The Residential Clean Energy Credit — a provision of the Inflation Reduction Act, which was signed by President Joe Biden in 2022 — is a nonrefundable federal tax credit that allows people who buy and install solar panels to write off 30% of the purchase. With many rooftop solar arrangements requiring lengthy loan agreements, the tax break helps alleviate what is often a daunting upfront cost.
In Arizona, the impact on people who retrofit their homes for solar energy has been substantial, according to a study by the United Kingdom-based legal website Conveyancing Solicitor. It found that in 2025, Arizonans with solar panels installed experienced a larger relative drop in their electricity bills than folks in any other state.
According to the study, the estimated annual energy bill for an Arizona household without solar panels is $1,510.74. With a solar system, though, the study estimates that customers would save $2,722.58 — a negative 180% swing.
“U.S. homeowners may think energy efficiency is a green luxury, but it’s fast becoming a financial and legal necessity. Property markets are evolving swiftly: Lenders and buyers now favour homes with solar, heat pumps, and strong energy ratings,” George Levett, a property legal expert, said in a written statement.
When do federal solar panel incentives expire?
But after Republicans in Congress sunsetted the tax credit in their 2025 budget bill, which Trump pushed for and signed, the tax credit is expiring on Jan. 1. “Post-2025, the removal of the federal tax credit and new tariffs will increase installation costs and reduce savings,” Levett noted.That means that barriers for installing solar systems will rise for regular homeowners — just as utilities like APS are looking to boost energy rates for hundreds of thousands of Valley residents.
"Trump is crushing Arizona from all angles, sending utility bills through the roof by attacking the state’s clean energy industry, and making the summers even hotter with more pollution,” Jesse Lee, a senior adviser for clean energy advocacy organization Climate Power, told Phoenix New Times. “Now he’s also stripping people of their only escape from that heat and those crushing utility bills by killing home solar tax credits.”
How do I get the tax credit before it expires?
So what does this mean practically, and how can Arizonans take advantage of the tax credit before it expires?To qualify for the tax refund, any solar infrastructure must be installed, operational and paid for by Dec. 31. Anyone who wants to write off nearly a third of their purchase has to act quickly.
“As incentives diminish and equipment prices rise, delay becomes an unwise strategy,” Levett said.
Does Arizona have incentives for solar?
Arizona’s statewide incentives aren’t as strong as the tax credit that Trump is nixing, but there are a few worth knowing about.The state will refund 25% — or a maximum of $1,000 — of the purchase and installation of solar systems. By law, solar systems don’t increase the taxable value of a property, even as they add value. In addition, panels and other equipment are exempt from Arizona’s sales tax.
