State and Federal Tax Benefits for Arizona Solar + Storage

State and Federal Tax Benefits for Arizona Solar + Storage

Solar panels are terrific for providing homeowners with clean and renewable energy that requires lots of sunshine. With an average of 300 days of sunshine every year, Phoenix is a perfect location to harness the power of solar energy. The cost to install solar panels plus a battery storage system is significant, but state and federal tax credits make it a lot more viable for Arizona homeowners. The combination of tax incentives and lower power bills makes it very compelling to consider installing solar + storage for many homeowners.

What Is a Solar + Storage System?

You already know that solar panels convert sunlight into electrical energy. You also know that batteries store energy in the form of electricity. A solar + storage system combines solar panels and battery storage to make it possible to use solar power throughout the night and on cloudy days. Solar + storage makes it possible to generate electrical power with solar panels and store the energy.

The solar element consists of the solar panels and the wiring needed to send the electrical power that they generate to where it can be used. The storage element usually consists of a very large lithium battery that is rechargeable and can store electrical energy until it is needed. The combination of solar and storage helps to ensure around-the-clock availability of usable solar power – even during the summer monsoon season in Phoenix.

Residential solar systems mostly do not include storage, but the best solar companies in Arizona can install storage batteries as well as solar panels. Many homeowners across the country sell any excess energy to their respective local power utilities. The ability to store that extra power helps to reduce the demand for energy from a regional power grid during peak usage times. It also helps to provide power during local power outages.

Tax Incentives for Installing Solar + Storage

A federal solar tax credit will pay up to 30 percent of the cost to install a solar energy plus storage system. The storage component is usually a lithium-ion battery that costs between $20,000 and $30,000, which is a significant investment.

The potential state and federal incentives greatly offset the cost of paying the best solar companies in Arizona to install solar plus storage for your Phoenix-area home.

Arizona homeowners also can take advantage of the state’s solar tax credit for installing solar devices. The state will allow up to a maximum of $1,000 credit for 25 percent of the cost to install solar devices. If you do not get the full credit for one year, you might obtain the remaining amount by installing an additional solar device, such as battery storage, during another year.

So you could install your solar + storage system in two stages and apply for state tax credits for both. If you spend less than $4,000 to install solar panels, you could claim a state tax credit for that year. If you spent $2,000 on solar panels, you would get a $500 credit on your tax bill.

If you spend another $2,000 or more to add storage during another year, you could claim the remaining credit on your state income tax after installing a storage system. Because you obtained a $500 credit initially, you could get up to $500 in an additional state tax credit.

Article Submitted By Community Writer

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