Federal & State Solar Incentives

federal and state solar energy tax incentives

Well done! You have made the decision to take ownership of your home energy and put money back into your pocket. When going solar in Phoenix Arizona with Onyx, not only will you save those hundreds and thousands of dollars over the years, you will also save additional money through federal and state solar energy tax incentives. Some of your saving options may include:


Federal Tax Credit ( ITC)


Arizona State Tax Credit




Clean Energy Programs

Onyx Solar Solutions is dedicated to being transparent with all of our customers, so please note these are all subject to qualification. Everyone’s situation is different. For example, you will need to check your personal tax liability. One of our talented energy consultants can guide you through this process and help you get the answers you need! However, we are not tax advisors, which is why we strongly encourage you to look into your options and, if needed, consult with a CPA, tax consultant, etc.


Ready to save more money? Let’s break these down! 

Federal Solar Tax Incentives

The Federal Tax Credit is also known as the ITC, Investment Tax Credit. This means upon qualification you get a dollar-for-dollar reduction in the amount of income tax that you would owe. For example, if you claim a $2,000 federal tax credit, this will reduce your income tax due by $2,000.

In August of 2022, there was an extension passed by Congress for the residential Investment Tax Credit. This raised the tax credit to 30% for systems installed in the next ten years. Prior years, 2020 and 2021, were eligible for a 26% tax credit. This has been a huge victory in the renewable energy space and created a higher desire for those considering going solar! As of late 2022, there are not predictions for the credit to surpass 30%.

Looking ahead, the 30% was voted in for years 2022-2032. Come 2033, the tax credit will lower back to 26%, then decrease to 22% in 2034. The tax credit offer is scheduled to expire for solar systems installed in 2035, unless Congress votes to renew it again.

Do I Qualify for the Residential Federal Solar Tax Credit?

Again, Onyx energy consultants are not tax advisors, but based on information that the IRS publishes, and other resources, you may be eligible for the residential tax credit if you meet the following criteria:

  • Your solar panels are new and being used for the very first time. The tax credit can only be claimed on the solar equipment of the initial, original installation.
  • Your residence receiving the installation is in the United States.
  • Your system is/was installed between January 2017 and December of 2034.
  • You own your solar system through financing or paying cash; a solar system that is on a leasing program or community solar project will not qualify.
  • You do not purchase the energy generated by the system from a solar company.
  • The Investment Tax Credit is different if the solar system is purchased for a place of business.

If I Am Eligible, How Do I Claim the Residential Federal Solar Tax Credit?

Once you have been advised by a tax professional that you do qualify, you will then fill out a particular form with the IRS, Form 5695. This form will be submitted with your federal tax return.

Arizona State Tax Incentives

In addition to federal or government opportunities, you can also save additional money through certain state incentives. Each state is different; please note the following information is specific to Arizona. If you are not going solar in Arizona, please check the qualifications for your specific state.

Going Solar in Arizona

Did you know Arizona is in the top five states for solar? In addition to the unlimited sunshine supply, Arizona offers $0 out of pocket costs for going solar! There are several other opportunities to check out:

  • Arizona Power Payback Program – This is a program where certain utility companies pay you a credit for going solar in Arizona! Check with your energy provider to see what options are available to you.
  • Arizona Solar Rebates– After filling out a quick form online, you can see if your geographic location or home-type qualify you for a solar rebate in Arizona.
  • Arizona Residential Solar and Wind Energy Systems Tax Credit– Receive a tax credit up to $1,000. Arizona’s Solar Energy Credit is available to individual taxpayers who install a solar or wind energy device at the taxpayer’s Arizona residence. The credit is allowed against the taxpayer’s personal income tax in the amount of 25% of the cost of a solar or wind energy device, with a $1,000 maximum allowable limit, regardless of the number of energy devices installed. The credit is claimed in the year of installation. If the amount of the credit exceeds a taxpayer’s liability in a certain year, the unused portion of the credit may be carried forward for up to five years.


For more information on any of the incentives above, be sure to chat with one our energy consultants or a tax professional! Onyx Solar Solutions is committed to saving you as much as possible!