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Solar Energy Economic Benefits - Arizona Solar Devices Sales Tax Exemption

In Arizona, "solar devices" (as defined either explicitly in the Arizona Revised Statutes or determined to be solar devices by the Arizona Department of Commerce) can now be sold to Arizona customers without having to charge state sales tax. (legally called the transaction privilege tax). County and city sales taxes still apply for those tax authorities that collect their own sales taxes. This is a result of House Bill 2433 passed in 1991.

Sales Tax Exemption

The process and requirements for the sales tax exemption are not simple to use and apply to the retail seller of the solar devices. The Arizona Energy Office (Arizona Department of Commerce) has compiled a guide to acceptable devices under the law. It is possible to petition the Arizona Department of Commerce to add additional items. A maximum of $5,000 of equipment per system may be exempted under this law. Please note that the sales tax exemption does not apply to batteries, controls, etc. that are not part of the system. For more information, contact The Arizona Energy Office at 602-280-1402.


Dealer Information

Arizona dealers must be registered with the Arizona Department of Revenue (ADOR) as a solar device dealer before utilizing the $5,000 state sales tax exemption. Registration requires filing Arizona Department of Revenue Form 6015 "Solar Energy Devices - Application for Registration".

Another provision of Arizona sales tax exemption may apply without value limit to the basic power generating part of the system (consisting of at least PV modules, structure, array wiring and controls; the limits have not been clearly defined). This further exemption requires the filling out of form ADOR 5000 (ADOR60-2010 11/97) titled "Transaction Privilege Tax Exemption Certificate" and checking reason #16, "Machinery, equipment or transmission lines used directly in producing or transmitting electrical power, but not including distribution."

Most cities have a 0.5 to 2% sales tax that still must be collected and reported for either of these exemptions unless the cities specifically exempt solar devices. For example, in Tempe it will not be necessary to charge the 1.7% Tempe city sales tax.