Commercial and Residential Alternative Energy Systems

State of Hawaii Renewable Energy Technologies Income Tax Credit

This tax credit may be applied to the cost of an alternative energy system, including a residential or commercial solar electric (PV) system, including accessories and installation. The current Hawai'i tax cedit for a residence is 35% with a $5000.00 cap. Businesses enjoy the same 35% tax credit with a $500,000 cap. Tax credits that exceed your tax liability are not refunded, but may be credited to your income tax liability until exhausted.

To down load and view the form and instructions for a Hawai'i homeowner or business would use to file for this credit, click below.

HI Form N-334 RE Tax Credit
HI Inst N-334 Instructions for N-334

Hawai'i County offers homeowners a Real Property Tax Credit of $300.00 for Solar Water Heaters.

Federal Energy Tax Credits

Commercial

Federal Tax Credits are also available for alternative energy systems including Solar Water Heat and Solar Electric (PV) Systems.

For equipment placed in service from January 1, 2006, until December 31, 2016, the credit is 30%. Use form 3468 Investment Credit.

IRS Form 3468

Depreciation

Businesses may recover investments in photovoltaics, wind energy, fuel cells and other renewable technologies through depreciation deductions. While the 50% bonus depreciation expired on December 31, 2008, the five year accelerated depreciation remains in effect. The current MACRS property class for solar wind and geothermal property is 5 years. For more information on the Federal MACRS, talk to your accountant and see IRS publication 946, IRS form 4562 and Instructions for from 5462 which can be found at the IRS web site.

The Internal Revenue Service announced in March 2009 that small businesses with deductions exceeding their income in 2008 can use a new net operating loss tax provision to get a refund of taxes paid in prior years. Click here for more information

Forms required are 1045 and 1139.

Individual/Residential

An individual can take both a 30% credit (no cap) for a solar electric system (photovoltaics) and a 30% credit for a solar water heating system. To be eligible for the credit, a system must be activated on or after January 1, 2006, and on or before December 31, 2016. To apply for the credit, fill out IRS Form 5695

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Before making tax or business decisions, please consult your accountant directly. ESHI Inc. cannot provide any warranty about the accuracy or source of information found herein or the content of any file the user might choose to download from a third-party site