Going solar in Hawai‘i isn’t just about reducing your electricity bill — it’s also about taking advantage of some of the most generous residential solar tax credits and incentives available in the U.S. With sky-high energy rates and abundant sunshine, solar already makes financial sense for Big Island homeowners. But when you factor in federal and state incentives, the payback period gets even shorter, making solar one of the smartest investments you can make in 2025.
In this guide, we’ll break down the federal solar tax credit, Hawai‘i’s unique state incentives, and other programs that help you save money while making the switch to clean energy.
The Federal Solar Investment Tax Credit (ITC)
The federal solar tax credit (ITC) is the single biggest financial benefit available to homeowners who install solar. It lets you claim 30% of the total cost of your solar system as a credit against your federal income taxes — a savings that can dramatically reduce the upfront expense of going solar.
What it covers: This credit isn’t limited to panels alone. It applies to solar panels, inverters, racking systems, batteries, wiring, labour, and even permitting fees. Essentially, most costs directly tied to your solar installation are included.
Eligibility: To qualify, you must own your system — either by purchasing it outright with cash or financing it with a solar loan. Customers who go with a lease or PPA, unfortunately, cannot claim this credit since they don’t legally own the system.
How it works: Imagine your system costs $20,000. With the ITC, you can claim 30% — that’s $6,000 — directly off your federal tax bill. Unlike a deduction, which reduces taxable income, a tax credit lowers the amount you owe dollar-for-dollar, making it far more valuable.
Why it matters: The ITC is guaranteed at 30% through 2032, giving Big Island homeowners the confidence to plan. This stability means you don’t need to rush into a decision but can invest strategically, knowing that this benefit will still be available for years to come.
Hawai‘i State Solar Tax Credit (RETITC)
Alongside the federal incentive, Hawai‘i residents benefit from the Renewable Energy Technologies Income Tax Credit (RETITC) — one of the most generous state-level solar programs in the nation. This credit makes solar even more affordable for Big Island families by reducing state income tax liability.
Credit amount: Homeowners can claim 35% of the total system cost as a state tax credit.
Cap limits: For residential properties, the maximum credit is $5,000 per system. If you install multiple systems (such as rooftop plus ground-mount), each may qualify separately, up to the cap.
Stackable benefit: The RETITC works in addition to the federal ITC, meaning homeowners can take advantage of both credits together. This double layer of savings can dramatically reduce the out-of-pocket expense.
How it works: For a $20,000 solar system, you’d qualify for a $6,000 federal tax credit plus up to $5,000 from the state program. Combined, that’s $11,000 in incentives, cutting your net cost nearly in half.
Why it matters: With Hawai‘i’s high electricity rates, these credits help homeowners achieve payback faster, often in 5–7 years instead of a decade. That means your investment starts generating true long-term solar savings much sooner.
Utility Programs That Add Even More Value
Beyond tax credits, Hawai‘i’s utility companies provide additional programs that help maximise your solar investment and give homeowners more control over their energy use. These programs reward you for storing, sharing, or managing your solar power in ways that benefit both you and the grid.
Battery Bonus Program
HELCO and other Hawaiian utilities offer cash incentives when you install a solar battery and agree to send stored power back to the grid during high-demand evening hours. This not only helps stabilise the island’s grid but also reduces your battery’s upfront cost, making energy storage more affordable for homeowners.
Smart Export Program
While traditional net metering has ended in Hawai‘i, Smart Export gives you a new way to save. It allows homeowners to export surplus solar energy back to the grid during designated hours — typically in the evening when demand is higher. In return, you receive bill credits that reduce your overall monthly costs.
Self-Supply Option
For those who value energy independence, the Self-Supply option is ideal. Instead of exporting excess power, you generate and store it on-site with a solar + battery system. This setup keeps your home running on solar around the clock and protects you from outages, giving you greater reliability and peace of mind.
Read More: Protect Your Power: Why Solar + Battery is Essential for Big Island Hurricanes
Navigating the Path to a Greener Future
Making the switch to solar in Hawai‘i isn’t just about lowering your electric bill — it’s about shaping a more sustainable future for your family and community. With multiple tax credits, rebates, and utility programs available, knowing how to take full advantage of them can feel overwhelming. That’s where BlueSky Energy Hawaii steps in.
Since 2014, we’ve guided Big Island homeowners through every step of the solar journey — from understanding incentives and financing options to designing systems built for Hawai‘i’s climate. Our support continues well beyond installation with monitoring and maintenance, ensuring your system delivers savings and reliability for years to come.
Closing Thoughts
Hawai‘i’s residential solar tax credits and incentives don’t just make solar affordable — they make it one of the smartest investments a homeowner can make. From cutting upfront costs to locking in long-term savings, these programs put clean energy within reach while moving our islands closer to a sustainable future.
At BlueSky Energy Hawaii, we’re here to simplify the process, explain your options clearly, and design a system that maximises every benefit available. With our local expertise and ongoing support, you can feel confident knowing your solar investment will pay off for years to come — for both your wallet and the planet. Contact us today to turn sunshine into savings!
FAQs
How much can I save with Hawai‘i’s solar tax credits?
With both the federal ITC (30%) and the Hawai‘i RETITC (35%, up to $5,000 per system), homeowners can often cut their solar installation costs nearly in half. For example, a $20,000 system could qualify for around $11,000 in combined credits.
Can I claim both the federal and state tax credits together?
Yes. The federal and Hawai‘i state solar tax credits can be stacked, meaning you can apply both to the same system for maximum savings.
Who qualifies for these solar tax credits?
To qualify, you must own your system outright (through cash purchase or loan). Leases and PPAs don’t make you eligible for federal or state tax credits since you don’t own the panels.
What costs are covered by the tax credits?
Both credits apply to more than just the panels — they cover inverters, racking, batteries, wiring, permitting, and labour, making the savings even more substantial.
Are there limits on the Hawai‘i State Solar Tax Credit?
Yes. The state credit is capped at 35% of the system cost or $5,000 per system for residential properties, whichever is lower.
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