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Non-Residential Solar and Wind Tax Credit (Corporate)

Eligibility 
Agricultural
Commercial
Fed. Government
Industrial
Institutional
Local Government
Nonprofit
Schools
State Government
Tribal Government
Savings Category 
Photovoltaics
Solar Water Heat
Maximum Rebate 

$25,000 for any one building in the same year and $50,000 per business in total credits in any year

Program Info
Start Date 

1/1/2006

State 
Arizona
Program Type 
Corporate Tax Credit
Rebate Amount 

10% of installed cost

Provider 
Arizona Commerce Authority

Arizona’s tax credit for solar and wind installations in commercial and industrial applications was established in June 2006 ([http://www.azleg.gov/legtext/47leg/2r/bills/hb2429s.pdf HB 2429]). In May 2007, the credit was revised by [http://www.azleg.gov/legtext/48leg/1r/bills/hb2491h.pdf HB 2491] to extend the credit to all non-residential entities, including those that are tax-exempt. Third parties who install or manufacture the system are now eligible as well -- not only those that finance a system as allowed in the original legislation. These provisions are retroactive to January 1, 2006.

The tax credit, which may be applied against corporate or personal taxes, is equal to 10% of the installed cost of qualified “solar energy devices” and applies to taxable years beginning January 1, 2006 and extending through December 31, 2018.

A solar energy device is defined as “a system or series of mechanisms designed primarily to provide heating, to provide cooling, to produce electrical power, to produce mechanical power, to provide solar daylighting or to provide any combination of the foregoing by means of collecting and transferring solar generated energy into such uses either by active or passive means, including wind generator systems that produce electricity. Solar energy systems may also have the capability of storing solar energy for future use. Passive systems shall clearly be designed as a solar energy device, such as a trombe wall, and not merely as a part of a normal structure, such as a window.”

The maximum credit per taxpayer is $25,000 for any one building in the same year and $50,000 in total credits in any year. If the allowable credit exceeds the taxpayer’s income tax liability, the amount of the claim not used to offset taxes may be carried forward for not more than five consecutive taxable years as a credit against subsequent years' income tax liability.

To qualify for the tax credits, a business must submit an application to the Arizona Commerce Authority (ACA). The ACA will review applications and provide an initial certification to qualifying installations. System owners must submit a completion report to the ACA once the device becomes operational. If approved, the ACA will then issue a credit certificate to the business and funds will be reserved. The Arizona Department of Revenue will also receive a copy of the credit certificate. The ACA may certify tax credits up to a total of $1 million each calendar year. The date the system is placed in service determines the calendar year cap from which the credit will draw. If a system is placed in service in a given year it can only receive a credit in that year. If the $1 million statewide cap has already been reached for that year, it will not receive a credit that year, and it will not be considered in the next year. In these instances, these systems will not be eligible for a tax credit. Senate Bill 1313 (2013) tasked the ACA with establishing a preapproval process for the certification of applications early in the process. The ACA will reserve a portion of the annual cap based on this preapproval.

Forms and additional information can be found at the web site above.