If you are researching solar incentives in Arizona for 2026, the headline is a mix of good and bad news. The bad news first: the 30 percent federal solar tax credit that homeowners leaned on for years ended after December 31, 2025, so a system you install in 2026 cannot claim it. The good news is that Arizona still has real incentives the federal change did not touch, a state credit, sales and property tax exemptions, and per-utility export credits, sitting on top of some of the best sun and the cheapest installation prices in the country. This page walks through the five things that actually move the numbers for an Arizona homeowner in 2026, with every figure sourced and dated.
Updated July 2026 with Arizona’s current state credit, net-billing export rates, and tax-exemption rules for the 2026 incentive year.
By the MySolarFY editorial team, reviewed July 2026. Every figure below is checked against a primary source and dated. See how we verify the numbers in our data and methodology.
Arizona solar in 2026, the honest numbers
- Arizona has some of the best sun in the country. A 6 kW system makes about 10,531 kWh a year in Phoenix and 10,680 kWh in Tucson, on roughly 6.5 peak sun hours a day (NREL PVWatts, as of June 2026).
- The state credit is worth up to $1,000. Arizona’s Residential Solar Energy Credit equals 25 percent of your system cost, capped at $1,000 once (Form 310), and most installs hit the cap (Arizona Department of Revenue, as of June 2026).
- Arizona no longer has statewide net metering. Utilities now credit the power you export at a net-billing rate that is well below retail: about 6.17 cents per kWh at APS and 5.13 cents at TEP, and lower still at SRP (Solar United Neighbors, as of June 2026).
- Two taxes come off the table. Solar equipment is exempt from Arizona sales tax, and the value your system adds to your home is exempt from property tax (DSIRE Arizona, as of June 2026).
- The 30 percent federal credit ended after December 31, 2025. A homeowner who buys solar in 2026 cannot claim the federal Residential Clean Energy Credit (Section 25D), which Congress ended early (IRS, as of January 2026).
- Installs here are cheap, and rates are below average. Arizona averages about $2.77 per watt installed, among the lowest in the US, against a residential rate near 15.48 cents per kWh (SolarReviews; EIA, as of 2026).
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Did the 30 percent federal solar tax credit go away in 2026?
Yes. The federal residential solar credit ended for systems placed in service after December 31, 2025. The 30 percent Residential Clean Energy Credit (Section 25D) was the credit homeowners claimed on their federal taxes for buying a home solar system, and the One Big Beautiful Bill Act (Public Law 119-21, signed July 4, 2025) ended it early, with no step-down, so it does not apply to property placed in service after December 31, 2025 (IRS, as of January 2026). This matters in Arizona specifically, because several Arizona incentive pages and installer sites still show a 30 percent federal credit running through 2032; for a homeowner buying in 2026, that figure is out of date (NAHB, as of July 2025). For the full national picture, see what the end of the federal solar tax credit means in 2026.
One federal exception exists, and it is not the homeowner’s to claim. A separate commercial credit, Section 48E, is claimed by the business that owns a leased or power purchase agreement (PPA) system, not by the resident (IRS, as of 2026). So on a lease or PPA you do not file for a federal credit yourself; the company that owns the panels does. The 25D homeowner credit, by contrast, ended after December 31, 2025. The rest of this page is about the Arizona incentives that did not change, which are now the heart of the math.
The five Arizona solar incentives that still pay in 2026
Arizona replaces a single federal write-off with a stack of state programs that the 2025 change left alone. The table sorts what applies in Arizona in 2026 from what does not, so you can plan on facts rather than a credit that no longer exists.
| Incentive | Applies in Arizona 2026? | What it does |
|---|---|---|
| Arizona Residential Solar Energy Credit | Yes | 25% of system cost, capped at $1,000 once, via Form 310 (AZDOR) |
| Solar equipment sales tax exemption | Yes | 100% off Arizona transaction privilege (sales) tax on qualifying solar equipment (DSIRE Arizona) |
| Energy equipment property tax exemption | Yes | The value solar adds to your home is exempt from property-tax assessment (DSIRE Arizona) |
| Net billing / export credit | Yes (replaces net metering) | Credits the power you export, below retail and set by your utility (Solar United Neighbors) |
| Statewide retail net metering | No, ended | Arizona phased out full-retail net metering (APS 2017, TEP 2018, SRP 2025) (Solar United Neighbors) |
| Federal residential credit (Section 25D) | No, it ended | The 30% homeowner credit ended for systems placed in service after Dec 31, 2025 (IRS) |
For the statewide rundown of programs that survived 2025, see our guide to the solar incentives that still apply in 2026.
