The 2025 IRA reconciliation kept the residential energy credits intact — but
the 2026 implementation guidance from the IRS (Notice 2026-04, released
January 19) clarified a few things that matter for Arizona homeowners.
Here's what stacks, what doesn't, and what's worth doing.
The three credits
1. Section 25C — Energy Efficient Home Improvement Credit
- 30 % of qualifying material costs
- $1,200 annual cap for the home envelope (this is the roof bucket)
- Resets every calendar year — split projects across years to maximize
- Roof itself qualifies only if it meets ENERGY STAR cool-roof spec
- Insulation and air-sealing in the same project also qualify (separate cap items)
2. Section 25D — Residential Clean Energy Credit
- 30 % of total cost (no cap)
- Solar PV, solar water heating, geothermal, battery (3 kWh+)
- Includes the roof structural reinforcement directly required for
the solar install — but NOT the entire reroof. (This is the most
misunderstood line in the credit.)
3. State + utility rebates
- APS Cool Roof Rebate: $0.20–$0.30/sq ft for ENERGY STAR cool roofs
in their service territory (Prescott, Flagstaff, Cottonwood)
- SRP Cool Roof Rebate: similar tier
- AZ State: no separate state credit, but no state tax on materials
qualifying under federal credit (clarified March 2026)
The 25C credit is non-refundable. If your federal tax bill is under
$1,200, the credit caps at what you owe. This catches retirees by
surprise — talk to your CPA before timing the project.
What "ENERGY STAR cool roof" actually means
For 2026, the spec requires:
- Solar reflectance ≥ 0.25 (initial), ≥ 0.15 after 3 years (low-slope)
- Solar reflectance ≥ 0.20 initial, ≥ 0.15 after 3 years (steep-slope)
- Listed on the ENERGY STAR Certified Roof Products database
Materials that qualify in Northern AZ:
- Most light-colored TPO and PVC membrane (flat roofs)
- Stone-coated steel in light/cool colors (Boral, DECRA, Gerard)
- Cool-rated standing seam (Galvalume, Kynar coatings in light colors)
- Specific shingle lines: GAF Timberline Cool Series, Owens Corning Cool
Plus, CertainTeed Landmark Solaris
Materials that don't qualify:
- Standard architectural shingles in dark colors
- Concrete tile in dark earth tones (most NAZ palettes)
- Black or dark gray metal
The solar-ready stacking play
If you're planning solar in the next 3 years, here's how to maximize:
Year 1 (2026): Replace roof with cool-rated material. Claim 25C up
to $1,200. Apply for APS/SRP rebate ($600–$900 typical on a 25-sq house).
Year 2 (2027): Install solar PV with battery. Claim 25D at 30 %
of total cost (no cap). If structural reinforcement was needed for the
PV mounting, that reinforcement also qualifies under 25D.
What NOT to do: Don't claim the full re-roof under 25D in the same
year as solar — the IRS only allows the incremental structural cost
that the solar install required, not the entire roof.
IRS Notice 2026-04 specifically called out abusive claims of full
re-roofs under 25D as a 2026 audit priority. The "structural reinforcement"
exception is narrow — load-bearing additions only, with engineering letter.
Real numbers — typical NAZ stack
For a 2,400 sq ft home (24 squares) replacing tile with cool-rated
standing seam metal in 2026, then adding 8 kW solar in 2027:
| Item | Cost | Credit |
|---|---|---|
| Cool standing seam (24 ga, light gray) | $28,800 | 25C: $1,200 |
| APS Cool Roof Rebate | — | -$720 |
| Engineering letter (solar prep) | $450 | (carry to 25D) |
| 2026 net out-of-pocket | $26,880 | |
| 8 kW solar + 13 kWh battery | $32,000 | 25D: $9,600 |
| Structural reinforcement | $1,200 | 25D: $360 |
| 2027 net out-of-pocket | $22,040 | |
| Total stack savings | | $11,880 |
Compared to dark-color shingle reroof + later solar, the cool roof
stack saves about $11,880 and reduces summer cooling load by an
estimated 14 % at 5,000 ft elevation (NAZ specific — varies by site).
Common mistakes that void the credit
- Buying materials yourself — labor doesn't qualify, but materials
bought outside the contractor's purchase chain often miss the
ENERGY STAR documentation requirement.
- Not getting the manufacturer's certification statement — the IRS
now requires this on every 25C claim. Your roofer should provide it.
- Confusing "Cool Roof Rating Council" listing with ENERGY STAR — they
use different methodologies. Both can apply.
- Filing 25D for the entire reroof. (See above. Don't.)
When this credit changes
The current 30 % clean energy credit holds through 2032 then steps
down. The 25C $1,200 envelope cap is law through 2032. Plan
accordingly — there's no rush, but there's also no upside to waiting
if your roof needs work now.
Match with a Northern AZ roofer who does cool-rated installs through
our wizard.