Solar incentives and rebates in Hawaii: the state tax credit, battery payments and more

Solar incentives in Hawaii are still among the stronger ones in the US, but they are shrinking: as of November 2026 the state Renewable Energy Technologies Income Tax Credit covers 35% of a home solar system's cost, up to $5,000 per system, yet a 2026 law (Act 24) added a $40 million yearly statewide cap, an income limit from 2027 and an end date after 2029. Hawaiian Electric also pays $400 per kW upfront for qualifying batteries in its BYOD Plus program, while the federal homeowner credit has ended.

Hawaii also pays time-based credits for power you export, which rewards systems that can send energy to the grid in the evening. Here is how each piece works and how to claim it.

Key takeaways

• Hawaii's state tax credit (Form N-342) is 35% of actual cost, up to $5,000 per single-family PV system, but Act 24 of 2026 puts claims under a $40 million yearly cap, requires state certification and ends the credit for taxable years beginning after December 31, 2029.
• Hawaiian Electric's BYOD Plus pays $400 per kW of committed battery capacity, plus another $400 per kW for qualifying low- and moderate-income households.
• New rooftop customers export under Smart Renewable Energy (SRE) Export, with credits that are highest from 5 to 9 p.m.
• Federal help is gone: the IRS says the Residential Clean Energy Credit is not allowed for expenditures made after December 31, 2025, which for solar means installation completed after that date.

Hawaii's state solar tax credit

The biggest state incentive is the Renewable Energy Technologies Income Tax Credit, claimed on Form N-342. Based on the Department of Taxation's instructions (revised 2025), the credit for solar electric systems works like this:

Property type	Solar PV and other non-water-heating solar	Solar water heater
Single-family home	35% of cost, up to $5,000 per system	35% of cost, up to $2,250
Multi-family, per unit	35% of the unit's cost, up to $350	35% of the unit's cost, up to $350
Commercial	35% of cost, up to $500,000	35% of cost, up to $250,000

The instructions also set a total output capacity of 5 kW per system for single-family homes, and that capacity decides how many credits you can claim. In the instructions' example, an 8.5 kW home system is treated as a 5 kW system plus a 3.5 kW system. Ask a Hawaii tax preparer how this applies to your system.

What changed in 2026: Act 24

In 2026 the Legislature passed SB 3125, signed as Act 24, which reshapes this credit. According to the Department of Taxation (Announcement 2026-06 and Tax Information Release 2026-02, both dated July 31, 2026):

• Yearly cap. Credits statewide are limited to $40 million a year, and the cap applies back to the start of 2026. It covers credits claimed in 2027 for systems placed in service in 2026.
• Certification. Credits must be certified by the Hawaii State Energy Office (HSEO).
• Income limit from tax year 2027. The credit is not available if your adjusted gross income is over $175,000, or $350,000 for joint filers.
• End date. The credit is not available for taxable years beginning after December 31, 2029.

For 2026 systems, Governor Green's Executive Order 26-02 (June 8, 2026) exempts some projects from the cap: systems completed before May 21, 2026, and systems whose owners can show reasonable reliance through money paid or costs incurred before May 21, 2026 for financing, planning, design, permitting or installation. The tax department says eligibility will be decided through a certification process with details to come, and HSEO says filing instructions will be posted on its tax credit page. Keep every dated contract and invoice, and do not count on the credit for a 2026 or 2027 system until you know it can be certified.

Refund options

Normally the credit reduces Hawaii income tax you owe. Two elections can turn it into a refund:

• Reduced refundable credit. You can elect to cut the solar credit by 30% and have any amount above your tax due refunded. The election is irrevocable and made per system.
• Low-income or retirement-income refund. If all your income is exempt retirement income, or your Hawaii adjusted gross income is $20,000 or less ($40,000 or less filing jointly), you can elect to receive the excess credit as a refund.

The deadline to claim the credit, including amended claims, is 12 months after the close of your taxable year. Late claims are not accepted.

A quick example (illustration)

Say a single-family PV system costs $20,000. Thirty-five percent of that is $7,000, but the cap for a single-family system is $5,000, so the credit would be $5,000, assuming the claim is certified and fits under the yearly cap. If you choose the refundable option, the credit is reduced by 30%, to $3,500, and any part of that larger than your Hawaii tax bill comes back as a refund. If you owe enough Hawaii tax to use the full credit, the non-refundable version is worth more; if you owe little Hawaii tax, the refundable version may be the better way to benefit. Since both elections are irrevocable, talk to a tax preparer before you file.

