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HB2241
HOUSE OF REPRESENTATIVES
H.B. NO.
2241
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII
A BILL FOR AN ACT
relating
to renewable energy
.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
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SECTION
1.
�
The legislature finds that the
State's environmental commitments and goals necessitate the swift adoption of
renewable energy.
�
Renewable energy
systems that capture solar and wind energy and convert it to thermal or
mechanical energy, electricity, and fuel will be key in the State's transition
away from fossil fuels.
�
The legislature
further finds that the renewable energy technologies income tax credit could be
adjusted to better support low- and moderate- income families by limiting the
credit to taxpayers in those income brackets.
�
The legislature additionally finds that such changes would promote
equitable access to clean energy and help offset federal actions taken to limit
tax incentives for renewable energy, helping to protect hundreds of jobs in the
State's energy industry.
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Accordingly,
the purpose of this Act is to
amend the renewable
energy technologies income tax credit by
:
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(1)
�
Beginning December 31,
2026, prohibiting individually or jointly filing taxpayers with an adjusted
gross income of $250,000 or greater from claiming a credit for certain solar
energy systems installed and placed in service on a single-family residential
property, with certain exemptions
;
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(2)
�
Removing certain cap amounts for solar energy
systems; and
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(3)
�
Increasing the adjusted gross income
requirements for an individual taxpayer to elect to have any excess of the
credit over payments due refunded.
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SECTION
2
.
�
Section 235-12.5, Hawaii Revised Statutes, is
amended to read as follows:
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"
�235-12.5
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Renewable energy technologies; income tax
credit.
�
(a)
�
Each individual or corporate taxpayer that files an individual or
corporate net income tax return for a taxable year may claim a tax credit under
this section against the Hawaii state individual or corporate net income
tax.
�
The tax credit may be claimed for
every eligible renewable energy technology system that is installed and placed
in service in the State by a taxpayer during the taxable year.
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The tax credit may be claimed as follows:
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(1)
�
For each solar
energy system:
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thirty-five per cent of
the actual cost or the cap amount determined in subsection [
(b);
]
(c);
provided that:
���������
(A)
�
For taxable years
beginning after December 31, 2019, and except as provided in subparagraphs (B)
and (C), no tax credit may be claimed for a solar energy system that is five
megawatts in total output capacity or larger and requires a power purchase
agreement approved by the public utilities commission;
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(B)
�
A solar energy
system that is five megawatts in total output capacity or larger, installed and
placed in service pursuant to a power purchase agreement approved or pending
approval by a decision and order by the public utilities commission prior to
December 31, 2019, shall continue to receive a tax credit equal to thirty-five
per cent of the actual cost, or $500,000 per solar energy system that has a
total output capacity of at least one thousand kilowatts per system of direct
current, whichever is less; and
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(C)
�
For each solar
energy system integrated with a pumped hydroelectric energy storage system, the
tax credit may be claimed for thirty-five per cent of the actual cost or the
cap amount determined in subsection [
(b),
]
(c),
whichever is
less; provided that applicable project approval filings have been made to the
public utilities commission by December 31, 2021; or
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(2)
�
For each
wind-powered energy system:
�
twenty per
cent of the actual cost or the cap amount determined in subsection [
(b),
]
(c),
whichever is less;
provided further that multiple owners of a single system shall
be entitled to a single tax credit; and provided further that the tax credit
shall be apportioned between the owners in proportion to their contribution to
the cost of the system.
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In the case of a partnership, S
corporation, estate, or trust, the tax credit allowable is for every eligible
renewable energy technology system that is installed and placed in service in
the State by the entity.
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The cost upon
which the tax credit is computed shall be determined at the entity level.
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Distribution and share of credit shall be
determined pursuant to administrative rule.
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(b)
�
For taxable years beginning after December 31, 2026, no taxpayer may
claim a tax credit under this section for a solar energy system that is
installed and placed in service on a single-family residential property unless
the taxpayer's adjusted gross income is $250,000 or less if filing as an
individual or jointly; provided that this income restriction shall not apply to
a third party financing a solar energy system for single-family residential
property; provided further that this income restriction shall not apply to any
energy systems with the primary purpose of using energy from the sun to heat
water for household use.
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[
(b)
]
(c)
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The amount of credit allowed for each
eligible renewable energy technology system shall not exceed the applicable cap
amount, which is determined as follows:
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(1)
�
If the primary
purpose of the solar energy system is to use energy from the sun to heat water
for household use, then the cap amounts shall be:
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(A)
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$2,250 per system
for single-family residential property;
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(B)
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$350 per unit per
system for multi-family residential property; and
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(C)
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$250,000 per
system for commercial property;
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(2)
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For all other solar
energy systems, the cap amounts shall be:
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[
(A)
�
$5,000
per system for single-family residential property;
provided that if all or a portion of
the system is used to fulfill the substitute renewable energy technology
requirement pursuant to section 196-6.5(a)(3), the credit shall be reduced by
thirty-five per cent of the actual system cost or $2,250, whichever is less;
��������
(B)
]
�
(A)
�
$350 per unit per system for
multi-family residential property; and
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[
(C)
]
�
(B)
�
$500,000 per system for commercial
property; and
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(3)
�
For all
wind-powered energy systems, the cap amounts shall be:
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(A)
�
$1,500 per system
for single-family residential property;
provided
that if all or a portion of the system is used to fulfill the substitute
renewable energy technology requirement pursuant to section 196-6.5(a)(3), the
credit shall be reduced by twenty per cent of the actual system cost or $1,500,
whichever is less;
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(B)
�
$200 per unit per
system for multi-family residential property; and
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(C)
�
$500,000 per
system for commercial property.
