This is part two of a two part series on solar power incentives and tax credits. To read part one, click here.
Federal Tax Credits
Homeowners qualify for a 30% residential solar property tax credit on their Federal income tax. This tax credit is in effect from December 31, 2008 through December 31, 2016 and does not impose a maximum credit amount. The credit can be applied to both purchase and installation of a solar energy system. However, the installation credit is not available if you install the devices yourself.
Since tax credits for solar power in Arizona are not subject to any maximum, they can be carried over to succeeding years. However, you won’t be able to carry credits over past 2016, the last year the Federal energy efficiency tax credit is in effect
Arizona State Tax Credits
Arizona homeowners can claim a one-time tax credit of up to $1,000. No additional credits are allowed on the same residence for future solar devices. When you purchase solar power in Arizona, a reputable solar contractor will provide a certificate that indicates your devices comply with all requirements for the state tax credit. The Arizona Registrar of Contractors manages licensing and standards for solar installers.
Property and Sales Tax Exemptions
Arizona allows sales tax exemptions for the sale or installation of solar energy devices. Under Arizona statute, registered solar energy providers can exclude taxes for the entire amount of a solar contract. Only solar energy retailers and contractors registered with the Arizona Department of Revenue can provide these tax exemptions. In addition, all Arizona towns and counties exempt sales taxes on solar energy devices.
Typical Savings from Available Incentives
The cost of a solar power in Arizona system can be substantially reduced by incentives and tax credits. As an example, you might expect the following on a 5 kilowatt solar system:
Approximate Cost of System = $21,000
Utility Incentive (SRP in this case) = $6,750
Arizona State Tax Credit = $1,000
Federal Tax Credit = $6,300
In this example, the utility incentive and tax credits alone would save you $14,050 or almost 67% of the total system cost. Plus, this amount does not factor in other savings from annual energy usage, financing incentives or provider promotions.
To make sure you get every dollar available to you, work with a reputable solar contracting company that’s been around for a long time and has installed thousands of systems. A well-qualified solar provider will help you understand and receive every available incentive for which you are entitled.
For additional information and to speak with a solar expert, contact American Solar today!
