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Solar Incentives Available for Hawaii Homeowners and Business Owners
“Lucky we live Hawaii,” as we often say here in the Islands. Even more so for homeowners and business owners that install solar panels on their properties. Hawaii is the only state in the union that still has a solar tax credit but that won’t be the case forever. So before they run out, you can take advantage of these solar incentives and tax credits:
Federal Solar Tax Credit
The current 2022 tax credit is 26%, which means that you can deduct 26% of the total cost of the solar system including local taxes. The IRS changed the rules in 2020 with a step-down in the tax credits; for 2023 it is reduced to 22%. The residential tax credit is set to expire altogether in 2024 unless Congress renews or extends it.
For commercial solar customers, the IRS also allows depreciation with what is called MACRS, which allows businesses to deduct the cost over a five year period which will reduce the business’s tax liability and accelerating the return on your solar investment.
Solar Hot Water owners can claim 26%.
Hawaii State Tax Credit
Homeowners that are residents, as well as businesses, can claim a $5,000 tax credit, or 35% of the system cost whichever is less. The State of Hawaii considers a solar energy system to be 5 kilowatts; so, if you have a 10 kilowatt solar energy system then you can deduct $10,000 from your income taxes. There is no special tax credit for solar home batteries, but they are included in the overall cost.
For non-Hawaii residents, the State of Hawaii offers a lower tax credit. Solar Hot Water owners can claim $2,250.
Green Energy Money Saver Program (GEMS)
A program in the HECO territories (Oahu, Maui and Hawaii Island) called GEMs allows homeowners to buy solar energy systems through what’s called “on-bill financing.” The total cost of the system is paid for monthly as a line item on the rate payer’s electric bill. Unfortunately, it does not include solar home batteries at this time, but it may be considered in the near future.
As we are not tax consultants, we recommend consulting with a CPA or professional tax preparer for details.