Solar and Wind Equipment Sales Tax Exemption (Arizona)

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Summary

Last modified on February 12, 2015.

Financial Incentive Program

Place Arizona

Name Solar and Wind Equipment Sales Tax Exemption
Incentive Type Sales Tax Incentive
Applicable Sector Commercial, Residential, General Public/Consumer
Eligible Technologies Passive Solar Space Heat, Solar Water Heat, Solar Space Heat, Solar Thermal Electric, Photovoltaics, Wind, Solar Pool Heating, Daylighting
Active Incentive Yes

Implementing Sector State/Territory
Energy Category Renewable Energy Incentive Programs
Amount 100% of sales tax on eligible equipment







Start Date 1997-01-01
Expiration Date 2016-12-31






Maximum Incentive No maximum











Website http://www.azsolarcenter.org/economics/incentives/state-tax-credits.html#resi-3
Date added to DSIRE 2000-01-01
Last DSIRE Review 2014-11-04



References DSIREDatabase of State Incentives for Renewables and Efficiency[1]


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.


Incentive Contact

Contact Name Taxpayer Assistance
Department Arizona Department of Revenue
Division Transaction Privilege Use Tax and Withholding Tax
Address 1600 W. Monroe

Place Phoenix, Arizona
Zip/Postal Code 85007
Phone (602) 255-2060
Phone 2 (800) 843-7196


Website http://www.revenue.state.az.us/
     
     

Authorities (Please contact the if there are any file problems.)

Authority 1: A.R.S. § 42-5061
Date Effective 1997-01-01

Expiration Date 2016-12-31

Authority 2: A.R.S. § 42-5075
Date Effective 1997-01-01

Expiration Date 2016-12-31

Authority 3: A.R.S. § 42-5063
Date Effective 2006-12-31
Date Enacted 2012-04-10


Authority 4: A.R.S. § 42-5159
Date Effective 2006-12-31
Date Enacted 2012-04-10
















  • Incentive and policy data are reviewed and approved by the N.C. Solar Center's DSIRE project staff.[1]

References

  1. 1.0 1.1  "Database of State Incentives for Renewables and Efficiency"