Solar Rebates in Arizona (2026)
Arizona homeowners installing solar in 2026 stack the federal 25D credit (30%) with the Arizona Residential Solar Energy Tax Credit (25% of system cost up to $1,000) plus Arizona-specific property and sales-tax exemptions. Major utilities — APS, SRP, and TEP — each have their own rate tariffs and incentive programs that significantly affect economics. APS uses Resource Comparison Proxy (RCP) export rates roughly $0.087/kWh, well below retail. SRP uses E-27 demand-charge tariffs that penalize solar without storage. TEP pays slightly better but caps system size at 100% of prior-year usage. Arizona has the second-best solar resource in the US — payback averages 6–9 years with proper utility planning.
Arizona solar programs available
| Program | Amount | Type | Authority | Deadline |
|---|---|---|---|---|
| Federal 25D Residential Clean Energy Credit | 30% | Tax credit | IRS | Dec 31 2032 |
| Arizona Residential Solar Energy Tax Credit | 25% up to $1,000 | Tax credit | Arizona DOR | Permanent |
| Energy Equipment Property Tax Exemption | 100% added value | Tax credit | AZ DOR | Ongoing |
| Solar Energy Equipment Sales Tax Exemption | 100% state sales tax | Tax credit | AZ DOR | Ongoing |
| APS Solar Communities (income-qualified) | Free leased rooftop solar — no upfront cost | Rebate | APS | Limited enrollment |
| SRP Battery Storage Rebate | $250 per kWh up to $3,600 | Rebate | SRP | Annual budget |
| APS Resource Comparison Proxy (RCP) | ~$0.087/kWh export | Net metering | APS | Ongoing |
| TEP Net Metering | Avoided-cost rate ~$0.04/kWh | Net metering | TEP | Ongoing |
Eligibility quick check
Does the AZ state credit cap at $1,000 even on a $30,000 system?
Yes. The Arizona credit is 25% but capped at $1,000 per residence, total. The federal 30% credit has no cap.
APS vs SRP vs TEP — which is best for solar?
TEP slightly best for solar economics (Tucson). APS second. SRP worst — the E-27 demand charge tariff penalizes solar customers significantly without battery storage.
Income limits on APS Solar Communities?
Yes — the no-upfront-cost program is for income-qualified APS customers. Income limit varies by household size.
How to stack with the federal credit
Arizona programs combine with the federal 25D 25D Credit (30% of cost, no cap) — see the 25D guide for filing instructions and forms.
Worked stacking example
Phoenix homeowner with 8 kW APS install at $22,000: federal 25D 30% = $6,600 + AZ state 25% capped at $1,000 = $7,600 total credits. Net cost $14,400. With APS RCP export and self-consumption, payback ~7 years.