HB 1851: Taxation; Apprenticeship Program Income Tax Credit; Qualified Apprenticeship Program; Qualified Costs

A BILL FOR AN ACT

RELATING TO TAXATION.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to part VI to be appropriately designated and to read as follows:

     "§235-     Apprenticeship program income tax credit.  (a)  There shall be allowed to each taxpayer subject to the taxes imposed by this chapter an apprenticeship program income tax credit that shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed.

     (b)  The amount of the tax credit shall be $4,800 or fifty per cent of the qualified costs, whichever is less, incurred by the taxpayer for a qualified apprenticeship program in the taxable year; provided that:

     (1)  The total tax credit claimed per qualified apprenticeship program shall not exceed $           per taxable year; and

     (2)  The aggregate amount of tax credits allowed under this section shall not exceed $           for all taxpayers in any taxable year; provided that any taxpayer who is not eligible to claim the credit in a taxable year due to the $           cap having been exceeded for that taxable year shall be eligible to claim the credit in the subsequent taxable year.

The taxpayer may apply the credit for the same qualified apprenticeship program for up to two consecutive taxable years.

     (c)  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.  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 provision shall constitute a waiver of the right to claim the credit.

     (d)  To qualify for the income tax credit, the taxpayer shall be in compliance with all applicable federal, state, and county statutes, ordinances, rules, and regulations.

     (e)  Every taxpayer claiming a tax credit under this section shall file with the department of taxation a written, certified statement from the department of labor and industrial relations verifying that the apprenticeship program is a qualified apprenticeship program and specifying the amount of qualified costs incurred.

     (f)  The director of taxation:

     (1)  Shall prepare any forms necessary to claim a credit under this section;

     (2)  May require the taxpayer to furnish information to ascertain the validity of the claim for credit made under this section; and

     (3)  May adopt rules under chapter 91 necessary to effectuate the purposes of this section.

     (g)  No taxpayer that claims a credit under this section shall claim any other credit for the same qualified costs under this chapter.

     (h)  As used in this section:

     "Qualified apprenticeship program" means an apprenticeship program in the State that is registered and approved by the department of labor and industrial relations.

     "Qualified costs" means the wages paid to each apprentice."

     SECTION 2.  New statutory material is underscored.

     SECTION 3.  This Act shall take effect on July 1, 3000; provided that this Act:

     (1)  Shall apply to taxable years beginning after December 31, 2025; and

     (2)  Shall be repealed on December 31, 2036.

Report Title:

Taxation; Apprenticeship Program Income Tax Credit; Qualified Apprenticeship Program; Qualified Costs

Description:

Establishes an apprenticeship program income tax credit for certain qualified costs incurred by a taxpayer for a qualified apprenticeship program.  Sunsets 12/31/2036.  Effective 7/1/3000.  (HD3)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

A BILL FOR AN ACT

RELATING TO TAXATION.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to part VI to be appropriately designated and to read as follows:

     "§235-     Apprenticeship program income tax credit.  (a)  There shall be allowed to each taxpayer subject to the taxes imposed by this chapter an apprenticeship program income tax credit that shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed.

     (b)  The amount of the tax credit shall be $4,800 or fifty per cent of the qualified costs, whichever is less, incurred by the taxpayer for a qualified apprenticeship program in the taxable year; provided that:

     (1)  The total tax credit claimed per qualified apprenticeship program shall not exceed $           per taxable year; and

     (2)  The aggregate amount of tax credits allowed under this section shall not exceed $1,500,000 for all taxpayers in any taxable year; provided that any taxpayer who is not eligible to claim the credit in a taxable year due to the $1,500,000 cap having been exceeded for that taxable year shall be eligible to claim the credit in the subsequent taxable year.

The taxpayer may apply the credit for the same qualified apprenticeship program for up to two consecutive taxable years.

     (c)  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.  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 provision shall constitute a waiver of the right to claim the credit.

     (d)  To qualify for the income tax credit, the taxpayer shall be in compliance with all applicable federal, state, and county statutes, ordinances, rules, and regulations.