Hawaiian Electric battery incentive: BYOD Plus

Hawaiian Electric's Bring Your Own Device Plus (BYOD Plus) program pays you for letting a home battery help the grid. As of November 2026, its program page lists:

• Upfront incentive: $400 per kW of committed capacity, with no cap.
• Low- and moderate-income adder: another $400 per kW for households with income below 140% of area median income, confirmed before applying.
• Daily commitment: the battery discharges during a 2-hour window you choose, every day. Your home is served first; only the excess is exported.
• Minimum size: at least 1 kW committed. The battery must be new and paired with renewable generation, and an advanced meter is required.
• Monthly export credit: also paid, varying by island and rate. Hawaiian Electric's example shows about $52 a month for a 5 kW, 2-hour commitment.

The program page describes a 5-year commitment in one section and mentions a 10-year commitment in another, so confirm the term in your agreement. Leaving early requires 60 days' written notice and repaying a prorated share of the upfront incentive. Battery Bonus customers cannot transfer into BYOD Plus. Our guide to battery storage incentives explains how programs like this compare.

Export credits as a Hawaii solar incentive

The Hawaii Public Utilities Commission capped retail net metering for Hawaiian Electric customers in October 2015. Today, new customers who export join Smart Renewable Energy (SRE) Export, which pays different credits for overnight, daytime and evening-peak exports. On Oahu, for example, Hawaiian Electric's 2024 to 2026 rates credit exports at 13.5 cents per kWh from 9 a.m. to 5 p.m. but 32.9 cents from 5 to 9 p.m. New agreements lock in rates for 7 years. See our full guide to net metering in Hawaii for every island's rates.

The practical effect: solar with a battery that can export in the evening earns far more per kWh than panels alone exporting at midday.

Is the federal solar tax credit still available in Hawaii?

No, not for a system a homeowner buys and places in service now. In an August 2025 FAQ, the IRS says the Residential Clean Energy Credit (section 25D) is not allowed for any expenditures made after December 31, 2025, and that an expenditure is treated as made when the original installation is completed. A home system finished in 2026 does not qualify. Hawaii's 35% state credit still exists, subject to the Act 24 limits above, so check any quote that adds a federal 30% on top. Our explainer on the federal solar tax credit has more.

Other Hawaii programs to know about

• GEM$ (Hawaii Green Infrastructure Authority). The state's GEM$ site lists program tracks for homeowner-owned solar and landlord/tenant projects. It does not list loan terms on its summary page, so contact HGIA directly for current details.
• Hawaii Energy rebates. Hawaii Energy offers first-come, first-served rebates through June 30, 2027 for customers on Oahu, Hawaii Island, Maui, Lanai and Molokai. They cover efficiency items such as solar water heaters, heat pump water heaters, appliances, lighting and cooling, not solar panels or batteries.
• Kauai. Kauai is served by a separate electric cooperative, not Hawaiian Electric, and Hawaii Energy rebates exclude it. Ask the co-op for its own solar and battery terms.

How to claim Hawaii solar incentives

1. Get itemized quotes and confirm the system and battery sizes, so the credit and battery incentive are calculated on the right numbers.
2. Your installer applies for interconnection through Hawaiian Electric's Customer Interconnection Tool. For BYOD Plus, the program page says to select "BYOD" while the tool is being updated.
3. If you are claiming the low- and moderate-income adder, confirm eligibility first; it is valid for one year.
4. After the system is placed in service, complete any HSEO certification step required under Act 24, then file Form N-342 with your Hawaii return within the 12-month window.

To see how much a system might produce where you live, visit our Hawaii solar panels page, and compare current utility prices on our Hawaii electricity rates page.

Next steps

Price out two versions of your project: panels only, and panels with a battery enrolled in BYOD Plus. Model the solar portion with and without the 35% state credit (up to $5,000), since the Act 24 cap and certification rules may limit it, leave out any federal credit, and value exports at the SRE rates for your island. Then run the quotes through our solar quote checker before you sign.