- Arizona homeowners can currently claim a 30% federal tax credit (via IRS Section 25D) on costs for solar panels and battery storage systems, even standalone batteries.
- Important: Under new federal legislation , the credit expires on December 31, 2025 for owner‑purchased home solar systems—no gradual phase‑out.
- If you don’t finalize installation and utility Permission to Operate (PTO) by year’s end, you won’t qualify.
Arizona State Residential Tax Credit
- The state offers an additional 25% credit, up to $1,000 per household.
- Worth noting: Arizona also provides sales‑tax exemption on solar equipment and a property‑tax exemption for added home value.
Net Billing (Not Net Metering)
- Unlike the old net‑metering system, most utilities in Arizona now use net billing—meaning excess solar generation is credited at lower wholesale or avoided‑cost rates, not full retail value.
- Utility details:
- APS credits exported energy at their Resource Comparison Proxy (RCP) rate (about $0.068–0.07/kWh), roughly half the retail rate. Credits roll over monthly; if your account exceeds $25 at year-end, APS mails a check.
- SRP still offers limited net metering under plans E‑27 and Average Demand Price, but those expire in November 2025.
- New systems are subject to instantaneous netting, meaning excess solar produced is credited immediately at export rate—without the option to “bank” energy for future use.
Why Battery Storage Is More Important Than Ever
- With net billing severely reducing export compensation, adding battery storage helps you keep more of your solar energy onsite and use it during peak hours when electricity is most expensive.
- Batteries still qualify for the 30% federal credit through 2032 under IRA if installed before the system cutoff, even if paired or standalone.
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