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How to Get Your Solar Tax Credit or Rebate from the State of Hawaii

Thursday, August 12, 2010

This tax-related post is out of date. Please refer to the latest post instead.

You made the wise decision and invested in solar. Now, what?

If you reside in the State of Hawaii you are in luck. Currently, you have the chance to take advantage of significant renewable energy tax incentives, either in the form of a 35% state tax credit or a 24.5% state tax refund/rebate – you pick your own path. Here is some helpful information from the State of Hawaii Department of Taxation to help get you started on the path to reaping the financial benefits of going solar.

Pick Your Path:

35% Hawaii State Tax Credit

The Hawaii Energy Tax Credit allows solar customers to claim an income tax credit of 35% of the cost of equipment and installation of a solar photovoltaic system. A credit that exceeds the taxpayer’s income tax liability may be carried forward to subsequent years until exhausted. Credits are capped based on property and system type as follows:

  • Single-family PV installations: The credit is capped at $5,000 per system
  • Multifamily PV installations: The credits for multi-family PV systems are capped at $350 per system.

If you meet the requirements listed above and you installed your system and placed it in service before July 1, 2009, read instruction Form N–334.

Fill out these forms:

  • Form N–334
  • Form N–334A

If you meet the requirements listed above and you installed your system and placed it in service on or after July 1, 2009, read instruction Form N–342.

Among the changes for customers falling under this category, include:

  • Removes the solar thermal and photovoltaic classifications, and provides a single solar classification.
  • Applies a lower solar system cap to a system if the primary purpose of that system is to use energy from the sun to heat water for household use.
  • Provides the taxpayer with an election to treat the tax credit as refundable.
  • Allows residential home developers to claim the tax credit.
  • Clarifies that the tax credit cannot be claimed for a solar water heating system that is required for new single-family residential property constructed on or after January 1, 2010. The tax credit also cannot be claimed for a wind-powered energy system that is used as a substitute for the required solar water heating system. The tax credit is reduced for a solar energy system that is used as a substitute for the required solar water heating system.

Fill out these forms:

  • Form N–342
  • Form N–342A

24.5% Hawaii State Tax Rebate

Senate Bill 464 offers incentives for renewable energy, in the form of income tax credits, for private entities. The bill makes the state renewable energy credit refundable for taxpayers who agree to accept a lower credit of 24.5%. Read the full bill here.

If you are electing to receive your incentive in the form of a tax rebate and you installed your system and placed it in service on or after July 1, 2009, please see Form N–342 line 42.


Please note: Sunetric does not provide tax advice. We can only describe to you the process and procedures that are in place at the time of this writing which may change without notice. Please consult professional tax counsel for your specific circumstance.

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