The state has updated tax guidance that some solar installation companies say was needed to clear up confusion that had been crimping their businesses.

A new tax information release published by the state last Friday seeks to clarify how state tax credits of up to $5,000 per system may be used.

"This gives us the clarity we need," said Mark Duda, president of the Hawai'i Solar Energy Association. "It will allow continued growth."

Local companies that install solar photovoltaic systems had been worried about the impact of tax credit guidance published by the state tax department earlier this month. The department issued the ruling after detecting some confusion and perhaps abuse on how tax credits were being filed.

Under the tax rules, homeowners can claim state tax credits of up to 35 percent or a maximum of $5,000 per system. The guidance issued earlier this month sought to clarify what constituted a system for tax credit purposes.

But some solar installers believed the guidance wasn't clear enough when it came to multiple systems on a single home.

Some people read the rules to say the tax credit could not be applied to more than one system per house despite there being legitimate reasons for splitting up connections.

The new guidelines seek to provide additional guidance on what constitutes a legitimate, fully integrated and independent system to provide more clarity.

Duda said the industry, along with the state Department of Business, Economic Development and Tourism and the tax department had worked together to come out with the added guidance.