Hawaii has some of the highest electric rates in the United States, so going solar has always been tempting for homeowners. For years, the federal 30% solar tax credit made these systems even more affordable, often cutting costs by $15,000 or more.
Unfortunately, the Federal ITC ended on December 31, 2025, leaving Hawaii homeowners with mainly smaller state-level incentives, like the 35% Renewable Energy Technologies Income Tax Credit, capped at $5,000. While solar panels are still a smart long-term investment, the overall bill picture has changed.
This post breaks down the current 2026 solar incentives for Hawaii homeowners, shows how much you can expect to save, and explains who benefits most from installing a system under the new rules.
Why Solar Still Makes Sense in Hawaii
Even without the federal tax credit, installing solar can still be a smart choice for your home. Hawaii gets plenty of sun, which means your panels can produce a lot of electricity year-round. Combine that with average electric rates around 40 cents per kilowatt-hour, and your system can pay for itself in about six to ten years.
A typical 5–6 kilowatt system costs roughly $15,000 to $18,000 to install. With the state incentives, plus the electricity you generate, you can cut your monthly bills by 50 to 100%, depending on your usage. Over time, those bill cuts add up and help protect you from rising utility rates.
It’s also important to know that rules vary by island. HECO, MECO, and KIUC each have different grid and net metering policies, which can affect how much you save if your panels produce extra power. Knowing how your local utility handles excess electricity will help you estimate your savings more accurately and help you make the right decision for your home.
Federal ITC: Gone After 2025
The federal 30% solar tax credit, which has helped homeowners save thousands for years, officially ended on December 31, 2025. This credit used to cover about $4,500 to $5,500 on a typical 5–6 kilowatt system, making it much more affordable and shortening payoff times.
For anyone who started their installation before 2026, you could still claim this credit. That means your system would have cost thousands less, and your return would have come quicker.
Now, new installations in 2026 no longer qualify for the federal credit. That changes the math significantly. Without the 30% discount, your system’s cost is higher, and the earning period is a few years longer.
Even so, it is still worth considering because Hawaii’s high electricity rates and generous state incentives can still deliver strong long-term savings—but the biggest discounts are behind us.
Top Remaining State Incentives
Even without the federal tax credit, there are still some state and local incentives that can help lower your costs in 2026.
- Renewable Energy Technologies Income Tax Credit (RETITC): This state credit covers 35% of your system cost, up to a $5,000 maximum. It’s available to Hawaii taxpayers who own their systems. You claim it when filing your state taxes, and unused portions can roll over up to five years.
- Honolulu Property Tax Exemption (PTE): If you live in Honolulu, you may qualify for a 25-year exemption on the added property value from your panels. This exemption is specific to city residents and requires filing the appropriate city form.
- GEMS On-Bill Financing: Low- to middle-income homeowners across the state can get financing at 5.5% interest for up to 20 years, often with no credit check. Applications go through the utility.
These incentives can reduce your upfront costs or make payments more manageable, but each has limits and requirements, so it’s important to review eligibility carefully.
Utility & Local Programs
Some utility programs have closed, like HECO’s Battery Bonus, which offered $850 per kilowatt-hour.
Other options remain in limited areas: Kauai offers solar water heater rebates or loans, and some islands have community solar subscriptions you can join.
Net metering is now standard under Smart Export programs, which lets you earn credit for excess electricity your system sends back to the grid. Rules vary by utility, so check with HECO, MECO, or KIUC before installing to understand how much you can save.
Total Savings Example
Let’s look at a typical 5.5-kilowatt installation in Hawaii to see how much you could save. A system costing $16,500 would be reduced to about $11,500 after applying the state RETITC, which covers 35% of the cost up to $5,000.
Assuming your home uses enough electricity to generate roughly $2,100 in financial returns per year at Hawaii’s average rate of 40 cents per kilowatt-hour, your system would pay for itself in about eight years. After that, most of the electricity your panels produce is essentially free, which can cut your bills by 50 to 100%, depending on your usage.
Here’s a quick comparison:
| System Type | Upfront Cost | Annual Savings | Payback Period | Ownership Benefits |
| Owned System | $11,500 | $2,100 | 8 years | Full incentives, long-term return on investment |
| Solar PPA/Lease | $0 | $1,500–$2,000 | N/A | No upfront cost, maintenance handled |
This shows that even after the post-federal tax credit, you can still save significant money over time.
Who Should Install Panels in 2026
If you plan to stay in your home for 10 years or more, installing panels can be a smart long-term investment. Homes with high electricity usage will benefit the most, as the monthly reductions add up faster. You’ll also get the most value if you can take advantage of state tax incentives like the RETITC when filing your taxes.
If you’re considering adding a battery or joining a community program, it could still make sense, but you’ll want to weigh the additional costs and benefits carefully.
On the other hand, it may not be the best choice if you plan to move soon, have low tax liability, or rent your home. In those cases, the upfront costs or limited incentives might make other energy-saving options more practical.
FAQ: Hawaii Homeowners Ask
Is the federal credit really gone?
Yes. If your installation started after December 31, 2025, it is no longer eligible for the 30% federal ITC.
Is the RETITC enough on its own?
The RETITC covers about 35% of your system cost, which is less than the 60%+ benefit with the federal credit. It still helps shorten your payback period by roughly two years.
Are leases or PPAs better now?
Often, yes. These options let you install a system with little or no upfront cost. Providers may pass along some savings from state incentives, though long-term benefits are smaller than ownership.
Do incentives vary by island?
Yes. Honolulu homeowners benefit from the 25-year property tax exemption, while the Big Island and Kauai have their own utility-specific programs and rebates.
Before You Sign
Get at least three quotes via EnergySage. Confirm your eligibility for the RETITC. Check your roof’s age and local utility rules. Model a 25-year cash flow to see how much you can realistically save. When you’re ready, contact Independent Energy Hawaii to discuss your options and find the solution that works best for your home. Contact us today to get started and see how much you can save.
Fact Checked by Lisa Musser on 01/28/26