Arizona solar tax credit in 2026, and what happened to the federal one

What the IRS says today about the federal credit

The residential clean energy credit is Internal Revenue Code Section 25D. The current IRS page for it states that the credit "equals 30% of the costs of new, qualified clean energy property for your home installed anytime from 2022 through December 31, 2025" and, in the next sentence, that "the credit is not available for any property placed in service after December 31, 2025" (irs.gov). The same page adds that you "must claim the credit for the tax year when the property is installed, not merely purchased."

On an $22,800 system, a 30% credit was $6,840. That is the size of the mistake if a 2026 quote still shows it. The IRS page is short and free to read: read it yourself before you sign anything, and put the question to a tax professional rather than to the person selling you the panels.

This page states the position on its updated date above and is corrected in place if the IRS page changes. Nothing here is tax advice.

The Arizona credit, which is still live

Arizona Revised Statutes 43-1083 allows a resident who is not another taxpayer's dependent a credit for installing a solar energy device in their Arizona residence. The credit "is equal to twenty-five percent of the cost of the device" and "the maximum credit in a taxable year may not exceed one thousand dollars", with the same $1,000 ceiling applying in aggregate across tax years for the same residence (ARS 43-1083).

• It is a credit, not a rebate. It reduces the Arizona income tax you owe. If you owe less than the credit, the statute lets you carry the unused amount forward for up to five consecutive tax years.
• It caps quickly. 25% of $4,000 is already $1,000, so every system above about $4,000 gets exactly $1,000.
• Once per residence. The statute says a taxpayer may claim it only once in a tax year and may not accumulate more than $1,000 in total for the same residence.
• It is claimed on Arizona Form 310, filed with your Arizona return. The installer must give you an accounting of the cost.

The two Arizona breaks people forget

Property tax

Solar energy devices and grid-tied photovoltaic systems "are considered to add no value to the property on which such a device or system is installed" when an assessor applies standard appraisal methods (ARS 42-11054(C)(2)). Adding solar should not raise your assessed value.

Sales tax on the equipment

"There shall be deducted from the tax base the amount received from sales of solar energy devices", and the retailer registers with the state as a solar energy retailer to do it (ARS 42-5061(M)). Ask to see the deduction on the quote.

Three questions to ask before you sign

1. "Show me, in writing, the authority for any federal credit line on this quote, and the date you say the system is placed in service."
2. "Is the Arizona 25% credit shown at the correct $1,000 cap, and is it shown as a tax credit rather than a discount off your price?"
3. "Is the solar energy device deduction applied to the transaction privilege tax on this quote, and where is it itemized?"