Arizona solar rebates and incentives: 2026 guide

Going solar in Arizona is more affordable than most people realize. While your state may not have the flashiest incentive programs in the country, there are still meaningful ways to reduce your system costs—and more importantly, solar's real value comes from decades of electricity savings, not just upfront rebates.

Arizona homeowners have access to some incentives that can help offset installation costs. But the biggest financial advantage of going solar? Dramatically lowering your electric bills for 25-30 years, especially as utility rates keep climbing. Here's what you need to know about solar incentives in Arizona.

Arizona offers some solar incentives, which can help lower the price. Here are the ones to know about:

Credit for Solar Energy Devices

When it comes to clear cut state solar incentives, it doesn’t get a lot simpler than the Credit for Solar Energy Devices. If you live in AZ, you'll get a credit worth 25% of your solar panel system cost, up to $1,000, towards your AZ state income tax bill.

The system can be installed on either your primary or secondary residence, but you can only claim $1,000 per year. If you don't have a big enough tax bill to claim the full credit, you can rollover unused credit for up to five years.

In addition to the great rebates and incentives above, Arizona also offers tax exemptions for solar panel systems. The solar sales tax exemption ensures that you won't have to pay a sales tax on your system, while the solar property tax exemption means you don't need to pay a higher property tax for adding solar panels to your house.

Arizona no longer offers net metering, but if you connect your solar panel system to the grid, you can benefit from net billing. Net billing is similar to net metering in that you earn credits when you send excess electricity from your solar panels to the grid. When the sun isn't shining and you need to pull electricity from the grid, your utility will apply the credits to your bill. However, the credits are worth a lot less with net billing compared to net metering, which means you won't save as much on your electric bills. 

In Arizona, the value of your bill credits is based on the avoided cost rate, or what your utility company would otherwise pay for the electricity. This is much lower than the retail rate, which is what they charge you for electricity. The avoided cost rate varies by utility, but there's some standardization in that they all use a methodology developed by the Arizona Corporation Commission (ACC). 

Arizona's current net billing policy stipulates that the compensation rate can't drop by more than 10% annually. The new rates go into effect on October 1st of each year. However, in October 2023, the ACC started exploring whether it should allow larger annual decreases in compensation. You're locked into the compensation rate at your time of interconnection for up to 10 years.

Your credits will carry over indefinitely. If your credits exceed a certain balance (which varies by utility company but is generally $10-$25) at the end of the annual period, your utility company will give you a check for them.

Some utility companies, like Arizona Public Service, Tuscan Electric Power, and UniSource Energy Services also require residential customers to sign up for its time-of-use rates to participate in net metering. This means your electricity cost will vary depending on the time of day, day of the week, and time of year. 

Learn more about Arizona's net billing programs:

Arizona doesn't offer any state-specific battery incentives, but batteries are great for increasing your energy independence and providing protection from blackouts.

Since Arizona doesn't offer net metering, batteries can also help you get the most out of your solar panels. You can use them to store excess solar energy for us later on, instead of sending it to the grid. This can help you avoid receiving bill credits below the retail rate.