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Arizona

Arizona

Incentives/Policies for Renewable Energy

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Solar and Wind Equipment Sales Tax Exemption   

Last DSIRE Review: 05/16/2013
Program Overview:
State: Arizona
Incentive Type: Sales Tax Incentive
Eligible Renewable/Other Technologies: Passive Solar Space Heat, Solar Water Heat, Solar Space Heat, Solar Thermal Electric, Photovoltaics, Wind, Solar Pool Heating, Daylighting
Applicable Sectors: Commercial, Residential, General Public/Consumer
Amount:100% of sales tax on eligible equipment
Maximum Incentive:No maximum
Start Date:1/1/1997
Expiration Date:12/31/2016
Web Site: http://www.azsolarcenter.com/economics/taxbreaks.html
Authority 1:
Date Effective:
Expiration Date:
A.R.S. § 42-5061
1/1/1997
12/31/2016
Authority 2:
Date Effective:
Expiration Date:
A.R.S. § 42-5075
1/1/1997
12/31/2016
Authority 3:
Date Enacted:
Date Effective:
A.R.S. § 42-5063
04/10/2012
12/31/2006
Authority 4:
Date Enacted:
Date Effective:
A.R.S. § 42-5159
04/10/2012
12/31/2006
Summary:

Arizona provides a sales tax exemption* for the retail sale of solar energy devices and for the installation of solar energy devices by contractors. The statutory definition of "solar energy device" includes wind electric generators and wind-powered water pumps in addition to daylighting, passive solar heating, active solar space heating, solar water heating, and photovoltaics. The sales tax exemption does not apply to batteries, controls, etc., that are not part of the system. (Note that HB 2429, enacted in June 2006, eliminated the $5,000 limit per device.)

To take advantage of these exemptions from tax, a solar energy retailer or a solar energy contractor must register with the Arizona Department of Revenue prior to selling or installing solar energy devices (Arizona Form 6015, Solar Energy Devices – Application for Registration). The Arizona Department of Commerce Energy Office has compiled a guide to the solar energy devices that qualify for exemption under the statutory definition. It is possible to petition the Arizona Department of Commerce to add additional items if they qualify per the statutory definition.

SB 1229 of 2012 extended this exemption to net metering transactions involving photovoltaics, and the sale of renewable energy credits (RECs). RECs are typically sold by a renewable energy generator to a utility to company for compliance with the state's renewable energy standard. SB 1229 clarified that sales tax should not be applied to those transactions.

Most cities have a 0.5 to 2% city privilege ("sales") tax that is applicable to sales or installations of solar energy devices, unless a city specifically exempts such sales under its city tax code. Solar energy retailers should check with the city in which the retail business is located to find out whether city privilege tax is applicable. Solar energy contractors should check with the city in which the installation will be performed to find out whether city privilege tax is applicable.

*Technically, the law allows retailers to deduct the amount received from the sale of solar energy devices from their transaction privilege tax base, and similarly, it allows prime contractors to deduct proceeds from a contract to provide and install a device from their transaction privilege tax base.


 
Contact:
  Tax Assistance
Arizona Department of Revenue
1600 W. Monroe
Phoenix, AZ 85007-2650
Phone: (602) 255-3381
Phone 2: (800) 352-4090
Web Site: http://www.revenue.state.az.us/
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Disclaimer: The information presented on the DSIRE web site provides an unofficial overview of financial incentives and other policies. It does not constitute professional tax advice or other professional financial guidance, and it should not be used as the only source of information when making purchasing decisions, investment decisions or tax decisions, or when executing other binding agreements. Please refer to the individual contact provided below each summary to verify that a specific financial incentive or other policy applies to your project.

While the DSIRE staff strives to provide the best information possible, the DSIRE staff, the N.C. Solar Center, N.C. State University and the Interstate Renewable Energy Council, Inc. make no representations or warranties, either express or implied, concerning the accuracy, completeness, reliability or suitability of the information. The DSIRE staff, the N.C. Solar Center, N.C. State University and the Interstate Renewable Energy Council, Inc. disclaim all liability of any kind arising out of your use or misuse of the information contained or referenced on DSIRE Web pages.

Copyright 2013 - 2014 North Carolina State University, under NREL Subcontract No. XEU-0-99515-01. Permission granted only for personal or educational use, or for use by or on behalf of the U.S. government. North Carolina State University prohibits the unauthorized display, reproduction, sale, and/or distribution of all or portions of the content of the Database of State Incentives for Renewables and Efficiency (DSIRE) without prior, written consent.