Arizona
Incentives/Policies for Renewables & Efficiency
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Last DSIRE Review: 06/11/2009
| Incentive Type: |
Sales Tax Exemption |
| State: |
Arizona |
| Eligible Renewable/Other Technologies: |
Passive Solar Space Heat,
Solar Water Heat,
Solar Space Heat,
Solar Thermal Electric,
Photovoltaics,
Wind,
Solar Pool Heating,
Daylighting
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| Applicable Sectors: |
Commercial,
Residential,
General Public/Consumer
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| Amount: | 100% of sales tax on eligible equipment |
| Maximum Incentive: | No maximum |
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Web Site: |
http://www.azsolarcenter.com/
economics/taxbreaks.html
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Authority 1:
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A.R.S. § 42-5061 (N)
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| Date Effective: | 1/1/1997 |
| Expiration Date: | 12/31/2010 |
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Authority 2:
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A.R.S. § 42-5075 (14)
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| Date Effective: | 1/1/1997 |
| Expiration Date: | 12/31/2010 |
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Summary:
Arizona provides a sales tax exemption* for the retail sale of solar energy devices and for 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.
According to the Arizona Solar Center's website, another provision of Arizona sales tax exemption may apply without value limit to the basic power generating part of the system (consisting of at least PV modules, structure, array wiring and controls; the limits have not been clearly defined). This further exemption requires the filling out of form ADOR 5000 titled "Transaction Privilege Tax Exemption Certificate" and checking reason #15, "Machinery, equipment or transmission lines used directly in producing or transmitting electrical power, but not including distribution."
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.
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Please note: The information on the DSIRE web site provides an overview of incentives and other policies, but it should not be used as the only source of information when making purchasing decisions, investment decisions, tax decisions or other binding agreements. Please refer to the individual contact provided in each record to verify that a specific incentive or other policy is applicable to your specific project.
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