Hawaii Solar Tax Credit Guide
Updated as of October 22, 2026 · Reviewed by Bruce Ekimura, Founder and President
Yes, Hawaii still has a solar tax credit. The state credit pays 35% of a system's cost, up to $5,000 for a single-family solar PV system. Act 24 adds a $40 million yearly cap, income limits and state certification from 2027, and ends the credit after the 2029 tax year. The 30% federal homeowner credit ended in 2025.
Hawaiʻi solar incentives at a glance (as of October 22, 2026)
Every credit, rebate and program in one table, with the deadline and the official source.
| Incentive | Amount or cap | Deadline and timing | Source |
|---|---|---|---|
| Hawaiʻi RETITC: solar PV, single-family home | 35% of cost, up to $5,000 per system | Ends for tax years beginning after Dec 31, 2029. From 2027: HSEO certification; application period closes March 1, 5:00 p.m. HST | Act 24 |
| Hawaiʻi RETITC: solar water heating, single-family | 35% of cost, up to $2,250 per system | Same timing as above | Act 24 |
| Act 24 statewide cap | $40 million per calendar year, 2027–2030; shared pro rata if exceeded | Applies to credits claimed in 2027 for systems placed in service in 2026, unless exempt under EO 26-02 | Act 24, TIR 2026-02 |
| Federal residential credit (25D) | Ended | Not available for property placed in service after Dec 31, 2025; unused 2025 credit carries to 2026 | IRS |
| Federal commercial credit (48E) | For businesses and third-party-owned systems | Solar must begin construction by July 4, 2026 or be placed in service by Dec 31, 2027; storage exempt from the in-service deadline | SEIA |
| Hawaiʻi Energy solar water heater rebate | Up to $2,750 instant rebate; tune-up up to $325 | Through June 30, 2027, while funds last; not available on Kauaʻi | Hawaiʻi Energy |
| Hawaiian Electric BYOD Plus (batteries) | $400 per kW committed, plus $400 per kW for qualifying LMI customers | New battery paired with renewables; 5-year agreement | Hawaiian Electric |
| Honolulu property tax | Rooftop solar isn't assessed | Ongoing | ROH § 8-10.12 |
General information, not tax advice. Ask a tax professional how these credits apply to you.
What is Hawaiʻi's solar tax credit?
Hawaiʻi's Renewable Energy Technologies Income Tax Credit (RETITC) lets you claim 35% of the actual cost of a solar system on your state return, up to a cap for each system (Act 24).
| System | Single-family home | Multi-family (per unit) | Commercial |
|---|---|---|---|
| Solar PV (electricity) | $5,000 | $350 | $500,000 |
| Solar water heating | $2,250 | $350 | $250,000 |
Carry it forward
Any credit larger than your tax bill carries over to the next year's income tax (Tax Facts 2022-2).
Or take a refund
For a PV system, you can take the credit as a refund if you reduce it by 30%. The election can't be revoked (Tax Facts 2022-2).
Full refund for lower incomes
Filers with Hawaiʻi AGI of $20,000 or less ($40,000 or less filing jointly) can claim the refund without the 30% reduction (Tax Facts 2022-2).
What did Act 24 change?
Governor Green signed SB 3125 as Act 24 on May 21, 2026 (EO 26-02). It keeps the 35% rate and the per-system caps and adds four changes (Act 24). The state energy office says the changes begin with taxable years after December 31, 2026 (HSEO).
$40 million yearly cap
Total credits are limited to $40 million in each calendar year from 2027 through 2030. If certified claims go over the cap, each claimant gets a share in proportion to their costs (Act 24).
Income limit
Only filers with adjusted gross income of $175,000 or less, or $350,000 or less filing jointly, can claim the credit (Act 24).
State certification
The Hawaiʻi State Energy Office (HSEO) certifies each claim before you file (Act 24). See how it works below.
Sunset after 2029
The credit doesn't apply to taxable years beginning after December 31, 2029 (Act 24).
The changes drew wide coverage in May 2026, including Hawaiʻi Public Radio and the Honolulu Star-Advertiser.
Is a 2026 solar system exempt from the cap?
Often, yes. Executive Order 26-02, signed June 8, 2026, says systems placed in service in 2026 aren't subject to the $40 million cap if either condition below is met (EO 26-02). The Department of Taxation explained how it applies in TIR 2026-02 on July 31, 2026 (TIR 2026-02).
Completed before May 21, 2026
The system was completed before Act 24 was signed.
You relied on the credit before May 21, 2026
You invested resources in the system's financing, planning, design, permitting or installation before May 21, 2026, and can show that to HSEO and the Department of Taxation.
HSEO says it will post filing instructions on its RETITC page as they're developed (HSEO). Until then, keep your contract, deposit receipts, financing papers and permit records together.
How does HSEO certification work?
Install and place in service
Your system is completed during the calendar year.
File the certified statement
Before March 1 of the following year, file a statement with HSEO listing your adjusted gross income, the system's actual cost and the credit you're claiming. The application period closes March 1 at 5:00 p.m. Hawaiʻi Standard Time.
Receive your certified amount
By May 31, HSEO tells each applicant the credit amount it certified.
Claim it on your return
Use the certified amount when you claim the credit on your Hawaiʻi return.
Source: Act 24, § 235-12.5(f) and (h).
Is the 30% federal solar tax credit still available?
Not for homeowners. The Residential Clean Energy Credit (Section 25D), which covered 30% of solar and battery costs, isn't available for property placed in service after December 31, 2025 (IRS). A home system finished in 2026 doesn't qualify, even if you signed or paid in 2025.
