Hawaii State & Federal Solar Tax Credits
Learn about the tax benefits of solar.
Solar Tax Credits
The Hawaii State tax credit is set at 35%.
for the 30% Federal tax Credit, there are different rules for purchasing residential and commercial solar systems. Time is of the essence for commercial systems to receive the 30% tax credit.
You can find the latest updates for Commercial Federal Solar Tax Credits here.
Read below to learn more about what the current tax credits are, how to claim your credits and any upcoming changes.
Hawaii State Energy Tax Credit
Originally enacted in 1976, the Hawaii Energy Tax Credit allows individuals to claim an income tax credit of as much as 35% of the cost of equipment and installation of a residential photovoltaic (PV) system. The credit is capped at $5,000 per “5 kW system,” and multiple systems may be installed on one home. Systems must be fully installed and capable of operation by the end of the the year in which you are claiming the tax credit. If your credit is more than what you owe in that year, the credits may be rolled forward to subsequent years. Hawaii also offers a “refundable credit” for PV system owners who do not have sufficient state tax liability; the refundable credit is 30% less than the normal tax credit, but state cuts a check directly to the system owner.
30% Federal Solar Tax Credit
Where the Credits Stand, and Why Now is the Time to Act
Right now, commercial solar systems can claim a 30% federal tax credit for the cost of a solar photovoltaic (PV) system through the Investment Tax Credit (ITC). These credits are still available and we are encouraging property owners to take advantage of this financial benefit before it’s gone.
For homeowners, leasing is a great option and right now a leased system still allows the 30% tax credit. Since a leased system is commercially owned, the tax credit is still available, and the savings is passed on to the homeowner.
We recommend safe harboring your solar project now to lock in 30% or more.
Learn more about the
rules and deadlines to safe harbor your system.
When you go solar in Hawaii, you can get back up to 65% of your system cost through tax credits — but it’s not an instant discount. Here’s how it works:
Hawaii State Credit – 35% (up to $5,000)
- You get a 35% Hawaii tax credit, capped at $5,000 per system.
- This credit reduces what you owe on your state taxes.
- File using Form N‑342 with your Hawaii return.
Federal Tax Credit – 30%
If you meet the deadline of July 4th to “begin construction” and Safe Harbor your solar project, you can purchase a commercial solar system or lease a residential system and still get the benefit of the 30% Federal tax credit.
