The primary goal of the Commercial/Industrial Solar Energy tax credit is to stimulate the production and use of solar energy in commercial and industrial applications by subsidizing the initial cost of solar energy devices. It achieves this goal by providing an Arizona income tax credit for the installation of solar energy devices in Arizona business facilities.
TAX CREDIT PROVISIONS & LIMITATIONS
An eligible applicant is a business that installs a solar energy device at its Arizona facility. The tax credit is equal to 10% of the installed cost of the solar energy device not to exceed $25,000 in credits for one building in a single tax year and $50,000 total credits per business per tax year. Tax credits can be used to offset Arizona income tax liability; any unused credit amounts can be carried forward for a five-year period.
The ACA cannot certify tax credits under this program that exceed $1,000,000 in any calendar year. Therefore, tax credits are authorized on a first come, first served basis, according to a priority placement number issued by the ACA based on the date of receipt of a completion report. Download the solar energy allocation table to view the tax credit amount remaining in the current calendar year.
- The Commercial/Industrial Solar tax credit is established under A.R.S. §41-1510.01
- Summary of Legislative Changes from 2005 through 2010.
- During the 2010 legislative session, House Bill 2700 was introduced, proposing amendments to extend the tax credit program from December 31, 2012 to December 31, 2018. On May 10, 2011 the Governor signed HB 2700 into law. To view the amendment, please click here.
- Pursuant to A.R.S. §41-1504(C)(1), the ACA is authorized to begin assessing and collecting fees for processing applications and administering tax incentive programs. Download the Incentive Program Fee Policy effective July 1, 2012.
APPLICATION PROCESS FOR INITIAL CERTIFICATION
A business that plans on installing or has installed a solar energy device at an Arizona facility may obtain initial certification through the following process:
- The business applies for initial certification by completing an electronic application for Initial Certification. To apply electronically for program incentives, click here.
- If a solar energy device has been installed and is operational the business may also submit an electronic Completion Report for a Solar Energy Tax.
Credit concurrent with submittal of an application. To apply electronically for program incentives, click here.
- Upon receipt of an application ACA will assign a unique identifying number to each solar energy device.
- Within 30 days of receipt of a complete application, ACA will notify the business of initial certification or denial.
- If a business receives initial certification, the ACA will issue a Letter of Initial Certification to the business and transmit the certification information to Arizona Department of Revenue (Revenue). Initial certification does not guarantee receipt of tax credits under this program because initial certification is issued before the ACA determines final eligibility.
COMPLETION REPORT PROCESS FOR A CREDIT CERTIFICATE
- Once a solar energy device is installed and operational a business can request a credit certificate by submitting an electronic Completion Report for a Solar Energy Tax Credit. To apply electronically for program incentives, click here.
- After receipt of a completion report, the ACA will assign a priority placement number to each solar energy device.
- If a business is eligible, the ACA will issue a Credit Certificate to the business and transmit the certification information to Revenue.
CLAIMING THE TAX CREDITS
After a business has received a credit certificate from the CA, it may claim the certified tax credits with Revenue. The tax credit must be claimed by the certified business on an Arizona income tax return along with Revenue Form 336 for the tax year identified on the credit certificate, which will be the year the device becomes operational. For more information and to download Revenue’s forms, visit http://www.azdor.gov/
The ACA will soon begin the process of drafting rules for the Commercial/Industrial Solar Energy tax credit and will seek public comment. As soon as rules are adopted, the ACA will place an update on this website and will notify businesses and others who have requested information. If you have not yet placed your e-mail address on our list, please click here to send an e-mail requesting notification. Please be sure to identify solar energy as the program for which you would like notification.
Please Note: The Commercial/Industrial tax credit is administered through the ACA. However, there are other incentives available, including: a TPT and property tax incentive provided by the Arizona Department of Revenue. For more information and to download Revenue’s forms, visit http://www.azdor.gov/
LOOKING FOR THE RESIDENTIAL SOLAR TAX CREDIT?
A solar energy device installed at a residential location may be eligible for a tax credit equal to 25% of the total installed cost of the device not to exceed $1000 under A.R.S. §43-1083. The residential tax credit is administered solely by Revenue. Click here to view brochure.