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- Renewable Energy Production Tax Credit
The primary goal of the Commercial/Industrial Solar Energy Tax Credit Program (Solar Program) is to stimulate the use of solar energy in commercial, industrial and other non-residential applications by subsidizing the cost of solar energy devices. The Solar Program achieves this goal by providing an Arizona income tax credit to offset the cost of installation of a qualifying solar energy device at an Arizona business facility.
The Solar Program is administered by the Arizona Commerce Authority (ACA). Other Arizona solar incentives are available including TPT and property tax incentives administered by the Arizona Department of Revenue (Revenue). For more information and to download Revenue’s forms, visit http://www.azdor.gov/
TAX CREDIT PROVISIONS & LIMITATIONS
An eligible applicant is a business that purchases a solar energy device and causes the device to be installed at a facility at which the business operates. Tax credits generally equal 10% of the installed cost of the solar energy device up to $25,000 in tax credits for one facility in a single tax year and up to $50,000 in total tax credits for one business in a single tax year. Tax credits can be used to offset Arizona income tax liability; any unused credit amounts can be carried forward for up to five tax years.
The ACA cannot certify tax credits under the Solar Program in excess of $1 million in any calendar year. Therefore, tax credits are allocated on a first-come, first-served basis, according to the date of receipt of a substantially complete preapproval application. Download the solar energy allocation table to view the outstanding balance of the current calendar year tax credit “cap.”
Please note that effective immediately, the ACA, and not the Governor's Office of Energy Policy, will be determining whether a device constitutes a "Qualified Solar Energy Device" within the meaning of the Commercial/Industrial Solar Energy Tax Credit Program Rules & Guidelines. Please contact the Program Manager in the event of questions.
A business that plans to install or has installed a solar energy device at its Arizona facility must follow the process below:
- Submit a Request for Preapproval to the ACA in the tax year in which the device will be installed and operational. To apply electronically for program incentives, click here.
- Receive a Preapproval letter from the ACA also known as an “Initial Certification.”
- Submit a Request for Postapproval to the ACA once the device is installed and operational. To apply electronically for program incentives, click here.
- Receive a Credit Certificate from the ACA.
CLAIMING TAX CREDITS
After a business has received a Credit Certificate from the ACA, it may claim the tax credits with Revenue. The tax credits must be claimed by the applicant-business on an Arizona income tax return that includes Revenue Form 336 for the tax year in which the solar device installation occurred. Alternatively, the applicant-business may transfer the tax credits to a Qualified Third Party Transferee. For more information and to download Revenue’s forms, visit http://www.azdor.gov/
The ACA sends out updates regarding the Solar Program from time to time. To place your e-mail address on the ACA’s notification list, please click here. Please identify the Solar Program as the program for which you would like notification.
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 $1,000 in accordance with A.R.S. § 43-1083. The residential tax credit is administered solely by Revenue. Click here to view Residential Solar program information.