How does the federal solar tax credit work in Hawaii? This is one of the key questions most people on the island ask before installing a solar system.
Hawaii is one of the most feasible places in the country to go green with a solar system. Hawaii’s electricity costs are still among the highest in the country. An effective way to help people install their own solar energy systems is through an innovative on-bill repayments programs.
Hawaii is dedicated to using only clean energy by 2045, regardless of net metering programs or any significant subsidies. As such, understanding how the federal solar tax credit work in Hawaii is key.
Depending on the island you live on and how much electricity you consume, solar energy can save you a significant of amount of money. Hawaii residents are all eligible for the federal solar tax credit, which is equal to 30% of the cost of installing solar panels. If you’re thinking about going solar, it’s crucial to know that Hawaii’s state government, which offers its own state solar tax credit, is also on your side.
How does the federal solar tax credit work in Hawaii?
Once you have a good knowledge of how the federal solar tax credit work in Hawaii, it will be easier for you to figure its benefits and how to plan your budget to install a solar system.
The cost of going solar in Hawaii will be most influenced by the federal solar investment tax credit.
The federal tax credit is 30% of the cost of your solar panel system if you build your photovoltaic system before the end of 2032. This is a 30% discount off the system’s total cost, which includes all labor, materials, and permits.
A 26% tax credit is available for solar PV systems installed in 2020 and 2021. The ITC was extended by Congress in August 2022, increasing it to 30% for installations between 2022 and 2032. The federal tax credit will be reduced to 26% starting in 2033. That’s how the federal solar tax credit work in Hawaii.
The best time to have a solar system installed on your rooftop is now and not later. At the state level, Hawaii also offers some tax credits.
Hawaii’s 35% solar tax credit
In addition to the federal tax credit of 30% (without a cap), if you purchase a solar system in the Aloha state you will receive a credit for 35% of the cost (up to $2,250) during tax season! Learn more about Hawaii’s solar tax credit.
Green Energy Money Saver Program (GEMS)
For homeowners and renters, there is a special financing option called the Green Energy Money $aver (GEM$) On-Bill Program. It is exclusively offered by the Hawaii Green Infrastructure Authority and consists of the following:
- Immediate bill savings
- Credit-barrier removal
- A meter-related obligation (not a person)
- You can pay monthly on your electric utility bill
- Long-term financing with a set yearly rate of 5.5 percent for up to 20 years
By including the GEM$ payments on your regular electricity bill, HGIA can relax its credit underwriting requirements. Also, by using the electric utility meter in the house, this enables the obligation to pass from one ratepayer to another. To qualify for GEMS, you must purchase your power from one of Hawaiian Electric (HECO), Maui Electric (MECO), or Hawaiian Electric Light (HELCO).