In recent years, there’s been a massive push to use renewable energy sources to power everyone’s homes and businesses. Using renewable energy sources will reduce the greenhouse effect and slow global climate change. It is also more efficient and costs less than burning fossil fuels.
The US federal government and many state governments are offering incentives to switch to a renewable energy source such as solar energy. These usually come in the form of tax credits or reductions.
Arizona solar incentives are some of the best in the nation. They offer their residents a handful of excellent reasons that go beyond the reduction in their monthly energy bill. When paired with the federal government’s incentives, there is little reason not to get a solar energy system in Arizona.
This guide will walk you through all the incentives for switching to solar energy as a resident of Arizona.
The US federal government also offers incentives to switch to solar energy. These are in addition to the state of Arizona’s incentives. This is great news for people who live in Arizona since they can save even more money on their solar energy system.
This federal incentive was set up by the Energy Policy Act in 2005. This act established investment tax credit or ITC.
Currently, you can deduct 26% of the cost of your solar panels when you file your federal income taxes. This incentive has no limit on it, so you’ll receive the full 26% no matter how much your system costs you.
There are only two caveats to receiving an investment tax credit for your solar energy system.
The first is that it has a time limit. You will only be able to deduct 26% of the cost of your solar energy system from your federal taxes until 2022.
After that, you will only be able to deduct 22% of the cost of your solar energy system. In 2024, this amount will drop to 0%.
The second caveat is that you must purchase your solar energy system outright to qualify for an investment tax credit. You cannot simply sign up to use solar energy with your current energy provider unless they are selling you the system. Make sure you double-check that you are buying your solar energy system outright, cash or financed, if you want federal tax credit.
The state of Arizona offers three different incentives for getting a solar energy system. These incentives are not exclusive of each other, so you get to take advantage of all three as much as you’d like. They also don’t prevent you from receiving your incentive from the federal government.
Arizona’s incentives are tax credit, property tax exemption, and sales tax exemption. Both businesses and individuals can claim and enjoy these incentives.
Arizona, just like the federal government, is offering an income tax credit for switching to a solar energy system. Their tax credit incentive will let you deduct 25% of the cost of your solar energy system from your state income taxes.
However, unlike the federal government’s tax credit incentive, Arizona tax credits have a limit. You can only claim up to $1,000 per calendar year on your state taxes.
Additionally, the state’s Department of Revenue can only approve up to $20 million a year for solar tax credits in Arizona. As of 2019, just over seven million people are living in the state. This means that the Department of Revenue’s $20 million per year can run out quickly.
It’s a good idea to switch to a solar energy system as soon as you can to take full advantage of the solar incentives in Arizona.
One of the benefits of going solar is the added property value to your hone. Unfortunately, this usually means that your property taxes also go up. This is not the case in the state of Arizona.
One of the state’s incentives for purchasing from Arizona solar programs in 2021 is their property tax exemption. This incentive guarantees that your property taxes will not go up because of your solar energy system. When the state comes to assess your property, they won’t count any solar panels or battery storage towards the value of your home for tax purposes.
If you ever sell your house, you can receive the added value of your solar energy system without ever paying higher taxes for switching to a renewable energy source.
This terrific incentive has been in place in the state of Arizona since 2006.
In many states, the sales tax is never accounted for until you go to make your purchase. On home improvement projects like getting a solar energy system, this sales tax can make quite a difference to the total cost of the project.
In the state of Arizona, this isn’t a problem when getting a solar energy system. There is no state sales tax on your solar energy system’s equipment in Arizona! This is also known as their solar equipment sales tax exemption.
This encourages Arizona residents to switch to a solar energy system. The sales tax exemption saves Arizona residents over 5.5% on their new system. This is on top of the savings they’ll receive from their energy bill every month thanks to their solar energy.
Besides these Arizona solar incentives, there are many reasons to get this type of energy system for your home or business. It reduces your energy bill and it helps the environment too.
The state of Arizona gives you even more reasons to switch to solar. Sunny Energy has the tools for you to make it happen. We’re based right here in Arizona and our experts are always standing by to help you with your solar energy project.
Come check us out and see how we can help you save money on your energy bill today!
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