Energy Equipment Property Tax Exemption
Administered by Arizona Department of Revenue
In Arizona, qualifying solar, wind, biomass, geothermal, small hydro and other renewable energy equipment that you use mainly on-site is treated as adding no value to your property for tax assessment, so it won't raise your property taxes. Energy efficient building components that meet Energy Star, LEED or equivalent standards, or are at least 15 percent more efficient than the International Energy Conservation Code, also qualify. To get it, give your county assessor documentation of the purchase and installation, including costs, at least six months before the notice of full cash value is issued for the first valuation year.
Your Arizona customers can install eligible solar, wind, biomass, geothermal, low-impact hydro, combined heat and power and high-performance building components without the equipment increasing their assessed property value. The equipment must be used primarily for on-site consumption, and efficient building components must meet Energy Star, LEED or an equivalent standard, or be at least 15 percent more efficient than the International Energy Conservation Code. Customers must submit documentation of the actual purchase and installation, with costs, to the county assessor at least six months before the notice of full cash value for the initial valuation year, so provide itemized invoices and installation records.
This is a property tax exemption created in 2006 by H.B. 2429 for solar energy devices and expanded in 2009 by H.B. 2332 to cover other renewable energy equipment, combined heat and power, and energy efficient building components. Eligible equipment is treated as adding no value for assessment purposes, so the incentive works as reduced assessed value rather than a funded rebate, and county assessors administer it. It is open to residential, commercial and industrial property owners, who must document purchase and installation costs to the county assessor at least six months before the notice of full cash value for the initial valuation year.
Program details
- Program ID
- 1683
- Last updated
- 9/4/2026
Eligibility
- Sectors
- commercial industrial residential
- Technologies
- solar - passive solar water heat solar space heat geothermal electric solar thermal electric solar thermal process heat solar photovoltaics wind (all) biomass geothermal heat pumps combined heat & power landfill gas daylighting solar pool heating wind (small) hydroelectric (small) anaerobic digestion other ee yes; specific technologies not identified
Program summary
Arizona’s property tax exemption was established in June 2006 (H.B. 2429) and originally applied only to “solar energy devices and any other device or system designed for the production of solar energy for on-site consumption.” For property tax assessment purposes, these devices are considered to add no value to the property.
A "solar energy device" for the purpose of this incentive 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. Such systems may also have the capability of storing such energy for future utilization. Passive systems shall clearly be designed as a solar energy device such as a trombe wall and not merely a part of a normal structure such as a window."
H.B. 2332, signed in July of 2009, expanded the exemption to include other renewable energy technologies, as well as combined heat and power systems, and energy efficient building components. The bill defines renewable energy equipment as "equipment that is used to produce energy primarily for on-site consumption from renewable resources, including wind, forest thinnings, agricultural waste, biogas, biomass, geothermal, and low-impact hydropower."
Energy efficient building components are defined as "high performance building components installed so that the buildings or building components meet or exceed the energy efficiencies prescribed by the United States Environmental Protection Agency Energy Star Program, or by a Leadership in Energy and Environmental Design green building rating standard developed by the U.S. Green Building Council, or an equivalent green building standard, or that are at least fifteen percent more efficient than the International Energy Conservation Code in effect at the time of building permit issuance."
To qualify for the property tax exemption, the property owner must provide their county assessor with documentation affirming the actual purchase and installation, including costs, of the eligible equipment. This documentation must be submitted no less than six months before the notice of full cash value is issued for the initial valuation year.
Contact & resources
Please verify current program details with the administering agency before making any financial decisions.
