§235-12.5 - Renewable energy technologies; income tax credit.

§235-12.5 Renewable energy technologies;
income tax credit. (a) When the requirements of subsection (d) are met,
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. The tax credit may be claimed as follows:

(1) For each solar energy system: thirty-five per
cent of the actual cost or the cap amount determined in subsection (b),
whichever is less; or

(2) For each wind-powered energy system: twenty per
cent of the actual cost or the cap amount determined in subsection (b),
whichever is less;

provided 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.

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. The cost upon which the tax credit is computed shall be
determined at the entity level. Distribution and share of credit shall be
determined pursuant to section 235-110.7(a).

(b) The amount of credit allowed for each
eligible renewable energy technology system shall not exceed the applicable cap
amount, which is determined as follows:

(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:

(A) $2,250 per system for single-family
residential property;

(B) $350 per unit per system for multi-family
residential property; and

(2) For all other solar energy systems, the cap
amounts shall be:

(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) $350 per unit per system for multi-family
residential property; and

(3) For all wind-powered energy systems, the cap
amounts shall be:

(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;

(B) $200 per unit per system for multi-family
residential property; and

"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.

"Household use" means any use to
which heated water is commonly put in a residential setting, including
commercial application of those uses.

"Renewable energy technology system"
means a new system that captures and converts a renewable source of energy,
such as solar or wind energy, into:

(1) A usable source of thermal or mechanical energy;

(2) Electricity; or

(3) Fuel.

"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.

(d) 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.

(e) 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.

(f) 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) or (h). 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. Failure to comply with this subsection shall constitute a waiver of
the right to claim the credit.

(g) 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.

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.

(h) Notwithstanding subsection (g), 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:

(1) All of the taxpayer's income is exempt from
taxation under section 235-7(a)(2) or (3); or

(2) The taxpayer's adjusted gross income is $20,000
or less (or $40,000 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.

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.

(i) 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.

(j) 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) Taxpayer type (corporate and individual);
and

(2) The total cost of the tax credit to the State
during the taxable year by:

(A) Technology type; and

(B) Taxpayer type.

(k) This section shall apply to eligible
renewable energy technology systems that are installed and placed in service on
or after July 1, 2009. [L 2003, c 207, §§2, 4; am L 2004, c 97, §1; am L 2006,
c 240, §§2, 3; am L 2007, c 151, §1; am L 2008, c 204, §4; am L 2009, c 154, §1
and c 155, §15]

Note

The L 2009, c 154 amendment applies to taxable years
beginning after December 31, 2008. L 2009, c 154, §3.