1. The Arizona Residential Solar Energy Credit
Arizona’s own credit is worth up to $1,000, and it is a state credit, not the federal one that ended. The Arizona Residential Solar Energy Credit, claimed on Form 310, equals 25 percent of the cost of your solar device, capped at $1,000 in total (Arizona Department of Revenue, as of June 2026). Because the cap is just $1,000, almost any full rooftop system, which runs well over $4,000, hits the maximum, so for most homeowners the credit is a flat $1,000 off their Arizona income tax in the year the system is installed. It is a nonrefundable credit, meaning it offsets tax you owe rather than paying out as a refund, and unused amounts can carry forward for up to five years. People most often confuse this with the expired federal credit, so to be clear, the two are different. The federal residential credit (Section 25D) ended after December 31, 2025. Arizona’s Residential Solar Energy Credit is a state credit that the 2025 federal change did not touch, and it applies for the 2026 tax year (Arizona Department of Revenue; DSIRE Arizona, as of June 2026). One caveat worth knowing: the credit is politically contested. A 2026 repeal bill (HB 4152) was introduced in the Arizona Legislature to end it, and as of mid-2026 the credit remains active, but because its status can change during a budget session you should confirm the current-year rule with the Arizona Department of Revenue before you file.
2. and 3. The sales tax and property tax exemptions
Arizona takes two taxes off the table entirely, and one of them saves you money the day you buy. First, qualifying solar energy equipment is 100 percent exempt from Arizona’s transaction privilege (sales) tax, so a compliant installer should not add state sales tax to the equipment on your quote (DSIRE Arizona, as of June 2026). On a system in the mid-teens of thousands of dollars, that exemption is worth real money up front. Second, the Energy Equipment property tax exemption means the value your solar system adds to your home is not counted when your property is assessed, so going solar raises your home’s value without raising your property tax bill.
Note: Arizona’s incentives are claimed on paperwork, not handed to you automatically. The state credit needs Form 310 filed with your Arizona return, and the property tax exemption is documented with your county assessor. Ask your installer which filings they handle for you, since many include the sales tax exemption on the quote and help with the assessor paperwork. None of these depend on the federal credit that ended after December 31, 2025.
4. Net billing replaced net metering, and it changes the math
This is the biggest thing that makes Arizona different: there is no statewide retail net metering anymore. Arizona’s regulated utilities retired full-retail net metering years ago, Arizona Public Service (APS) in 2017 and Tucson Electric Power (TEP) in 2018, and Salt River Project (SRP) retired its remaining traditional net metering in November 2025 (Solar United Neighbors, as of June 2026). In their place, each utility uses net billing: the energy you use from your own panels in real time avoids the full retail rate, but any surplus you export to the grid is credited at a lower, utility-set export rate. For how the underlying mechanism works, see how net metering and net billing credit your solar exports, and for the full Arizona export-rate breakdown by utility, see our deep dive on Arizona net billing in 2026.
The export rate is well below the retail rate, and it varies a lot by utility. That gap is why sizing your system to your own usage matters more in Arizona than in a full-retail net metering state. The table below shows the rough export credit by major utility against the retail rate; treat these as current snapshots, because the export rates are set by the utilities, locked or stepped down on their own schedules, and were valid through about September 1, 2026 when captured (Solar United Neighbors, as of June 2026).
| Utility | Approx. residential retail rate | Export credit (net billing) | Export as share of retail |
|---|---|---|---|
| APS | ~15 to 16 cents per kWh | ~6.17 cents per kWh, locked 10 years at enrollment, steps down yearly | ~40% |
| TEP | ~15 cents per kWh | ~5.13 cents per kWh, net billing since 2018 | ~34% |
| SRP | varies by plan (time-of-use / demand) | lowest of the three; about 1.87 cents per kWh, or a time-of-use net-billing plan plus a fixed monthly solar charge | lowest |
Note: SRP is a public power district and is not regulated by the Arizona Corporation Commission, so its solar price plans, export rates, and the fixed monthly solar charge (recently around $32 per month) work differently from APS and TEP. If you are an SRP customer, confirm the current plan and export rate directly with SRP before you budget (Solar United Neighbors, as of June 2026).
