What the credit is
The Renewable Energy Technologies Income Tax Credit, at HRS Section 235-12.5, gives 35 percent of the actual cost of a residential solar photovoltaic system, capped at $5,000 per system for single-family residential property.
It is a state income tax credit rather than a rebate, so it reduces what you owe Hawaii rather than arriving as a cheque at installation. That distinction matters for cash flow: you pay the installer in full and recover the credit at filing.
The credit has no scheduled repeal, which is unusual and worth noting given how much of the incentive landscape has expired or been closed in recent years.
It is now the primary tax credit for a Hawaii cash buyer rather than a supplement, because the 30 percent federal Residential Clean Energy Credit under Section 25D expired for property placed in service after December 31, 2025.
A system is 5 kW, not a roof
For single-family residential property the total output capacity defining one photovoltaic system is 5 kW. That is the detail that changes the arithmetic, because a home may install more than one system.
So a 10 kW array is not one system capped at $5,000. Treated correctly it is two systems, each with its own cap, and one Form N-342 is completed for each system.
A homeowner who assumes a single $5,000 ceiling applies to the whole installation may under-claim substantially, and a quote that shows the credit as a flat $5,000 regardless of system size is presenting the same misunderstanding.
Ask your installer how many systems your installation comprises for RETITC purposes and how many Forms N-342 you should expect to file. Then take that answer to a Hawaii tax professional rather than relying on the installer for the filing itself.
Carry it forward, or take it smaller and sooner
There are two ways to take the credit and they suit different households. Unused credit can be carried forward indefinitely until it is exhausted, which preserves the full value but only helps if you have Hawaii income tax liability in future years to absorb it.
Alternatively you can elect to have the credit refunded in the year claimed, in exchange for the credit being reduced by 30 percent. That converts a credit you might wait years to use into money now, at a discount.
Which is better is a question about your tax position rather than about solar. A household with substantial ongoing Hawaii tax liability generally does better carrying forward. A retired household with little liability may find that a reduced refundable credit is worth considerably more than a full credit it can never fully use.
This is a decision to make with a tax professional before you file, not something to leave to the installer. Ask your installer to give you the system cost breakdown and the system count, and take that to someone qualified to advise on the election.
Costing it out at Hawaii electricity prices
Start by removing the federal residential credit if a quote shows one. Section 25D expired for property placed in service after December 31, 2025, so a cash or loan purchase receives nothing from it.
Section 48E, the commercial credit, survives at 30 percent for third-party owners under leases and power purchase agreements. Note that under a lease or power purchase agreement you generally do not own the system, which affects whether you can claim the RETITC at all, so ask that question explicitly before choosing a structure.
Then rebuild from the RETITC at 35 percent capped at $5,000 per 5 kW system, Bring Your Own Device Plus at $400 per kW of committed battery capacity if a battery is included, and the correct Smart Renewable Energy track for your project.
And add the item that dwarfs the rest: Oahu residential electricity averaged 40.54 cents per kWh in 2025. Ask for the projection built from those alone, in writing.