Hawaii State – 35%

Hawaii State Solar Tax Credit

Credit Election: per Act 154 (2009) taxpayer may elect to take credit as a non-refundable credit against taxable income or as a refundable credit against taxable income

1. Non-Refundable Election: It is taken against the tax on the taxable income before tax-withheld is deducted. This makes it likely that a working adult will get the whole credit even though the bulk of his/her tax liability is paid directly out of a recurring paycheck and none may be owed at tax time. It also makes it possible that the credit will increase the taxpayer’s refund even though the credit is ‘non-refundable’

2. Refundable Election: All taxpayers have the (irreversible) option of calculating the credit basis as above (with applicable caps) then reducing the credit by 30% and claiming the reduced credit as a rebate. This will allow any portion of the credit which exceeds their tax liability to be refunded to them during the year they file. This is particularly useful for out-of-state military persons who own their home in Hawaii and pay state tax to another state or to tax-payers with low state tax liabilities for who it would take many years of filing to recoup the entire state tax credit. In the case where all of a taxpayer’s income is exempt under a public retirement system (such as Social Security) or received in the form of a pension for past services, or where the taxpayer’s adjusted gross income is $20,000 or less ($40,000 or less if filing jointly), the taxpayer may elect to claim the credit as a refundable credit without any reduction

  • Available for both solar water heating systems and PV systems
  • Formally called the Solar and Wind Energy Credit (Personal)
  • 35% (capped credit) on all expenditures directly related to the installation of a qualifying Solar Water Heating or PV property
  • Solar Thermal (solar water heating and pool/spa heating) energy systems credit cap for single family residential property: $2,250 per system
  • Photovoltaic energy systems credit cap for single family residential property: $5,000 per system
  • Excess credit may be carried forward until exhausted
  • System must be new and in compliance with all applicable performance and safety standards
  • A taxpayer or a couple filing jointly is eligible for the tax credit for the portion of the system which he/she/they pay for or finance
  • Credit cannot be claimed until the tax year in which the solar system was “placed in service” (for new construction that is the date of occupancy by the owner)
  • Tax credits can only be claimed by the economic owner of the renewable energy technology system (the economic owner of the system need not be the owner of the property being served by the system nor a resident there)

Background: originally enacted 1990, amended several times. HB2957, enacted June 2006, removed the credit’s sunset date and eliminated the provision that required new federal tax credits to be deducted from the actual cost before calculating the state tax credit. Recent changes are detailed in Act 154.

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