35% State Income Tax Credit (HRS 235-12.5)
Active, Sunsets After Tax Year 2029
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Hawaii's Renewable Energy Technologies Income Tax Credit (RETITC) is the state's flagship solar incentive and among the most generous in the country. It allows homeowners to claim 35% of solar system cost as a direct credit against Hawaii state income tax, up to per-system caps. SB 3125 (Act 24, 2026) added income limits, an annual cap, and a sunset after tax year 2029.
State Income Tax Credit Rate
35%
of actual system cost, capped at $5,000 per residential system (single-family, non-water heating)
| Detail | Value |
|---|---|
| Governing statute | HRS 235-12.5 |
| Credit rate | 35% of actual cost |
| Cap, single-family solar (non-water heating) | $5,000 per system |
| Cap, single-family solar water heating | $2,250 per system |
| Cap, multi-family | $350 per unit per system |
| Credit type | Non-refundable; unused amount carries forward to future tax years |
| Income limit (new per SB 3125) | ≤$175,000 AGI (individual); ≤$350,000 (joint) |
| Annual state cap (2027 to 2030) | $40,000,000 total statewide, pro-rata if exceeded |
| Credit available through | Tax year 2029 (statute sunsets the credit for taxable years beginning after December 31, 2029) |
SB 3125 (2026), Major Changes to the Solar Tax Credit:
- Income limits added: AGI must not exceed $175,000 (individual) or $350,000 (joint) to claim the credit
- Annual statewide cap: Starting 2027, total credit claims are capped at $40M per year. If applications exceed the cap, each claimant receives a pro-rated share
- Phase-out: The credit does not apply to taxable years beginning after December 31, 2029
- Application window: Annual application required; deadline is March 1 of each year at 5:00 PM HST
Governor Green issued Executive Order 26-02 on June 12, 2026, preserving the credit for systems placed in service in 2026 where the taxpayer reasonably relied on the credit before Act 24 was signed on May 21, 2026. Verify current rules and eligibility at tax.hawaii.gov before contracting.
How It Works: If your system costs $25,000, your credit is $25,000 × 35% = $8,750, but the cap limits you to $5,000. That $5,000 reduces your Hawaii income tax bill dollar-for-dollar. If your tax liability is less than $5,000, the unused portion carries forward to future years. Verify with a Hawaii tax professional for your specific situation.
System Cost vs. Credit Comparison
| System Cost | 35% Calc | Actual Credit (Capped at $5,000) |
|---|---|---|
| $10,000 | $3,500 | $3,500 |
| $15,000 | $5,250 | $5,000 (cap applies) |
| $20,000 | $7,000 | $5,000 (cap applies) |
| $30,000 | $10,500 | $5,000 (cap applies) |
Solar Export Programs (Hawaiian Electric)
SRE Export: Open
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Hawaiian Electric (HECO) serves most of Hawaii. Unlike traditional net metering, HECO's programs use time-of-use export rates that vary by island and time of day. The older programs (Customer Grid Supply Plus, Smart Export, Customer Self-Supply) closed to new customers on March 29, 2024. New customers should apply through the Smart Renewable Energy Export program.
Hawaii is not a traditional net metering state. Exports are compensated at time-varying rates, not a flat retail rate. Pairing solar with battery storage allows you to shift export to higher-value evening peak hours, significantly increasing the value of your system.
Current Program Status
| Program | Status | Export Credits |
|---|---|---|
| Smart Renewable Energy Export | OPEN | Yes, time-of-use rates (see below) |
| Smart Renewable Energy Non-Export | OPEN | No exports; self-consumption only |
| BYOD Plus (battery incentive) | OPEN | Battery incentive program |
| Customer Grid Supply Plus | CLOSED 3/29/2024 | Legacy program; grandfathered customers only |
| Smart Export | CLOSED 3/29/2024 | Legacy program; grandfathered customers only |
| Customer Self-Supply | CLOSED 3/29/2024 | Legacy program; no exports |
Smart Renewable Energy Export, Time-of-Use Rates by Island
Oahu
9am to 5pm (Daytime)13.5¢/kWh
9pm to 9am (Overnight)18.9¢/kWh
5pm to 9pm (Evening Peak)32.9¢/kWh
Per Hawaiian Electric; rates are set in 3-year periods and new customers may lock in for 7 years. Verify at hawaiianelectric.com
Maui
9am to 5pm (Daytime)6.6¢/kWh
9pm to 9am (Overnight)13.1¢/kWh
5pm to 9pm (Evening Peak)18.2¢/kWh
Tier 2 estimate; verify at hawaiianelectric.com
Hawaii Island (Big Island)
9am to 5pm (Daytime)10.6¢/kWh
9pm to 9am (Overnight)14.8¢/kWh
5pm to 9pm (Evening Peak)23.1¢/kWh
Tier 2 estimate; verify at hawaiianelectric.com
Lanai & Molokai
Export creditsApplicable; rates higher than Maui
Verify island-specific rates at hawaiianelectric.com
Battery Storage Maximizes Value: Solar panels generate most power during daytime (9am to 5pm) when export rates are lowest. A battery storage system lets you store that energy and export it during the evening peak (5pm to 9pm) when rates are highest (up to 32.9¢/kWh on Oahu). The BYOD Plus program also offers battery incentives to HECO customers.
