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INSTRUCTIONS STATE OF HAWAII—DEPARTMENT OF TAXATION
FORM N-342
(2009) INSTRUCTIONS FOR FORM N-342
RENEWABLE ENERGY TECHNOLOGIES INCOME TAX CREDIT
(FOR SYSTEMS INSTALLED AND PLACED IN SERVICE ON OR AFTER JULY 1, 2009)

CHANGES YOU SHOULD NOTE • For any renewable energy technology system, a taxpayer may elect
to have any excess of the credit over payments due refunded to the
For taxable years beginning after December 31, 2008, Act 154, Session taxpayer without any further reduction if (1) all of the taxpayer’s income
Laws of Hawaii 2009, made the following changes to the provisions of the is exempt from taxation under section 235-7(a)(2), Hawaii Revised
renewable energy technologies income tax credit for renewable energy Statues (HRS), i.e., distributions from a public retirement plan or
technology systems that are installed and placed in service on or after system, or section 235-7(a)(3), HRS, i.e., any compensation received
July 1, 2009: in the form of a pension for past services; or (2) the taxpayer has Hawaii
adjusted gross income of $20,000 or less (or $40,000 or less if ﬁling a
• Removes the solar thermal and photovoltaic classiﬁcations, and tax return as married ﬁling jointly).
provides a single solar classiﬁcation.
A husband and wife who do not ﬁle a joint tax return shall only be entitled
• Applies a lower solar system cap to a system if the primary purpose of to make this election to the extent that they would have been entitled to
that system is to use energy from the sun to heat water for household
use. make the election had they ﬁled a joint tax return.
A separate election may be made for each separate system that
• Provides the taxpayer with an election to treat the tax credit as
refundable. generates a tax credit. Once an election is made, it is irrevocable.
All claims for credit, including any amended claims, must be ﬁled
• Allows residential home developers to claim the tax credit. on or before the twelfth month following the close of the taxable year
• Clariﬁes that the tax credit cannot be claimed for a solar water heating for which the credit may be claimed.
system that is required for new single-family residential property
constructed on or after January 1, 2010. The tax credit also cannot be Multiple owners of a single renewable energy technology system shall
claimed for a wind-powered energy system that is used as a substitute be entitled to a single tax credit. Further, the tax credit shall be apportioned
for the required solar water heating system. The tax credit is reduced between the owners in proportion to their contribution to the cost of the system.
for a solar energy system that is used as a substitute for the required The tax credit may be claimed for the following renewable energy technology
solar water heating system. systems installed and placed in service in Hawaii on or after July 1, 2009:
See Department of Taxation Announcement No. 2009-09, Act 154,
Session Laws of Hawaii 2009, Relating to Taxation, and Tax Information Type of Renewable Tax Credit
Release No. 2007-02, Relating to the Renewable Energy Technologies Energy Technology System Rate
Income Tax Credit, for more information. 1. Solar energy systems - Primary purpose is to use energy from
the sun to heat water for household use
GENERAL INSTRUCTIONS a. Single-family residential The lesser of 35% of the actual
Note: For systems installed and placed in service before July 1, 2009, use property. cost of the system or $2,250.
Form N-334.
b. Multi-family residential Per building unit:
Note: If you are claiming the Ethanol Facility Tax Credit, no other credit can property. The lesser of 35% of each unit’s
be claimed for the same taxable year. actual cost of the system
Note: Use a separate Form N-342 for each eligible system installed and or $350.
placed in service.
c. Commercial property. The lesser of 35% of the actual
REQUIREMENTS FOR CLAIMING TAX CREDIT cost of the system or $250,000.
Each individual or corporate taxpayer may claim a tax credit against
the Hawaii net income tax or franchise tax liability for an eligible renewable Solar energy systems - All other solar energy systems
energy technology system installed and placed in service in Hawaii. The a. Single-family residential The lesser of 35% of the actual
tax credit shall apply only to the actual cost of the solar or wind-powered property. cost of the system or $5,000.
energy system, including their accessories and installation, and shall not
include the cost of consumer incentive premiums unrelated to the operation b. Multi-family residential Per building unit:
of the system or offered with the sale of the system (such as “free gifts”, property. The lesser of 35% of each unit’s
offers to pay electricity bills, or rebates) and costs for which another credit actual cost of the system
is claimed. The dollar amount of any utility rebate shall be deducted from or $350.
the cost of the qualifying system and its installation before determining the c. Commercial property. The lesser of 35% of the actual
State credit. cost of the system or $500,000.
The tax credit cannot be claimed for a solar water heating system that
is required for new single-family residential property constructed on or after 2. Wind-powered energy systems
January 1, 2010. The tax credit also cannot be claimed for a wind-powered a. Single-family residential The lesser of 20% of the actual
energy system that is used as a substitute for the required solar water property. cost of the system or $1,500.
heating system. For a solar energy system that is used as a substitute for
the required solar water heating system, the tax credit is reduced by the b. Multi-family residential Per building unit:
lesser of 35% of the actual system cost or $2,250. property. The lesser of 20% of each unit’s
actual cost of the system
Tax credits that exceed the taxpayer’s income tax liability are not or $200.
refunded but may be used as a credit against the taxpayer’s income tax
liability in subsequent years until exhausted, unless the taxpayer elects to c. Commercial property. The lesser of 20% of the actual
treat the tax credit as refundable. The tax credit may be refundable under cost of the system or $500,000.
the following circumstances:
• For solar energy systems, a taxpayer may elect to reduce the eligible DEFINITIONS
credit amount by 30%. If this reduced amount exceeds the amount of
income tax payment due from the taxpayer, the excess of the credit FOR PURPOSES OF THE TAX CREDIT
amount over payments due will be refunded to the taxpayer. “Actual cost” means costs related to the renewable energy technology
systems provided by section 235-12.5(a), HRS, including accessories and
installation, but not including the cost of consumer incentive premiums
(Continued on back)