What an Arizona system actually saves: our estimate
Here is the original math for a Phoenix-area home, built from the rate, the production, and the export credit on this page. Because Arizona credits exported power below retail, the value of each kilowatt-hour depends on how much you use yourself versus export. The table below assumes about 65 percent of production offsets your own usage at the 15.48 cent retail rate and 35 percent is exported at the APS net-billing rate of about 6.17 cents, which works out to a blended value near 12.2 cents per kWh. It uses the Arizona average install price of $2.77 per watt and subtracts the $1,000 state credit. These are estimates to show the shape of the numbers, not a quote for your roof. The 65/35 self-consumption split is a typical-home assumption, a battery or shifting big loads into daylight moves it in your favor, and the savings are shown in today’s dollars with no utility rate escalation, so as APS and TEP rates rise your real payback is likely shorter than the table shows.
| System size | Est. annual production (Phoenix) | Installed cost at $2.77/W | After the $1,000 state credit | Est. annual savings | Simple payback |
|---|---|---|---|---|---|
| 5 kW | ~8,775 kWh | ~$13,850 | ~$12,850 | ~$1,070 | ~12.0 years |
| 6 kW | ~10,531 kWh | ~$16,620 | ~$15,620 | ~$1,285 | ~12.2 years |
| 8 kW | ~14,040 kWh | ~$22,160 | ~$21,160 | ~$1,715 | ~12.4 years |
| 10 kW | ~17,550 kWh | ~$27,700 | ~$26,700 | ~$2,140 | ~12.5 years |
Two honest takeaways from those numbers. First, paybacks in Arizona lengthened after the federal credit ended after December 31, 2025, which is exactly why the state credit, the tax exemptions, and right-sizing your system matter more now than they did in 2024. Second, the payback gets slightly longer as the system grows, because the flat $1,000 state credit is a smaller share of a bigger system’s cost. The way to shorten your own payback is to use more of your solar directly, by shifting big loads like the air conditioner and pool pump into daylight hours, or adding a battery, so fewer kilowatt-hours are sold back at the export rate. Production estimates come from NREL’s PVWatts calculator, which you can run for your own address, and you can weigh the long-run numbers with our guide on whether solar panels are worth it. For local quotes and rate detail, see our city pages for Phoenix, Mesa, Tucson, and Scottsdale.
5. Cheap installs and strong sun are Arizona’s real edge
Arizona’s retail electricity is below the national average, so the savings come from producing a lot of power cheaply, not from a sky-high rate. Arizona homes pay about 15.48 cents per kWh (EIA, as of April 2026), which is lower than in the high-rate Northeast. What tips the math in Arizona’s favor is the other side of the ledger: roughly 6.5 peak sun hours a day means a kilowatt of panels produces about 1,755 kWh a year here, well above the national norm, and Arizona is one of the cheapest states in the country to install solar, averaging about $2.77 per watt (SolarReviews, as of June 2026). High output plus low install cost is what keeps solar worthwhile in Arizona even after the federal credit ended after December 31, 2025.
Paying for solar in Arizona with no up-front cost
How you pay decides who keeps the state credit and the export savings. If you want the Arizona Residential Solar Energy Credit and the tax exemptions to be yours, you own the system through a cash purchase or a solar loan. A lease or PPA can mean no up-front cost for eligible homeowners, but it is a long-term agreement with monthly payments, not free solar, and the company that owns the panels keeps the tax benefits while you get a lower or more predictable power price.
| Path | Up-front cost | Who keeps the state credit and tax exemptions | Best when |
|---|---|---|---|
| Cash purchase | Full system cost | You, the owner | You want the fastest payback and the most lifetime value |
| Solar loan | Little to none, financed | You, the owner | You want ownership without paying cash up front |
| Lease or PPA | $0-up-front where eligible | The third-party owner | You prefer no up-front cost and a simpler, fixed monthly bill |
How to choose a solar installer in Arizona
Arizona has a deep, competitive installer market, which is good for you because it means real competition on price and service. Rather than chasing a “best installer” list, screen any company against objective criteria:
- A valid Arizona ROC contractor license (the Registrar of Contractors license) and proper electrical licensing.
- NABCEP certification, the industry’s professional standard for PV installers.
- A clear workmanship and equipment warranty in writing.
- Real experience with your specific utility’s net-billing enrollment and interconnection, since APS, SRP, and TEP each handle solar differently, plus the Form 310 state credit and the county property tax exemption paperwork.
- A written production estimate and a transparent quote that does not count the federal credit that ended after December 31, 2025. For a checklist, see the right questions to ask a solar installer.
MySolarFY matches you with licensed installers that serve your area so you can compare real local quotes side by side, with no obligation. To see how we research and match, read how MySolarFY works.
Check which Arizona solar programs are available at your address →
For the current incentive landscape and how the numbers pencil out today, see our guide to going solar in Arizona.
Frequently asked questions
Is the 30 percent solar tax credit going away in 2026? It is already gone. The 30 percent federal Residential Clean Energy Credit (Section 25D) ended for systems placed in service after December 31, 2025, under the One Big Beautiful Bill Act, so a homeowner who goes solar in Arizona in 2026 cannot claim it (IRS, as of January 2026). Several Arizona pages still show the credit running through 2032; that is out of date. The credit was not reduced for 2026, it ended, so plan your Arizona project around the state’s own programs instead, which the change did not touch.
