Hawaii Solar Tax Credit

Solar power is a great investment in Hawaii — electricity is expensive and the sun is abundant. The upfront costs may be high but you can bring them down with the help of an Investment Tax Credit. Let's talk about how to claim the Solar Tax Credit in Hawaii.

What is the Solar Tax Credit?

The Solar Investment Tax Credit (ITC) lets businesses and homeowners in Hawaii get a tax credit of 30% of the solar panel system's cost. It's different from a rebate because it directly lowers the income tax you owe.

This Solar Tax Credit is for those installing solar panels before December 31, 2034, with a decrease to 26% in 2033 and a further reduction to 22% at the beginning of 2034.

How does the Solar Tax Credit work?

In simple terms, the Solar Tax Credit in Hawaii works just like in any other state. If you install a $20,000 solar panel system, you can subtract $6,000 from your income taxes. Basically, the net cost of the system drops to $14,000. If the credit is more than the taxes you owe, you can use the leftover credit the next year.

How do I get a solar tax credit in Hawaii?

Claiming the Solar Tax Credit in Hawaii is the same as in any other state in the US. Claim the incentive after your PV system is installed. To qualify for the Solar Tax Credit, you must own the solar system, not rent it. The solar panels must be either brand new or used for the first time. Keep the bills, receipts, and papers related to the installation and purchase of solar panels. While you don't have to send in these records, it's a good idea to keep them in case of an audit.

If you're a homeowner looking to claim the Solar Tax Credit, fill out a form known as IRS Form 5695. If you're installing solar panels on a boat or an RV, write it down as your second home. Attach it to your federal tax return and be sure to include your home energy credit information on Schedule 3 (Form 1040). Send in your tax return before the deadline.

Need help? Follow our guide!

We cover filling out the forms for claiming ITC step by step

Step-by-step guide

Benefits of the Hawaii Solar Tax Credit

The Hawaii Solar Tax Credit doesn't just reduce the cost of solar panels; it also covers all related equipment, shipping, and labor expenses. There's no limit to how much you can claim. In addition to the national solar tax credit, Hawaii might offer its own state-level rewards and discounts for solar installations, making it even more convenient to start using solar energy. Check our guide on Hawaii solar incentives for more details.

Andrey Gorichenski
Senior Editor

Andrey had been a news editor and freelance writer for a number of medias before joining A1SolarStore team. Climate change and its impact on people's lives has always been among his interests and it partially explains his degree in Philosophy and Ethics.

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