     (e)  Every taxpayer claiming a tax credit under this section shall file with the department of taxation a written, certified statement from the department of labor and industrial relations verifying that the apprenticeship program is a qualified apprenticeship program and specifying the amount of qualified costs incurred.

     (f)  The director of taxation:

     (1)  Shall prepare any forms necessary to claim a credit under this section;

     (2)  May require the taxpayer to furnish information to ascertain the validity of the claim for credit made under this section; and

     (3)  May adopt rules under chapter 91 necessary to effectuate the purposes of this section.

     (g)  No taxpayer that claims a credit under this section shall claim any other credit for the same qualified costs under this chapter.

     (h)  As used in this section:

     "Qualified apprenticeship program" means an apprenticeship program in the State that is registered and approved by the department of labor and industrial relations.

     "Qualified costs" means the wages paid to each apprentice."

     SECTION 2.  New statutory material is underscored.

     SECTION 3.  This Act shall take effect on July 1, 3000; provided that this Act:

     (1)  Shall apply to taxable years beginning after December 31, 2025; and

     (2)  Shall be repealed on December 31, 2036.

Report Title:

Taxation; Apprenticeship Program Income Tax Credit; Qualified Apprenticeship Program; Qualified Costs

Description:

Establishes an apprenticeship program income tax credit for certain qualified costs incurred by a taxpayer for a qualified apprenticeship program.  Sunsets 12/31/2036.  Effective 7/1/3000.  (HD2)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

A BILL FOR AN ACT

RELATING TO TAXATION.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to part VI to be appropriately designated and to read as follows:

     "§235-     Apprenticeship program income tax credit.  (a)  There shall be allowed to each taxpayer subject to the taxes imposed by this chapter an apprenticeship program income tax credit that shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed.

     (b)  The amount of the tax credit shall be $4,800 or fifty per cent of the qualified cost, whichever is less, incurred under a qualified apprenticeship program in the taxable year; provided that:

     (1)  The total tax credit claimed per qualified apprenticeship program shall not exceed $           per taxable year; and

     (2)  The aggregate amount of tax credits allowed under this section shall not exceed $           for all taxpayers in any taxable year; provided that any taxpayer who is not eligible to claim the credit in a taxable year due to the $           cap having been exceeded for that taxable year shall be eligible to claim the credit in the subsequent taxable year.

The taxpayer may apply the credit for the same apprentice for up to two consecutive taxable years.

     (c)  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.  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 provision shall constitute a waiver of the right to claim the credit.

     (d)  To qualify for the income tax credit, the taxpayer shall be in compliance with all applicable federal, state, and county statutes, ordinances, rules, and regulations.

     (e)  Every taxpayer claiming a tax credit under this section shall file with the department of taxation a written, certified statement from the department of labor and industrial relations verifying that the apprenticeship program is a qualified apprenticeship program and specifying the amount of qualified costs incurred.

     (f)  The director of taxation:

     (1)  Shall prepare any forms necessary to claim a credit under this section;

     (2)  May require the taxpayer to furnish information to ascertain the validity of the claim for credit made under this section; and

     (3)  May adopt rules under chapter 91 necessary to effectuate the purposes of this section.

     (g)  No taxpayer that claims a credit under this section shall claim any other credit for the same qualified costs under this chapter.

     (h)  As used in this section:

     "Qualified apprenticeship program" means an apprenticeship program in the State that is registered and approved by the department of labor and industrial relations.

     "Qualified costs" means the wages paid to each apprentice."

     SECTION 2.  New statutory material is underscored.

     SECTION 3.  This Act shall take effect on July 1, 3000; provided that it:

     (1)  Shall apply to taxable years beginning after December 31, 2025; and

     (2)  Shall be repealed on December 31,     .

