Energy Equipment Property Tax Exemption
| Program Type | Property tax exemption |
|---|---|
| Technologies | Solar power equipment, photovoltaics, landfill gas, wind energy equipment, biomass, geothermal, combined heat and power systems, anaerobic waste management, small hydroelectric |
| Amount | Exempts any increased value of the property due to installation of energy equipment |
| Required Documentation | Documentation of purchase and installation of equipment |
| Official Web Site | http://www.revenue.state.az.us/ |
For tax assessment purposes, the state of Arizona does not consider energy-generating devices to add any value to a piece of property—which means consumers don’t get taxed on the added property value.
Both “active” and “passive” systems can qualify. If the system in question generates some form of renewable power—photovoltaic systems or wind turbines, for example—it’s active, and it definitely qualifies. Passive systems, like solar water heaters or solar daylighting systems, can qualify as well, as long as it’s clear that the system in question is specifically designed to fill an existing power need.
The statute (HB-2429, expanded by HB-2332 in 2009) defines “energy equipment” as systems that harness “energy … from renewable resources.” In addition to such equipment, the state specifies that “energy efficient building components” can qualify as well. To make the cut, such components (appliances or building materials) must meet or exceed the efficiency requirements of the Environmental Protection Agency’s Energy Star Program, or exceed by 15 percent the energy efficiency requirements of the building code in place when and where the building permit is issued.
To qualify for the exemption, property owners need to provide their county assessor with documentation of the purchase and installation of the equipment within six months. There’s no limit on this exemption—consumers can install as much qualifying equipment as they want, property tax-free.
