to 6.0 peak sun hours per day (NREL PVWatts). Assumes 80% self-consumption at $0.1603 per kWh retail value; 20% exported at APS avoided-cost rate of $0.0686 per kWh. Utility rate escalation at 3% annually. Federal residential credit: $0 (expired). State credit: $1,000. Figures are illustrative; your in-home assessment will use your actual bills and current APS rate schedule.
Arizona APS customer (illustrative)
Illustrative example. Federal residential credit: $0 (Section 25D expired December 31, 2025). Your estimate will use your actual utility bills and current rate schedule.
Permitting
Arizona does not have a statewide residential solar permit fee cap equivalent to California's AB 1124. Permit fees vary by jurisdiction - Maricopa County and Phoenix metro jurisdictions typically charge $100 to $400 for residential solar permits. SolarAPP+ has been adopted by a number of Arizona jurisdictions in the Phoenix and Tucson areas, enabling faster permit processing. Typical contract-to-energization time in Arizona ranges from 6 to 12 weeks depending on utility interconnection queue. APS and TEP interconnection queues are the primary variable.
Phoenix metro AHJs (city of Phoenix, Scottsdale, Mesa, Tempe, Chandler) each have separate permit processes. SolarAPP+ adoption reduces permit wait to days in participating jurisdictions. Tucson city permits under city of Tucson building services; timeline 2 to 4 weeks typical.
Commercial solar in Arizona
The commercial solar credit (Section 48E, 30 percent) remains available for qualifying commercial projects. Construction must begin by July 4, 2026 to qualify for the full placed-in-service window. Combined with MACRS accelerated depreciation and 100 percent first-year bonus depreciation, the combined first-year federal benefit can reach 45 to 55 percent of project cost for many Arizona business owners. Direct Pay is also available for nonprofits, municipalities, and other tax-exempt entities.
Commercial solar overviewCommercial solar projects must begin construction by July 4, 2026 to qualify for the 30 percent Section 48E federal tax credit. After that date, the system must be placed in service by December 31, 2027.
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