Maximizing Savings with Hawaii’s Solar Panel Tax Credits: A Guide for Homeowners

RemoteMediaFile 7602421 0 2022 04 28 10 01 54

Are you considering installing solar panels on your home in Hawaii? One of the biggest incentives for making the switch to solar power is the availability of tax credits. These credits can significantly lower the cost of installing solar panels, making it a more financially viable option for many homeowners. In this blog post, we’ll explain how these credits work and how you can maximize your savings by taking advantage of them.

What are solar panel tax credits?

First, it’s important to understand what a tax credit is. Unlike a tax deduction, which reduces the amount of income on which you are taxed, a tax credit directly reduces the amount of taxes you owe. In the case of solar energy, the state of Hawaii offers a 35% state tax credit for the cost of installing solar panels on your home. This means that if you spend $10,000 on solar panels, you can claim a $3,500 credit on your state taxes, effectively reducing the cost of your solar installation by 35%.

In addition to the state tax credit, there is also a federal tax credit available. The federal tax credit is 26% for solar panel systems placed in service by December 31, 2022, it will decrease to 22% for systems placed in service after December 31, 2022 and before January 1, 2024, and it will expire after December 31, 2023. This credit can be claimed on your federal taxes and works in the same way as the state credit, reducing the cost of your solar installation by 26%.

How to claim the credits

To claim these credits, you will need to file the appropriate forms with your state and federal taxes. It’s important to consult with a tax professional to ensure that you are claiming the credits correctly and maximizing your savings.

Here are some general steps you should follow to claim the solar panel tax credits in Hawaii:

1.   Gather all the necessary documents, including proof of purchase and installation of your solar panel system, such as invoices and receipts.

2.   Consult with a tax professional or accountant to ensure that you are eligible for the solar panel tax credits and to understand the specific forms you need to file.

3.   File Form N-342, the Hawaii Solar Energy Systems Credit, with your state taxes to claim the 35% state tax credit.

4.   File Form 5695, Residential Energy Credit, with your federal taxes to claim the 26% federal tax credit for systems placed in service by December 31, 2022 and decrease to 22% for systems placed in service after December 31, 2022 and before January 1, 2024.

5.   Keep all your documents and records in case of an audit by the IRS.

It is important to note that the availability of tax credits may change over time and it is always best to consult with a tax professional to ensure that you are getting the most up-to-date information and maximizing your savings.


In summary, Hawaii’s solar panel tax credits can significantly reduce the cost of installing solar panels on your home. By taking advantage of both the state and federal credits, you can save thousands of dollars on your solar installation. Be sure to consult with a tax professional to ensure you are claiming the credits correctly and maximizing your savings.

Overall, investing in solar energy is a smart financial decision for Hawaii homeowners. Not only will it lower your energy bills, but it also helps to reduce your environmental footprint, and with the help of these tax credits, the investment will pay off much faster. Don’t miss out on the opportunity to save money and do your part in promoting sustainable energy, consult with a tax professional today and start reaping the benefits of solar energy.




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Status: The program is capped at 50 megawatts (MW), as of right now we are at 6.2 MW.

  • Currently customers who are accepted into the program will receive $850 per kilowatt (kW).
  • After the first 15 MW is filled, the next 15 MW of committed capacity will receive $750 per kW.
  • After the next 15 MW is used the last 20 MW of committed capacity will receive $500 per kW.

Customers that are not currently enrolled in the company’s Net Energy Metering (NEM) Program will receive a fixed monthly bill credit for energy exported to the grid for three years. The credit is an amount equivalent to the respective retail rate for electricity exported during the two-hour period. After these three years are completed any underlying interconnection tariff export rates, if any, will apply.

Customers who wish to participate with an existing solar system and are presently enrolled in a customer energy program (such as Net Energy Metering, and Grid Supply or others) will continue to receive full benefits from these programs. Up to 5 kW of new panels may be added under existing programs. There is no limit on the size of an individual customer’s battery.

If you would like to add more than 5 kW of additional capacity of PV, it is possible as long as you still adhere to a 2:1 PV to battery output ratio. These apply to any interconnection tariff customers!


“We wholeheartedly recommend Independent Energy Hawaii for all your solar photovoltaic system needs. From our initial conversations with Desta to the final inspection with James, every interaction was extraordinarily positive. The team’s knowledge, honesty, and professionalism was exceptional. The whole process was done efficiently and reliably and we couldn’t be more appreciative. Every member of the team was professional, competent, and respectful in their dealings with us.”

– Sandy L


“Easily the most professional crew I ever had the pleasure of doing business with, and I never felt alone or in the dark thanks to Desta. He helped me with all my questions and I loved the fact that he was just a phone call away. Dedication to something like that is just hard to find nowadays. This company was a breath of fresh air for me and I wish I could do such an awesome crew justice with such a simple review. 10/10″

– Hank W


“Desta, Adam, Mike, Garrison and the rest of the Independent Energy Team are amazing. They were knowledgeable, responsive and helpful throughout our whole solar process. When issues came up (as they always do with projects), they went the extra mile to make sure everything worked properly.
Our panels and battery were installed on time as promised and are working great – just got our first ever $26 HECO bill!
This company cares about helping people and doing quality work, which is very rare these days. Hands down the best experience I’ve had with a company for home improvement/renovations. Highly recommend!”

– Matcha S.