- Advanced meter required for Smart Renewable Energy Export
- Participants billed on time-of-use (Shift and Save) rates
- No program-wide size cap, individual sizing governed by Rule 14H
- Unused annual export credits expire (except BYOD Plus credits)
- Apply through HECO's Customer Interconnection Tool at hawaiianelectric.com
Property Tax Exemption
Honolulu Only (County Ordinance)
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County-Level Program, Not Statewide: Property tax in Hawaii is administered by each county independently. Only the City and County of Honolulu has a confirmed solar property tax exemption. Maui, Hawaii County, and Kauai County homeowners should verify directly with their county assessor.
| County | Exemption | Details |
|---|---|---|
| Honolulu (Oahu) | Not confirmed for residential rooftop solar | ROH 8-10.12 applies to utility-scale renewable facilities under a power-purchase agreement, not rooftop systems for home use. Confirm residential solar treatment with the Real Property Assessment Division. |
| Maui County | Unconfirmed, verify with county | Contact Maui Real Property Assessment Division |
| Hawaii County (Big Island) | Unconfirmed, verify with county | Contact Hawaii County Real Property Tax Division |
| Kauai County | Unconfirmed, verify with county | Contact Kauai Real Property Assessment Division |
Honolulu Application: File City of Honolulu Form E-8-10.12 with the Real Property Assessment Division on or before September 30 of the year preceding the tax year for which you claim the exemption. The exemption applies to the added value your solar system contributes to your home's assessed value.
General Excise Tax (GET) on Solar
GET Applies (No Exemption Confirmed)
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Hawaii does not have a traditional sales tax, but the General Excise Tax (GET) applies to most business transactions including construction. Solar installation is a construction contracting service and is generally subject to GET. Unlike most other states, there is no confirmed statewide solar GET exemption in Hawaii.
| GET Detail | Status |
|---|---|
| Hawaii state GET rate (base) | 4.0% |
| Honolulu county surcharge | +0.5% = 4.5% total in Honolulu |
| Other counties (Maui, Hawaii, Kauai) | 4.5% (all counties levy a 0.5% surcharge) |
| Does GET apply to solar installation? | Yes, construction contracting is taxable under GET |
| Solar-specific GET exemption | None confirmed statewide |
| Who pays GET | Contractors pass GET cost to customers, typically shown in contract price |
Unlike Oregon (no sales tax) or Washington (100% sales tax exemption for solar), Hawaii homeowners will pay GET on their solar installation. The 35% state income tax credit partially offsets this cost. Confirm GET treatment with your installer and a Hawaii tax professional.
Federal Solar Tax Credit (§25D)
Eliminated After 12/31/2025
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Federal 30% Solar ITC Eliminated by P.L. 119-21: The One Big Beautiful Bill Act (P.L. 119-21, signed July 4, 2025) ended the §25D residential solar investment tax credit for systems whose installation was completed after December 31, 2025. Hawaii's 35% state credit remains and partially fills this gap for eligible homeowners.
| Detail | Status |
|---|---|
| Credit for installations completed through Dec 31, 2025 | 30% of eligible system cost |
| Credit for systems whose installation was completed after Dec 31, 2025 | 0%, Eliminated by P.L. 119-21 |
Source: IRS.gov (T1). Consult a tax professional for your specific situation.
Hawaii Solar Savings Estimator
Annual Production
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State Tax Credit (35%)
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25-Year Est. Value
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Estimates only. Hawaii avg: 5.5 peak sun hours/day (Oahu). Battery scenario assumes 80% of exports shifted to evening peak. Rates are Tier 2 estimates per hawaiianelectric.com, verify before contracting. State tax credit capped at $5,000; income eligibility may apply. No federal ITC applied (eliminated after 12/31/2025). GET not included in savings calculation.
Sources & Verification
- T1HRS 235-12.5, Hawaii Renewable Energy Technologies Income Tax Credit. Justia (Hawaii Revised Statutes) ↗
- T1Hawaii SB 3125 (Act 24, 2026), Amendment to HRS 235-12.5; income limits, $40M annual cap, sunset after tax year 2029. data.capitol.hawaii.gov ↗
- T1Hawaiian Electric, Smart Renewable Energy Export program: TOU rates by island, program status. hawaiianelectric.com ↗
- T1Hawaiian Electric, Customer Grid Supply Plus and Smart Export: program closure (March 29, 2024). hawaiianelectric.com ↗
- T1IRS.gov, §25D residential energy credit; P.L. 119-21 repeal effective 12/31/2025. irs.gov ↗
- T1Hawaii Department of Taxation, General Excise Tax (GET): base rate 4.0%; construction contracting taxable under HRS Chapter 237; Honolulu county surcharge 0.5%. hitax.hawaii.gov ↗
- T2SolarReviews, City of Honolulu property tax exemption (§8-10.12), 100% for PV, 25-year duration, Form E-8-10.12. Verify directly with Honolulu Real Property Assessment Division.
- T2Hawaii Public Radio (May 2026), SB 3125 solar credit changes, industry impact, Governor Green's executive order. hawaiipublicradio.org ↗
- T2E&E News (June 2026), Governor Green executive order on in-progress solar projects. eenews.net ↗
T1 = Primary source (state statute, program administrator, IRS.gov). T2 = Secondary source (industry publications, news, aggregators). All information subject to change. Verify with program administrators and your tax professional before making decisions. Last reviewed: October 2026.