If you are a resident of Arizona and considering going solar for your home or office, 2020 is just the time to do so. The state’s plentiful sunlight can easily convert into a bounty of clean, renewable energy. You may be concerned with the costs you’ll incur with this transition, but rest assured. With the many financial incentives available for property owners in Arizona, you can greatly offset that investment and start saving on electric bills.
As one of the sunniest places in the country, Arizona has excellent potential for harnessing solar energy. Residents all over the state are becoming aware of this, as the number of households opting to install solar energy systems on their homes is ever-increasing. In the first quarter of 2019 alone, the state had 3,787.96 megawatts (MW) of solar installed, enough to power more than 559,840 homes. Read on to learn more about ways to save on your solar purchase in the Grand Canyon State!
Cost of Solar Panels
The exact cost of a solar panel system for your property in Arizona depends on some factors. Your county of residence, the size of your system, the installation company you have chosen, and the equipment used are all important to consider. According to recent data, a 5 kilowatts (kW) solar installation in Arizona averages between $12,495 and $16,905 in cost, with an average gross price of $14,700.
This estimate might initially sound daunting to your wallet, but the good news is that 2020 offers plenty of opportunities to save on your solar investment. There are several financial incentives available this year that can help you out, so read on to find out more!
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Federal Solar Tax Credit
One of the most significant solar incentives you can take advantage of in 2020 is the Federal Solar Tax Credit (ITC). Under this credit system, you can receive a tax credit for 26 percent of the installation cost of a photovoltaic (PV) solar energy system. For instance, let’s say you install a solar energy system that costs $22,000. This would earn you a credit of $6,600 on your federal taxes. The ITC is a non-refundable tax credit so, effectively, if you have to pay $5,000 in federal taxes, you can take credit for just $5,000 in the first year and carry over the remaining $1,600 from your solar tax credit to the next taxable year.
Owners of residential as well as commercial properties are eligible for this incentive. Of course, you have to meet the eligibility requirements, including having sufficient income for the tax credit. However, the ITC’s value of 26 percent will remain effective only until December 31, 2020. It will drop to 22 percent in 2021. So, if you wish to maximize your savings on a solar installation, cash in on this financial incentive soon.
Arizona’s Energy Systems Tax Credit
An income tax credit is also available at the state level for homeowners in Arizona. Known as the Residential Solar and Wind Energy Systems Tax Credit, this incentive gives you a tax credit of 25 percent for your new solar energy system. The reimbursement is capped at a maximum of $1,000 credit per residence, irrespective of the number of energy devices installed in your home. You can also carry forward any excess credit you have for up to five years – making it even more convenient for homeowners to keep saving on a solar installation. To be eligible for this tax credit, your energy system must be compliant with the applicable standards of safety and performance, and have the required warranties on its parts.
Arizona’s Tax Exemptions on Solar Energy
Solar Sales Tax Exemption
Property owners in Arizona can also benefit from exemptions on sales and property taxes. With the Solar and Wind Equipment Sales Tax Exemption, you do not have to worry about your new solar energy purchase causing an additional financial burden, since the incentive applies to 100 percent of eligible energy equipment. The retail sales of solar devices and their installation are covered under this Arizona solar incentive. To enjoy the tax exemption, make sure that the retailer you buy your solar energy system from is registered with the Arizona Department of Revenue. The eligible technologies include solar PV systems, solar pool heating, solar thermal electric, and solar water heat, among others.
Energy Equipment Property Tax Exemption
Arizona’s property tax exemption available for homeowners with solar installations lets you be free of any additional taxes on your property. Typically, the installation of a solar PV system is considered to raise the value of a home. In Arizona, it can go up by 3 percent – which may mean that you incur additional property taxes. However, with the Energy Equipment Property Tax Exemption, you can get an exemption of 100 percent of the increased value of your property. So not only do you benefit from reduced electricity bills, but the resale value of your home goes up without any addition to your taxes. With state incentives like these, it is the perfect time to go for a solar panel installation on your property.
Other Solar Incentives in Arizona
The Arizona Department of Revenue also has incentives for non-residential properties to make solar affordable for businesses. These include a Renewable Energy Production Tax Credit on electricity generated by qualified solar PV and solar thermal electric energy systems (a minimum of 5 MW). This financial incentive, which can go up to $2 million per year, is available as both a corporate tax credit and personal tax credit. The tax credits are valid only through 2020, so it is a good idea to apply for yours now.
Talk to your local solar installation company to get more details about state rebates and financial incentives available for solar in 2020. They will be able to provide specifics about incentives in your area and help you determine which you may qualify for. Moreover, many installers often offer convenient financing options that may further assist you in making the switch to solar energy.