Solar and Wind Energy Credit (Corporate)

August 15, 2024

Summary

Originally enacted in 1976, the Hawaii Energy Tax Credits allow individuals or corporations to claim an income tax credit of 20% of the cost of equipment and installation of a wind system and 35% of the cost of equipment and installation of a solar thermal or photovoltaic (PV) system.* 

For solar thermal water heating systems, the maximum allowable credits are as follows:

  • Single family residential property is eligible for a credit of 35% of the actual cost or $2,250, whichever is less;
  • Multi-family residential property is eligible for a credit of 35% of the actual cost or $350 per unit, whichever is less; and
  • Commercial property is eligible for a credit of 35% of the actual cost or $250,000, whichever is less.

For photovoltaic and solar space heating systems, the maximum allowable credits are as follows:

  • Single family residential property is eligible for a credit of 35% of the actual cost or $5,000, whichever is less; if all or part of the system is used as a substitute renewable energy technology for the solar water heating requirement for new residential construction, the credit shall be reduced by thirty-five per cent of the actual system cost or $2,250, whichever is less;
  • Multi-family residential property is eligible for a credit of 35% of the actual cost or $350 per unit, whichever is less; and
  • Commercial property is eligible for a credit of 35% of the actual cost or $500,000, whichever is less.

For wind powered energy systems the maximum allowable credits are as follows:

  • Single family residential property is eligible for a credit of 20% of the actual cost or $1,500, whichever is less; if all or part of the system is used as a substitute renewable energy technology for the solar water heating requirement for new residential construction, the credit shall be reduced by twenty per cent of the actual system cost or $1,500, whichever is less;
  • Multi-family residential property is eligible for a credit of 20% of the actual cost or $200 per unit, whichever is less; and
  • Commercial property is eligible for a credit of 20% of the actual cost or $500,000, whichever is less.

For a system that is business property, it is important to note that the costs that exceed the amount allowable for the maximum energy tax credit may be used for the Capital Goods Excise tax credit. In addition, for taxable years beginning after December 31, 2005, the dollar amount of any utility rebate must be deducted from the cost of the qualifying system and its installation before applying the state tax credit. 

A new provision was added to the tax credits in June 2009, with the passage of SB 464. This legislation, effective July 1, 2009, allows the tax credit to be refundable under certain conditions. For solar energy systems, a taxpayer can reduce the eligible credit amount by 30%. If this reduced amount exceeds the amount of income taxes to be paid by the taxpayer, the excess credit will be refunded to the taxpayer. If the tax credit exceeds a tax payer’s income liability, the excess credit over liability may be used as a credit against the taxpayer’s income liability until exchausted. Taxpayers whose entire income is exempt or whose adjusted gross income is $20,000 or less (or $40,000 or less if filing jointly) may receive the tax credit as a refund.

Program Overview

Implementing Sector: State
Category: Financial Incentive
State: Hawaii
Incentive Type: Corporate Tax Credit
Web Site: http://tax.hawaii.gov/geninfo/renewable/
Administrator: Hawaii Department of Taxation
Start Date: 7/1/2009
Eligible Renewable/Other Technologies:
  • Solar Water Heat
  • Solar Space Heat
  • Solar Thermal Electric
  • Solar Photovoltaics
  • Wind (All)
  • Wind (Small)
Incentive Amount: Solar Thermal and PV: 35%
Wind: 20%
Maximum Incentive: Varies by technology and property type (see summary for details)
Eligible System Size: PV Systems installed on or after January 1, 2020: 5 MW maximum capacity
Equipment Requirements: System must be new and in compliance with all applicable performance and safety standards.
Carryover Provisions: Credit may be carried forward until exhausted.

Incentives

This program has 6 incentives
Technologies: Solar Water Heat
Sectors: Residential
Parameters: The incentive is 35.00 %, The incentive has a minimum of $2250.00
Technologies: Solar Water Heat
Sectors: Commercial
Parameters: The incentive is 35.00 %, The incentive has a minimum of $250000.00
Technologies: Solar Space Heat, Solar Thermal Electric, Solar Photovoltaics
Sectors: Residential
Parameters: The incentive is 35.00 %, The incentive has a minimum of $5000.00
Technologies: Solar Space Heat, Solar Thermal Electric, Solar Photovoltaics
Sectors: Commercial
Parameters: The incentive is 35.00 %, The incentive has a minimum of $500000.00
Technologies: Wind (All), Wind (Small)
Sectors: Residential
Parameters: The incentive is 25.00 %, The incentive has a minimum of $1500.00
Technologies: Wind (All), Wind (Small)
Sectors: Commercial
Parameters: The incentive is 25.00 %, The incentive has a minimum of $500000.00

Authorities

Name: HRS §235-12.5
Date Enacted: 1976, subsequently amended
Effective Date: 7/1/2003
Expiration Date: None
Name: HAR §18-235-12.5
Date Enacted: 11/09/2012

Contact

Name: Information Specialist
Organization: Hawaii Department of Taxation
Address: P.O. Box 259
Honolulu HI 96809
Phone: (808) 587-4242
Email: Taxpayer.Services@hawaii.gov

This information is sourced from DSIRE; the most comprehensive source of information on incentives and policies that support renewables and energy efficiency in the United States. Established in 1995, DSIRE is operated by the N.C. Clean Energy Technology Center at N.C. State University.