Unused 2025 credit: if your 2025 tax bill was too small to use the whole credit, you can carry the unused portion to 2026 (IRS Form 5695 instructions).
Leases and PPAs: when a third party owns the system, that owner claims the commercial credit (Section 48E), not you. Solar projects must begin construction by July 4, 2026 or be placed in service by December 31, 2027 (SEIA).
Does your quote still subtract 30%?
If a 2026 quote for a home system subtracts a 30% federal credit, it's out of date. Ask for the price before incentives, with the state credit, BYOD Plus and any rebate shown separately.
What solar incentives can Hawaiʻi businesses use?
Businesses, landlords and developers have their own caps and a different federal credit.
State credit for commercial property
35% of cost, up to $500,000 per PV system and $250,000 per solar water heating system, subject to the same Act 24 cap and certification (Act 24).
Federal Section 48E
Solar must have begun construction by July 4, 2026, or be placed in service by December 31, 2027. The in-service deadline doesn't apply to energy storage (SEIA).
Plan with your tax advisor
Start from your electric bills and peak usage, then have your advisor confirm which credits, depreciation and timing apply before you sign. See commercial solar on Oʻahu.
What other incentives can homeowners get?
BYOD Plus for batteries
$400 per kW of committed battery capacity upfront, plus $400 per kW for qualifying low- to moderate-income customers. New batteries paired with renewables only (Hawaiian Electric). See our BYOD Plus guide.
Hawaiʻi Energy rebates
Up to $2,750 instant rebate on a solar water heater and up to $325 on a tune-up, through June 30, 2027, while funds last. Not available on Kauaʻi (Hawaiʻi Energy). See solar water heating.
Honolulu property tax
Devices that convert sunlight into electricity or heat aren't treated as property and aren't assessed, so rooftop solar doesn't raise your assessed value (ROH § 8-10.12).
Do batteries qualify for the state credit?
A battery counts toward the RETITC as an accessory to a PV system only if it's installed and placed in service on the same property in the same tax year as that system. A battery added in a later year doesn't qualify (TIR 2022-02). For a battery added to existing solar, BYOD Plus is the main incentive. Compare options on our battery storage page and Tesla Powerwall page. For prices and payback, see Powerwall cost and payback.
What records do you need to claim it?
- Signed contract and itemized invoice showing the system's actual cost
- Date the system was completed and placed in service
- Building permit and Hawaiian Electric approval
- For a 2026 system finished after May 21: proof you invested in financing, planning, design, permitting or installation before that date (EO 26-02)
- From 2027: your HSEO certification and the certified credit amount
Our guide to what solar costs in Hawaiʻi explains how incentives change your net price.
Hawaii solar tax credit questions
Does Hawaii still have a solar tax credit in 2026?
Yes. Hawaiʻi's Renewable Energy Technologies Income Tax Credit still pays 35% of a solar system's cost, up to $5,000 for a single-family PV system and $2,250 for a solar water heater. Act 24 adds a $40 million yearly cap on credits from 2027, but Executive Order 26-02 exempts many systems placed in service in 2026.
Is the 30% federal solar tax credit gone?
For homeowners, yes. The IRS says the Residential Clean Energy Credit isn't available for property placed in service after December 31, 2025. If you couldn't use your whole 2025 credit, you can carry the unused part to 2026. Businesses and third-party owners of leased systems use the separate Section 48E credit.
What is the Act 24 cap?
Act 24 limits total Hawaiʻi renewable energy tax credits to $40 million in each calendar year from 2027 through 2030. If certified claims exceed the cap, each claimant gets a share in proportion to their costs. The credit doesn't apply to taxable years beginning after December 31, 2029.
Is my 2026 solar system exempt from the cap?
It is if the system was completed before May 21, 2026. A system placed in service later in 2026 can also be exempt if you invested resources in its financing, planning, design, permitting or installation before May 21, 2026, and can show that to the State Energy Office and Department of Taxation.
What changes in 2027?
Starting with taxable years after 2026, you file a certified statement with the Hawaiʻi State Energy Office before March 1 for the system installed the year before. HSEO tells you your certified credit by May 31. Only filers with adjusted gross income of $175,000 or less, or $350,000 jointly, qualify.
Do batteries qualify for the Hawaii solar tax credit?
Only as an accessory to a PV system installed and placed in service on the same property in the same tax year. A battery added in a later year doesn't qualify for the state credit. Hawaiian Electric's BYOD Plus pays a separate upfront incentive of $400 per kW committed for new batteries.
Can I get the Hawaii credit as a refund?
For a PV system, you can elect to take the credit as a refund if you reduce it by 30%, and the election can't be revoked. Filers with Hawaiʻi adjusted gross income of $20,000 or less, or $40,000 jointly, can claim the refund without the reduction. Otherwise unused credit carries forward.
Sources
- Act 24 (SB 3125 CD2)
- Executive Order 26-02
- Department of Taxation TIR 2026-02
- Department of Taxation Tax Facts 2022-2
- Department of Taxation TIR 2022-02 (batteries)
- Hawaiʻi State Energy Office: RETITC
- IRS: Residential Clean Energy Credit
- IRS: Form 5695 instructions (2025)
- SEIA: clean energy provisions of the One Big Beautiful Bill
- Hawaiʻi Energy: 2026–2027 rebates
- Hawaiian Electric: BYOD Plus
- Honolulu ROH § 8-10.12
See which incentives your system qualifies for
Alternate Energy Hawaii has installed solar on Oʻahu since 1993. We'll show the price before incentives and each credit, rebate and program your system is likely to qualify for. Your tax professional confirms the tax side.