Does Arizona have its own solar tax credit? Yes, and it is separate from the federal credit, which ended after December 31, 2025 (IRS, as of 2026). Arizona’s state incentive is the Arizona Residential Solar Energy Credit, claimed on Form 310, worth 25 percent of your system cost up to a one-time cap of $1,000 (Arizona Department of Revenue, as of June 2026). Because the cap is low, most full rooftop systems hit the $1,000 maximum, so for the typical homeowner it is a flat $1,000 off Arizona income tax, with any unused portion carrying forward for up to five years. The credit is active for 2026, though a 2026 repeal bill (HB 4152) was proposed, so confirm the current-year status with the Arizona Department of Revenue before you file.
Does Arizona have net metering? No, not the full-retail kind anymore. Arizona’s regulated utilities replaced retail net metering with net billing, where the power you use from your panels avoids the retail rate but the surplus you export is credited at a lower utility-set rate (Solar United Neighbors, as of June 2026). APS pays about 6.17 cents per kWh exported, locked for 10 years and stepping down yearly; TEP pays about 5.13 cents; and SRP is lowest, around 1.87 cents or a time-of-use plan with a fixed monthly solar charge. The practical takeaway is to size your system close to your own usage so most of your power is used on site rather than exported at the low rate.
What are the export rates for APS, SRP, and TEP? As of mid-2026, APS credits exported solar at roughly 6.17 cents per kWh, fixed for 10 years from when you enroll and then stepping down annually; TEP credits about 5.13 cents per kWh under net billing it adopted in 2018; and SRP, which is not regulated by the Arizona Corporation Commission, is the lowest, near 1.87 cents per kWh or through a time-of-use net-billing plan that adds a fixed monthly solar charge of around $32 (Solar United Neighbors, as of June 2026). These rates are set by the utilities and change on their own schedules, so confirm the current figure with your utility before you sign.
Do I pay sales tax or higher property tax on solar in Arizona? No on both. Qualifying solar equipment is 100 percent exempt from Arizona’s transaction privilege (sales) tax, and the value your system adds to your home is exempt from property tax assessment (DSIRE Arizona, as of June 2026). The sales tax exemption usually shows up as no state sales tax on the equipment line of your quote, while the property tax exemption is documented with your county assessor. Neither one depends on the federal credit that ended after December 31, 2025, so they are reliable parts of your 2026 math.
Is solar still worth it in Arizona without the federal credit? Often yes, because Arizona’s advantage was never mainly the federal credit. The state has roughly 6.5 peak sun hours a day, so a kilowatt of panels produces about 1,755 kWh a year, and it is one of the cheapest states to install at about $2.77 per watt (NREL PVWatts; SolarReviews, as of 2026). Paybacks did lengthen after the federal credit ended after December 31, 2025, but the $1,000 state credit, the sales and property tax exemptions, and self-consuming more of your own power keep the numbers working for many homes. Run your own address to see, and weigh it with our guide on whether solar panels are worth it.
Can I get solar in Arizona with no up-front cost? Some homeowners can, through a lease or power purchase agreement (PPA) where eligible, which can mean no out-of-pocket cost at installation in exchange for monthly payments. This is not free solar; it is a long-term agreement, often 20 to 25 years, and total payments may exceed the cost of a cash purchase. On a lease or PPA the third-party owner, not you, keeps the Arizona state credit and the tax exemptions, while your benefit is a lower or fixed power price. If you want to own the system and capture those incentives yourself, a cash purchase or solar loan keeps them with you. Check what you qualify for before deciding.
Reviewed by the MySolarFY editorial team (reviewed July 2026). Figures were verified against the linked IRS, Arizona Department of Revenue, EIA, NREL PVWatts, Solar United Neighbors, and SolarReviews sources as of mid-2026, following our data and methodology. Arizona’s net-billing export rates are set by each utility, are time-limited, and step down on their own schedules, so confirm the current APS, SRP, or TEP rate and the state credit terms with your utility and the Arizona Department of Revenue before you decide. MySolarFY does not provide tax or financial advice; consult a licensed professional about your own situation. Learn more about how MySolarFY works.
MySolarFY is a free service that matches homeowners with licensed solar installers. We are not an installer, financing company, tax advisor, or government program. “No up-front cost” refers to qualifying lease or PPA financing, where eligible homeowners may have no out-of-pocket cost at installation. Lease and PPA terms typically run 20 to 25 years, may include an annual price escalator, and total payments may exceed the cost of a cash purchase; on a lease or PPA the Arizona state credit and any tax benefit go to the company that owns the system, not the homeowner. Homeowners do not get the federal residential credit (Section 25D) that ended after December 31, 2025. Solar panels are not free and monthly payments apply. Eligibility, savings, incentives, and rates vary and are not guaranteed. See our full disclaimer.
