Federal Tax Credit
The federal solar income tax credit is 30% of the total system cost. There is no cap and it can be carried forward 20 years and back one year, if needed.
Set to drop to 26% for systems installed after December 31, 2020, 22% in 2021, and 10% in 2022, where it will remain.
State Tax Credit
The Arizona state tax credit is 10% of the system cost and is capped at $25,000 per location, $50,000 per business.
There is a $1,000,000 pool of funds available first-come-first-serve each year for systems placed in service that year only. Systems installed earlier in the year have a greater chance of being awarded funds. Can be carried forward 5 years. Expires Dec 31, 2018.
Note: There is a 1% charge for obtaining the necessary certification letter from the Arizona Commerce Authority for the credit.
State Property Tax Increase Exemption
Arizona state law dictates that your property taxes will not increase as a result of installing a photovoltaic system.
Solar installations can be depreciated in five years under MACRS rules. The tax basis for depreciation is effectively equal to the total system cost less 50% of state and federal tax credits and is valued at approximately 25-35% of the system cost.
The USDA's Rural Energy America Program provides grants and loan guarantees to 'rural' small businesses outside of a census metro area (including Green Valley and Sahuarita) and agricultural producers (including plant nurseries) to deploy renewable energy systems and energy efficient measures. The grant is for up to 25% of the total project cost.
To see if your business qualifies as 'rural' input your address here: Property Eligibility Search
TEP offers NET metering for solar electric systems. This means that excess kWh production is carried over for use during following months at a retail rate. Once a year, during the October billing cycle, any excess production that has not been used is purchased by TEP at the wholesale cost, generally $0.03 - $0.04/kWh.