Solar panel tax credits are about to expire: What you should know
During the last few years, federal incentives for installing solar energy have benefited residents of Arizona more than in any other state and saved many thousands of dollars a year on energy, according to a recent analysis. However, the program that made investing in solar affordable is going away in a few months because of President Donald Trump’s infamous “One Big Beautiful Bill.”
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.