The 30% federal Investment Tax Credit for residential solar PV expired on December 31, 2025.[1] On a $30,000 system, that was $9,000 — real money. We fielded a lot of anxious calls in January from homeowners who thought they had missed the window entirely.
They had not. The incentive landscape shifted, but it did not disappear.
What Is Still on the Table
Hawaii State Tax Credit
Still active. No expiration date. The Hawaii Renewable Energy Technologies Income Tax Credit (HRS §235-12.5) covers 35% of installed cost, $5,000 per system for residential solar PV (and $2,250 per system for solar hot water).[2] It applies against your Hawaii state income tax, and unused credit carries forward to future tax years. This is one of the most generous state solar credits in the country, and it has survived every legislative session without a scratch.
Most people do not realize the $5,000 cap is per system, not per property. Under HRS §235-12.5, a "system" is generally defined in roughly 5 kW blocks. A standard 5 kW installation is one system and qualifies for up to $5,000 in credits. But a 10 kW installation can be structured as two separate 5 kW systems, qualifying for up to $10,000. An 8.8 kW project might be structured as a 5 kW system ($5,000 credit) plus a 3.8 kW system (proportional credit of roughly $3,080), totaling around $8,080 in state credits. This is common industry practice for larger residential installations — your contractor and tax advisor can determine the right structure for your specific system size.
Commercial PV systems qualify for the same 35% credit but with a dramatically higher cap: up to $500,000 per system.
Federal Battery Storage ITC
This is the big one that most people miss. Standalone battery systems of 3 kWh or greater qualify for a 30% federal ITC through 2032.[3] The battery does not need to be paired with new solar — battery-only installations qualify. A Tesla Powerwall 3 at roughly $14,000 installed[4] translates to about $4,200 in federal tax savings. The credit steps down to 26% in 2033 and 22% in 2034.
If you already have solar and have been thinking about adding a battery, this is the incentive that should push you over the edge. It captures federal tax savings that are no longer available for panels.
Federal Commercial Solar ITC
Still active through 2027 at the full 30% rate, stepping to 26% in 2028 and 22% in 2029.[1] MACRS accelerated depreciation adds another 15–18% in tax savings on top of that. If you own a business in Hawaii, 2026–2027 is the optimal window — the combined tax benefit will never be this large again.
HECO BYOD+ Payments
This program pays $400 per kW upfront when you enroll your battery in HECO's grid services program.[5] For a Tesla Powerwall 3 with 11.5 kW capacity, that is roughly $4,600 in your pocket at enrollment. LMI-qualifying households receive an additional $400/kW. The commitment is five years, with 20% backup reserve maintained for your own use.
A Pearl City homeowner we worked with last fall enrolled his two Powerwalls in BYOD+ and collected over $9,000 in upfront payments. Combined with the federal battery ITC, his net out-of-pocket for both batteries dropped to under $10,000. They will earn that back through peak rate arbitrage within two years.
Property Tax Exemption
Hawaii exempts the added value of a solar energy system from property tax assessment.[6] Your home is worth more, but your property taxes do not go up. Simple and permanent.
Stacking It All Together
Here is what a real project looks like for a 10 kW solar system plus one Tesla Powerwall 3 on Oahu:
| 10 kW solar system (gross) | $28,000 |
| Tesla Powerwall 3 (gross) | $14,000 |
| Total gross cost | $42,000 |
| Hawaii state credit (35% of solar, $5,000 per system)* | -$5,000 to -$10,000 |
| Federal ITC on battery (30% of $14,000) | -$4,200 |
| HECO BYOD+ payment (11.5 kW × $400) | -$4,600 |
| Net cost after incentives | $23,200–$28,200 |
*A 10 kW system can be structured as two ~5 kW systems under HRS §235-12.5, potentially qualifying for up to $10,000 in state credits instead of $5,000. Consult your tax advisor for your specific situation.
That $23,200–$28,200 (depending on system structuring) eliminates approximately $5,000–$6,000 per year in electricity costs. Payback lands around 4–6 years. Twenty-five-year savings exceed $100,000. The federal residential credit is gone, but the economics still work — and adding a battery recaptures some of that lost federal money through the standalone battery ITC.
Is Solar Still Worth It?
We get asked this weekly now, and the answer is the same every time. Hawaii's electricity rates run $0.40–$0.52/kWh — three times the national average, driven by structural factors that are not going away. The payback period has stretched by about 1–2 years compared to 2025. The 25-year return on investment is still exceptional. A family in Kailua with a 10 kW system will save over $100,000 in electricity costs over the life of their panels whether the federal credit exists or not.
The credit made great math slightly better. Without it, the math is still great.
For full details on all available incentives, visit our Incentives & Tax Credits page.
Sources & References
- U.S. Department of Energy, Homeowner's Guide to the Federal Tax Credit for Solar Photovoltaics. DOE
- Hawaii Department of Taxation, Renewable Energy Technologies Income Tax Credit (HRS 235-12.5). Hawaii Tax
- U.S. Department of Energy, Federal Battery Storage Investment Tax Credit. DOE
- Tesla, Powerwall 3 Specifications and Pricing. Tesla
- Hawaiian Electric, Bring Your Own Device (BYOD+) Program. Hawaiian Electric
- Hawaii State Legislature, Property Tax Exemption for Renewable Energy Systems (HRS 246-34.7). Hawaii State Legislature