Energy- Related Incentives

Income Subtraction for Construction of an Energy Efficient Residence
For taxable years beginning from and after December 31, 2001, through December 31, 2010, Arizona law (A.R.S. 43-1031) allows a subtraction for a residence that is 50% more efficient than the 1995 Model Energy Code (MEC). The subtraction is allowed for selling one or more new energy efficient residences located in Arizona. The subtraction is equal to 5% of the sales price excluding commissions, taxes, interest, points, and other brokerage, finance and escrow charges. The subtraction cannot exceed $5,000 for each new qualifying residence.

A home’s energy efficiency must be demonstrated by a score of at least 90 points (indicating that the home is 50% better than the MEC threshold) on a home energy rating. A Certified Home Energy Rater must provide the home energy rating. For a listing of Certified Raters in Arizona, click here.

For more information, see Arizona Department of Revenue Income Tax Procedure ITP 02-1, or click here.

Solar Energy Credits
Arizona law (A.R.S. 43-1083) provides an individual taxpayer with a solar energy credit for installing a solar energy device in the taxpayer"s residence located in Arizona. For more information, click here.

Solar Energy Tax Incentives Program
The Governor signed House Bill 2429, Solar Energy Tax Incentives, on June 21, 2006.  The bill becomes effective on September 21, 2006 and will be retroactive to January 1, 2006.  For more information, click here.