§235-12 - Energy conservation; income tax credit.

§235-12 Energy conservation; income tax
credit. (a) For taxable years ending before January 1, 1990, except in
the case of ice storage systems for taxable years ending before January 1,
1991, each individual and corporate resident taxpayer who 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 any solar or wind energy device, heat
pump, or ice storage system in an amount not to exceed ten per cent of the
total cost of the device, heat pump, or ice storage system; provided that the
tax credit shall apply only to the actual cost of the solar or wind energy
device, the heat pump, or ice storage system, their accessories, and
installation and shall not include the cost of consumer incentive premiums
unrelated to the operation of the solar or wind energy device, the heat pump,
or ice storage system offered with the sale of the solar or wind energy device,
the heat pump, or ice storage system. The credit shall be claimed against net
income tax liability for the year in which the solar or wind energy device, the
heat pump, or ice storage system was purchased and placed in use; provided:

(1) The tax credit shall be applicable only with
respect to solar devices, which are erected and placed in service after
December 31, 1974, but before January 1, 1990;

(2) In the case of wind energy devices and heat
pumps, the tax credit shall be applicable only with respect to wind energy
devices and heat pumps which are installed and placed in service after December
31, 1980, but before January 1, 1990; and

(3) In the case of ice storage systems, the tax
credit shall be applicable only with respect to ice storage systems which are
installed and placed in service after December 31, 1985, but before January 1,
1990.

Tax credits which exceed the taxpayer's income tax
liability may be used as a credit against the taxpayer's income tax liability
in subsequent years until exhausted. If federal energy tax credits are not
extended beyond December 31, 1985, are not retroactively extended or reenacted,
or federal energy tax credits the same as or less in amount than the credits in
effect during the 1985 taxable year are not enacted during the taxable year
1986, then the state tax credit shall be increased to fifteen per cent of the
total cost after December 31, 1985, but before January 1, 1990.

As used in this subsection:

"Solar or wind energy device" means
any new identifiable facility, equipment, apparatus, or the like which makes
use of solar or wind energy for heating, cooling, or reducing the use of other
types of energy dependent upon fossil fuel for their generation.

"Heat pump" means and refers to an
electric powered compression heating system which extracts energy from warm
ambient air or recovers waste heat to assist in the production of hot water.

(b) For taxable years beginning after December
31, 1989, each individual or corporate resident taxpayer who 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 as follows:

(1) For wind energy systems that are installed and
placed in service after December 31, 1989, but before July 1, 2003, the credit
shall be twenty per cent of the actual cost;

(2) For solar energy systems that are installed and
placed in service after December 31, 1989, but before July 1, 2003, on new and
existing single family residential buildings, the credit shall be in an amount
not to exceed thirty-five per cent or $1,750, whichever is less, of the actual
cost of the solar energy system;

(3) For solar energy systems that are installed and
placed in service after December 31, 1989, but before July 1, 2003, on new and
existing multiunit buildings used primarily for residential purposes, the
credit shall be in an amount not to exceed thirty-five per cent or $350 per
building unit, whichever is less, of the actual cost of the solar energy
system;

(4) For solar energy systems that are installed and
placed in service after December 31, 1989, but before July 1, 2003, in new and
existing hotel, commercial, and industrial facilities, the credit shall be in
an amount not to exceed thirty-five per cent of the actual cost of the solar
energy system;

(5) For heat pumps that are installed and placed in
service after December 31, 1989, but before July 1, 2003, in new and existing
single-family residential buildings, the credit shall be in an amount not to
exceed twenty per cent or $400, whichever is less, of the actual cost of the
heat pump;

(6) For heat pumps that are installed and placed in
service after December 31, 1989, but before July 1, 2003, in new and existing
multiunit buildings used primarily for residential purposes, the credit shall
be in an amount not to exceed twenty per cent or $200 per building unit,
whichever is less, of the actual cost of the heat pump; provided that a
licensed professional engineer reviews the design of the system and provides a
written opinion that the system, in accordance with recognized engineering
practice, is designed to provide not less than ninety per cent of the daily
annual average hot water needs of all of the occupants of the building;

(7) For heat pumps that are installed and placed in
service after December 31, 1989, but before July 1, 2003, in new and existing
hotel, commercial, and industrial facilities, the credit shall be in an amount
not to exceed twenty per cent of the actual cost of the heat pump; and

(8) For ice storage systems that are installed and
placed in service after December 31, 1990, but before July 1, 2003, the credit
shall be in an amount not to exceed fifty per cent of the actual cost of the
ice storage system.

The per unit of actual cost of a solar energy system
or heat pump referred to in subsection (b)(3) and (6) shall be determined by
multiplying the actual cost of the solar energy system or heat pump installed
and placed in service in the multiunit building by a fraction, the numerator
being the total square feet of that unit in the multiunit building, and the
denominator being the total square feet of all the units in the multiunit
building.

If federal energy tax credits similar to any of
those provided in paragraphs (1) to (8) are established after June 30, 1998,
but before July 1, 2003, then the state tax credit provided in the respective
paragraph or paragraphs shall be reduced by the amount of the applicable
federal energy tax credit.

(c) Tax credits shall apply only to the actual
cost of the solar or wind energy system, heat pump, or ice storage system,
including their accessories and installation, and shall not include the cost of
consumer incentive premiums unrelated to the operation of the system or offered
with the sale of the system or heat pump. The tax credit shall be claimed
against net income tax liability for the year in which the solar or wind energy
system, heat pump, or ice storage system was purchased and placed in use in
Hawaii. Tax credits that exceed the taxpayer's income tax liability may be
used as credit against the taxpayer's income tax liability in subsequent years
until exhausted.

(d) The director of taxation shall prepare
such forms as may be necessary to claim a credit under this section. 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.

(e) As used in this section:

"Solar or wind energy system" means
any new identifiable facility, equipment, apparatus, or the like that converts
solar insolation or wind energy to useful thermal or electrical energy for
heating, cooling, or reducing the use of other types of energy dependent upon
fossil fuel for their generation.

"Heat pump" means an electric powered
compression heating system that extracts energy from warm ambient air or
recovers waste heat to assist in the production of hot water.

"Ice storage system" refers to ice
banks or other cool energy storage tanks, containers, accessories, and controls
that are specifically designed to store ice or chilled fluids for the express
purpose of shifting the consumption of energy to off-peak periods. [L 1976, c
189, §1; am L 1980, c 177, §2; am L 1981, c 233, §1; am L 1983, c 67, §1; am L
1985, c 232, §2; gen ch 1985; am L 1986, c 66, §1, c 70, §1, and c 339, §18; am
L 1989, c 307, §2; am L 1990, c 319, §3; am L 1993, c 93, §1; am L 1998, c 163,
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