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INSTRUCTIONS FORM N-342 (2009) PAGE 2
unrelated to the operation of the system or offered with the sale of the claim more than your share of the costs if there are multiple owners of the
system and costs for which another credit is claimed under Chapter 235, eligible renewable energy technology system.
HRS. Lines 8, 20, and 33 –– The per unit cost of a solar or wind-powered energy
“Household use” means any use to which heated water is commonly put system installed and placed in service in Hawaii in a multi-family residential
in a residential setting, including commercial application of those uses. property may be determined as follows:
“Renewable energy technology system” means a new system that Total square feet of your unit
captures and converts a renewable source of energy, such as solar or wind Total square feet of all units x The actual cost
energy into: in the multi-family of the system
(1) A usable source of thermal or mechanical energy; residential property
(2) Electricity; or If the above per unit cost calculation does not fairly represent the owners’
(3) Fuel. contribution to the cost of the system, provide an alternative calculation.
“Solar or wind energy system” means any identiﬁable facility, equipment, Line 42 — Check the appropriate box if you are making the election to treat
apparatus, or the like that converts solar or wind energy to useful thermal the tax credit as refundable. Once an election is made, it is irrevocable.
or electrical energy for heating, cooling, or reducing the use of other types Tax Liability Limitations
of energy that are dependent upon fossil fuel for their generation.
Line 48 — Enter the tax liability before any credits from the appropriate
SPECIFIC INSTRUCTIONS line of your tax return.
Note: Multiple owners of a single system are entitled to a single tax credit. Line 49 — The law requires that ALL other credits offset a taxpayer’s tax
This means that if two people purchased and installed an eligible liability BEFORE allowing a renewable energy technologies income tax
renewable energy technology system in Hawaii and they jointly incur credit. Complete the Credit Worksheet in these instructions and enter the
$6,000 in costs for the system, the total credit claimed by the two result on line 49. If you are claiming the nonrefundable renewable energy
people cannot exceed $2,250 for a solar energy system where the technologies income tax credit for multiple systems, enter on line k of the
primary purpose is to use energy from the sun to heat water for Worksheet the amount of tax credit that is being claimed on line 51 of other
household use, $5,000 for all other types of a solar energy system, Form(s) N-342 that you have already completed for the taxable year.
or $1,500 for a wind-powered energy system. Line 51 — Enter the smaller of line 47 or 50 here. This is your maximum
Be sure to enter the date each system was installed and placed in service credit allowed for this taxable year.
in the appropriate space. Line 52 — Tax credits which exceed the taxpayer’s net income tax liability
Lines 1 through 41 — Fill in the lines as they apply to your claim. may be used as a credit against the taxpayer’s net income tax liability in
subsequent years until exhausted.
Lines 1 and 27 –– Enter the qualifying cost of the eligible renewable
energy technology system installed and placed in service in Hawaii. Do not

CREDIT WORKSHEET
Tax Credit Amount
a. High Technology Investment
Tax Credit for investments
made after April 30, 2009 ........
b. Ethanol Facility Tax Credit ........
c. Income Taxes Paid to Another
State or Foreign Country .........
d. Enterprise Zone Tax Credit ......
e. Carryover of the Energy
Conservation Tax Credit ...........
f. Credit for Employment of
Vocational Rehabilitation
Referrals ..................................
g. Carryover of the Individual
Development Account
Contribution Tax Credit ............
h. Credit for School Repair and
Maintenance ............................
i. Ko Olina Resort and Marina
Attractions and Educational
Facilities Tax Credit ..................
j. Renewable Energy
Technologies Income Tax
Credit (Form N-334) .................
k. Nonrefundable Renewable
Energy Technologies Income
Tax Credit (Form N-342) ..........
l. Add lines a through k. Enter the
amount here and on line 49. ....

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