2026 Hawaii solar incentive guide
Yes, Hawaii still has a solar tax credit in 2026. 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 and income limits from 2027, and the credit ends after the 2029 tax year. The 30% federal homeowner credit ended in 2025.
Last reviewed October 13, 2026 by the Alternate Energy Hawaii team. This guide is general information, not tax advice. Ask a tax professional how these credits apply to you.
What is Hawaii's solar tax credit?
Hawaii'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, Department of Taxation).
| 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 |
Any credit larger than your tax bill carries forward to later years. For a PV system, you can instead take it as a refund if you reduce the credit by 30%, and that choice can't be changed later (Tax Facts 2022-2).
What did Act 24 change?
Governor Green signed Act 24 (SB 3125) on May 21, 2026. It keeps the 35% rate and the per-system caps, and adds four changes (Act 24):
$40 million yearly cap
Covers all RETITC credits, retroactive to the start of 2026. If certified claims go over the cap, each claimant gets a share in proportion to their costs.
Income limit from 2027
Adjusted gross income of $175,000 or less for individuals, or $350,000 for joint filers.
State certification
The Hawaiʻi State Energy Office certifies each claim before you file. The credit doesn't apply to tax years beginning after December 31, 2029.
Is a 2026 solar system exempt from the cap?
Often, yes. Executive Order 26-02, signed June 8, 2026, and the Department of Taxation's TIR 2026-02 (July 31, 2026) set two ways a system placed in service in 2026 avoids the $40 million cap (EO 26-02, TIR 2026-02):
- It was placed in service before May 21, 2026. These systems are exempt.
- It's placed in service by the end of 2026, and you relied on the credit before May 21, 2026. You qualify if you paid for or incurred costs for the system's financing, planning, design, permitting or installation before that date, and can show it to the State Energy Office and the Department of Taxation.
The state says it will run a certification process for these exemptions and publish the details later. Keep your contract, deposit receipts and permit records together.
How does the HSEO certification step work from 2027?
From the 2027 tax year, you file a certified statement with the Hawaiʻi State Energy Office (HSEO) by 5:00 p.m. on March 1 for the system you installed the year before. It lists your adjusted gross income, the system's actual cost and the credit you're claiming. HSEO tells you your certified credit by May 31, and you attach the certificate to your tax return (Act 24).
What happened to the 30% federal solar tax credit?
The federal residential clean energy credit (Section 25D) isn't allowed for expenditures made after December 31, 2025. The IRS treats an expenditure as made when installation is complete, so a system finished in 2026 doesn't qualify even if you paid in 2025 (IRS).
- Unused 2025 credit: if your 2025 tax bill was too small to use the whole credit, you can carry the unused part to 2026 (IRS Form 5695 instructions).
- Businesses, leases and PPAs: commercial systems and third-party-owned systems (leases and power purchase agreements) use the commercial clean electricity credit (Section 48E) instead. Solar projects need to begin construction by July 4, 2026 or be placed in service by December 31, 2027; the placed-in-service deadline doesn't apply to energy storage (SEIA).
What other solar incentives can Hawaii homeowners get?
Hawaiian Electric BYOD Plus
$400 per kW of committed battery capacity upfront, plus $400 per kW more for qualifying low- to moderate-income customers. New batteries paired with solar only (Hawaiian Electric). See our BYOD Plus guide.
Hawaiʻi Energy rebates
Up to $2,750 off a solar water heater and up to $325 off a tune-up, through June 30, 2027, through a participating contractor (Hawaiʻi Energy).
Honolulu property tax
Devices that turn sunlight into electricity or heat aren't treated as assessable property, so rooftop solar doesn't raise your assessed value (ROH § 8-10.12).
Do batteries qualify for the state credit?
A battery can count toward the RETITC as an accessory to a PV system, but 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 batteries added to existing solar, BYOD Plus is the main incentive. See our battery storage page for options.
How do these incentives affect what solar costs?
The state credit, a BYOD Plus payment and any Hawaiʻi Energy rebate each reduce your net cost in different ways and at different times. Your estimate should show the system price before incentives and each incentive separately. Our guide to what solar costs in Hawaii explains the other cost factors.
Plan your system with the incentives in mind
Alternate Energy Hawaii has installed solar on Oʻahu since 1993. We'll show you which incentives your system is likely to qualify for and how they affect the price. Your tax professional confirms the tax side.
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Hawaii solar tax credit FAQs
Does Hawaii still have a solar tax credit in 2026?
Yes. The state 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 caps total credits at $40 million a year, but Executive Order 26-02 exempts many 2026 systems from that cap.
Is the 30% federal solar tax credit gone?
For homeowners, yes. The federal residential clean energy credit (Section 25D) isn't allowed for expenditures made after December 31, 2025, and the IRS counts an expenditure as made when installation is complete. If you couldn't use your whole 2025 credit, you can carry the unused part to 2026. Commercial and third-party-owned systems use a separate credit.
What is the Act 24 cap?
Act 24 limits total Hawaii renewable energy tax credits to $40 million a year, retroactive to 2026, for credits claimed in 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 tax years beginning after December 31, 2029.
Is my 2026 solar system exempt from the cap?
It is if the system was placed in service before May 21, 2026. A system placed in service later in 2026 can also be exempt if you paid for or incurred costs for its financing, planning, design, permitting or installation before May 21, 2026, and can show that to the State Energy Office and Department of Taxation.
Do batteries qualify for the Hawaii solar tax credit?
A battery can count as an accessory to a PV system if it's installed and placed in service on the same property in the same tax year as the PV system. A battery added in a later year doesn't qualify for the state credit. Hawaiian Electric's BYOD Plus program pays a separate upfront incentive for new batteries.
What changes in 2027?
Starting with the 2027 tax year, you must apply to the Hawaiʻi State Energy Office by March 1 for certification, and the office notifies you of your certified credit by May 31. The credit is limited to filers with adjusted gross income of $175,000 or less, or $350,000 for joint filers.
Can I get the credit as a refund?
For a PV system, you can choose to take the credit as refundable if you reduce it by 30%. Otherwise, any credit you can't use carries forward to later years. Lower-income filers may qualify for a full refund. Talk to a tax professional before you choose, because the election can't be undone.
Do solar panels raise my property tax in Honolulu?
No. Under Honolulu's real property tax code, devices that convert sunlight into electricity or heat aren't treated as assessable property, so rooftop solar doesn't add to your assessed value.
Sources
- Act 24 (SB 3125 CD2)
- Executive Order 26-02
- Department of Taxation TIR 2026-02
- Department of Taxation Tax Facts 2022-2 (RETITC)
- Department of Taxation TIR 2022-02 (batteries)
- Hawaiʻi State Energy Office: RETITC
- IRS: 25D changes under the One Big Beautiful Bill Act
- IRS: Form 5695 instructions (2025)
- Hawaiian Electric: BYOD Plus
- Hawaiʻi Energy: 2026–2027 rebates
- SEIA: Clean energy provisions in the One Big Beautiful Bill
- Honolulu ROH § 8-10.12
