Hawai'i Solar Rebates Explained

Let's face it, tax credits and rebates are NOT the most interesting topic, but they're still very important if you're considering going solar. So here's a quick, pain-free breakdown of solar rebates in Hawaii.


The state of Hawaii offers up to a 35% state tax credit for homeowners that install solar PV, but what if you don’t pay state taxes? Many members of the armed forces and many retired kupuna do not pay state taxes, and if that’s you, you’re still in luck! There is a rebate available for those that do not qualify for the state tax credit. Here’s a quick breakdown of how the tax rebates work.

If you’re confused about tax credits, check out this article and it will explain in much greater detail how the tax credits work, who qualifies, etc.

What is a Rebate?

A rebate is something the government uses to incentivize people to do certain things, such as purchasing an electric vehicle and installing solar. Whereas a tax credit depends on how much you pay in taxes, a rebate does not depend on how much you pay in taxes. This means that if there is a $1,000 rebate, you qualify for the rebate regardless of how much you pay in taxes. With a credit you would only be able to claim the $1,000 if you already paid $1,000 in taxes. Boo!

How much is the rebate worth?

According to HRS 235-12.5, the rebate is valued at 30% of the total state tax credit amount. If that’s confusing, don’t worry. Here’s an example to illustrate:

Example:

If the Thompson 'ohana installs a solar PV system that costs $40,000, they will be eligible for a federal tax credit of $12,000 (30%) and a state tax credit of around $8,000 (I say ‘around’ because the total credit depends on the size of the system). Because the Thompson’s are in the military and don’t pay state taxes in Hawaii, they can instead elect for a rebate of $5,600 instead of the $8,000 credit.

$8000 (State tax credit)

X 70% (Minus 30%)

$5,600

This means that the Thompson’s could save $17,600 off the total cost of the system, bringing the true cost of ownership for a $40,000 system down to $22,400! That’s some serious savings!

This is great news for homeowners looking to install solar, because no matter your tax situation, you are still eligible for a tax incentive!

A Caution about Rebates

While it’s true that there is a state rebate for installing solar PV, it is less than the state credit, and there is no federal rebate for solar, only the federal tax credit. Some solar companies talk about tax credits like rebates, but this is misleading. The rebate is great because everyone can get it regardless of how much they pay in taxes, but it does not include the federal tax credit. Additionally, unlike the state tax rebate, tax credits may take longer than a year to fully materialize.

At Mālama Solar, our job is to help educate and assist you in your solar decision making. If you have questions about tax credits or want to see if your home qualifies for solar, feel free to reach out to us and we'd be happy to help!

We are not tax professionals, and we recommend you consult with a certified tax advisor to discuss your individual tax situation.

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