STATE OF Hawaiʻi AND FEDERAL INCENTIVES
STATE OF Hawaiʻi INCENTIVES
Hawaiʻi Renewable Energy Technologies Income Tax Credit
The Hawaiʻi Department of Taxation oversees the Hawaiʻi Renewable Energy Technologies Income Tax Credit.
Database of STATE Renewable Energy and Energy Efficiency Incentives Available in Hawaiʻi
The Database of State Incentives for Renewables & Efficiency (DSIRE), maintained by the North Carolina Clean Energy Technology Center and originally funded by the United States Department of Energy, is a free and open resource providing a searchable database of incentives and policies available for clean energy in each state.
Property Tax Incentives
Certain counties within Hawaiʻi offer property tax incentives.
Hawaiʻi Enterprise Zones
Currently, wind energy producers may be eligible for this incentive that provides a 100% general excise tax exemption as well as reductions in state income taxes in exchange for demonstrated job growth. This incentive is available statewide in designated geographic areas.
Hawaiʻi Foreign Trade Zone
Hawaiʻi’s Foreign Trade Zone Program supports manufacturing and small business activity in Hawaiʻi by encouraging companies to compete in export markets and providing growth to new companies that import and export merchandise, including renewable energy and energy efficiency equipment.
Renewable Fuels Production Tax Credit
In June of 2022, Governor Ige signed Act 216, which reinstates (with changes) the Renewable Fuels Production Tax Credit (RFPTC).
FEDERAL INCENTIVES
Residential Tax Credits
Eligible homeowners, including renters for certain expenditures, may be eligible for federal tax credits for energy and other efficient appliance purchases. Products eligible for federal tax credits include solar panels for electricity, home backup power battery storage (capacity greater than 3 kWh), solar water heating products, and other qualified energy efficiency upgrades. The U.S. Department of Energy Office of Policy and the Internal Revenue Service provide more detailed information for taxpayers to reference.
Business Tax Credits
Federal tax credits for energy technologies include investment tax credits (shown in the table below) as well as production tax credits, fuel credits, and vehicle credits.
| Technology | 12/31/2020 | 12/31/2021 | 12/31/2022 | 12/31/2023 | 12/31/2024 | 12/31/2025 |
|---|---|---|---|---|---|---|
| PV, Solar Water Heating, Solar Space Heating/Cooling, Solar Process Heat | 26% | 26% | 26% | 22% | 22% | 22% |
| Hybrid Solar Lighting, Fuel Cells, Small Wind, Waste Energy Recovery | 26% | 26% | 26% | 22% | N/A | N/A |
| Geothermal Heat Pumps, Microturbines, Combined Heat and Power Systems | 10% | 10% | 10% | 10% | N/A | N/A |
| Geothermal Electric | 10% | 10% | 10% | 10% | 10% | 10% |
| Large Wind | 18% | 18% | N/A | N/A | N/A | N/A |
Renewable Energy Production Tax Credit (PTC)
Wind facilities commencing construction by December 31, 2019, can qualify for this credit. The value of the credit steps down in 2017, 2018, and 2019. See below for more information. For all other technologies, credit is not available for systems whose construction commenced after December 31, 2016.
Residential Renewable Energy Tax Credit
A taxpayer may claim a credit of 30% of qualified expenditures for a system that serves a dwelling unit located in the United States that is owned and used as a residence by the taxpayer.
Corporate Depreciation (Modified Accelerated Cost-Recovery System)
The Consolidated Appropriations Act, signed in December 2015, extended the “placed in service” deadline for bonus depreciation. Equipment placed in service before January 1, 2018, can qualify for 50% bonus depreciation. Equipment placed in service during 2018 can qualify for a 40% bonus depreciation. And equipment placed in service during 2019 can qualify for 30% bonus depreciation. Under the federal Modified Accelerated Cost-Recovery System (MACRS), businesses may recover investments in certain properties through depreciation deductions. The MACRS establishes a set of class lives for various types of property, ranging from three to 50 years, over which the property may be depreciated. A number of renewable energy technologies are classified as five-year property (26 USC § 168(e)(3)(B)(vi)) under the MACRS, which refers to 26 USC § 48(a)(3)(A), often known as the energy investment tax credit or ITC to define the eligible property. Such properties currently include:
- A variety of solar-electric and solar-thermal technologies.
- Fuel cells and microturbines.
- Geothermal electric.
- Direct-use geothermal and geothermal heat pumps.
- Small wind (100 kW or less).
- Combined heat and power (CHP).
- The provision that defines ITC technologies as eligible also adds the general term “wind” as a qualified technology, extending the five-year schedule to large wind facilities as well.