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[
(c)
]
(d)
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For the purposes of this section:
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"Actual cost" means costs related
to the renewable energy technology systems under subsection (a), including
accessories and installation, but not including the cost of consumer incentive
premiums unrelated to the operation of the system or offered with the sale of
the system and costs for which another credit is claimed under this chapter.
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"Household use" means any use to
which heated water is commonly put in a residential setting, including
commercial application of those uses.
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"Renewable energy technology
system" means a new system that captures and converts a renewable source
of energy, such as solar or wind energy, into:
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(1)
�
A
usable source of thermal or mechanical energy;
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(2)
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Electricity;
or
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(3)
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Fuel.
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"Solar or wind energy system"
means any identifiable facility, equipment, apparatus, or the like that
converts solar or wind energy to useful thermal or electrical energy for
heating, cooling, or reducing the use of other types of energy that are
dependent upon fossil fuel for their generation.
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[
(d)
]
(e)
�
For taxable years beginning after December
31, 2005, the dollar amount of any utility rebate shall be deducted from the
cost of the qualifying system and its installation before applying the state
tax credit.
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[
(e)
]
(f)
�
The director of taxation shall prepare any
forms that may be necessary to claim a tax credit under this section, including
forms identifying the technology type of each tax credit claimed under this
section, whether for solar or wind.
�
The
director may also require the taxpayer to furnish reasonable information to
ascertain the validity of the claim for credit made under this section and may
adopt rules necessary to effectuate the purposes of this section pursuant to
chapter 91.
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[
(f)
]
(g)
�
If the tax credit under this section exceeds
the taxpayer's income tax liability, the excess of the credit over liability
may be used as a credit against the taxpayer's income tax liability in
subsequent years until exhausted, unless otherwise elected by the taxpayer
pursuant to subsection [
(g)
]
(h)
or [
(h).
]
(i).
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All claims for the tax credit under this
section, including amended claims, shall be filed on or before the end of the
twelfth month following the close of the taxable year for which the credit may
be claimed.
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Failure to comply with this
subsection shall constitute a waiver of the right to claim the credit.
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[
(g)
]
(h)
�
For solar energy systems, a taxpayer may
elect to reduce the eligible credit amount by thirty per cent and if this
reduced amount exceeds the amount of income tax payment due from the taxpayer,
the excess of the credit amount over payments due shall be refunded to the
taxpayer; provided that tax credit amounts properly claimed by a taxpayer who
has no income tax liability shall be paid to the taxpayer; and provided further
that no refund on account of the tax credit allowed by this section shall be
made for amounts less than $1.
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The election required by this
subsection shall be made in a manner prescribed by the director on the
taxpayer's return for the taxable year in which the system is installed and
placed in service.
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A separate election
may be made for each separate system that generates a credit.
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An election once made is irrevocable.
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[
(h)
]
(i)
�
Notwithstanding subsection [
(g),
]
(h),
for any renewable energy technology system, an individual taxpayer may elect to
have any excess of the credit over payments due refunded to the taxpayer, if:
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(1)
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All of the
taxpayer's income is exempt from taxation under section 235-7(a)(2) or (3); or
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(2)
�
The taxpayer's
adjusted gross income is [
$20,000
]
$40,000
or less (or [
$40,000
]
$60,000
or less if filing a tax return as married filing jointly);
provided that tax credits properly claimed by a
taxpayer who has no income tax liability shall be paid to the taxpayer; [
and
]
provided further that no refund on account of the tax credit allowed by this
section shall be made for amounts less than $1.
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A husband and wife who do not file a
joint tax return shall only be entitled to make this election to the extent
that they would have been entitled to make the election had they filed a joint
tax return.
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The election required by this
subsection shall be made in a manner prescribed by the director on the
taxpayer's return for the taxable year in which the system is installed and
placed in service.
�
A separate election
may be made for each separate system that generates a credit.
�
An election once made is irrevocable.
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[
(i)
]
(j)
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No taxpayer shall be allowed a credit under
this section for the portion of the renewable energy technology system required
by section 196-6.5 that is installed and placed in service on any newly
constructed single-family residential property authorized by a building permit
issued on or after January 1, 2010.
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[
(j)
]
(k)
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To the extent feasible, using existing
resources to assist the energy-efficiency policy review and evaluation, the
department shall assist with data collection on the following for each taxable
year:
����
(1)
�
The number of
renewable energy technology systems that have qualified for a tax credit during
the calendar year by:
���������
(A)
�
Technology type;
and
���������
(B)
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Taxpayer type
(corporate and individual); and
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(2)
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The total cost of
the tax credit to the State during the taxable year by:
���������
(A)
�
Technology type;
and
���������
(B)
�
Taxpayer type.
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[
(k)
]
(l)
�
This section shall apply to eligible
renewable energy technology systems that are installed and placed in service on
or after July 1, 2009."
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SECTION
3.
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Statutory material to be repealed is
bracketed and stricken.
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New statutory
material is underscored.
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SECTION 4.
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This Act, upon its approval, shall apply to
taxable years beginning after December 31, 2026.
INTRODUCED BY:
_____________________________
Report Title:
Renewable
Energy Technologies; Income Tax Credit; Income Restriction; Solar Energy
Systems
Description:
Amends the renewable energy technologies income tax credit
by beginning 12/31/26, prohibiting individually or jointly filing taxpayers
with an adjusted gross income of $250,000 or greater from claiming a credit for
certain solar energy systems installed and placed in service on a single-family
residential property, with certain exemptions; removing certain cap amounts for
solar energy systems; and increasing the adjusted gross income requirements for
an individual taxpayer to elect to have any excess credits refunded.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.