Report Title:

Taxation; Apprenticeship Program Income Tax Credit; Qualified Apprenticeship Program; Qualified Costs

Description:

Establishes an apprenticeship program income tax credit for certain qualified costs incurred by a qualified apprenticeship program.  Contains an unspecified sunset date.  Effective 7/1/3000.  (HD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

A BILL FOR AN ACT

relating to taxation.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§235-     Apprenticeship program income tax credit.  (a)  There shall be allowed to each taxpayer subject to the taxes imposed by this chapter an apprenticeship program income tax credit that shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed.

     (b)  The amount of the tax credit shall be ten per cent of the qualified costs incurred by a qualified apprenticeship program in the taxable year; provided that:

     (1)  The total tax credit claimed per qualified apprenticeship program shall not exceed $           per taxable year; and

     (2)  The aggregate amount of tax credits allowed under this section shall not exceed $           for all taxpayers in any taxable year; provided that any taxpayer who is not eligible to claim the credit in a taxable year due to the $           cap having been exceeded for that taxable year shall be eligible to claim the credit in the subsequent taxable year.

     (c)  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.  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 provision shall constitute a waiver of the right to claim the credit.

     (d)  To qualify for the income tax credit, the taxpayer shall be in compliance with all applicable federal, state, and county statutes, ordinances, rules, and regulations.

     (e)  Every taxpayer claiming a tax credit under this section shall file with the department of taxation a written, certified statement from the department of labor and industrial relations verifying that the apprenticeship program is a qualified apprenticeship program and specifying the amount of qualified costs incurred.

     (f)  The director of taxation:

     (1)  Shall prepare any forms necessary to claim a credit under this section;

     (2)  May require the taxpayer to furnish information to ascertain the validity of the claim for credit made under this section; and

     (3)  May adopt rules under chapter 91 necessary to effectuate the purposes of this section.

     (g)  No taxpayer that claims a credit under this section shall claim any other credit for the same qualified costs under this chapter.

     (h)  As used in this section:

     "Qualified apprenticeship program" means an apprenticeship program in the State that is registered and approved by the department of labor and industrial relations.

     "Qualified costs" means costs directly incurred by a qualified apprenticeship program for training, instruction, and related expenses necessary to maintain program compliance and provide apprenticeship opportunities."

     SECTION 2.  New statutory material is underscored.

     SECTION 3.  This Act, upon its approval, shall apply to taxable years beginning after December 31, 2025.

Report Title:

Taxation; Apprenticeship Program Income Tax Credit; Qualified Apprenticeship Program; Qualified Costs

Description:

Establishes an apprenticeship program income tax credit for certain qualified costs incurred by a qualified apprenticeship program.  Applies to taxable years beginning after 12/31/2025.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

STAND. COM. REP. NO.  1160-26

Honolulu, Hawaii

                , 2026

RE:   H.B. No. 1851

      H.D. 3

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Madame:

     Your Committee on Finance, to which was referred H.B. No. 1851, H.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

     The purpose of this measure is to establish an Apprenticeship Program Income Tax Credit for certain qualified costs incurred by a qualified apprenticeship program.

     Your Committee received testimony in support of this measure from the Department of Labor and Industrial Relations; Chamber of Commerce Hawaii; Hawaii Food Industry Association; Maui Chamber of Commerce; Hawaii Primary Care Association; and Kohala Coast Resort Association.  Your Committee received comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

     Your Committee has amended this measure by changing the aggregate cap of the tax credit to an unspecified amount.

     As affirmed by the record of votes of the members of your Committee on Finance that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1851, H.D. 2, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 1851, H.D. 3.

Respectfully submitted on behalf of the members of the Committee on Finance,

STAND. COM. REP. NO.  509-26

Honolulu, Hawaii

                , 2026

RE:   H.B. No. 1851

      H.D. 2

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Madame:

     Your Committee on Economic Development & Technology, to which was referred H.B. No. 1851, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

     The purpose of this measure is to establish an Apprenticeship Program Income Tax Credit for certain qualified costs incurred by a qualified apprenticeship program.

     Your Committee received testimony in support of this measure from the Department of Labor and Industrial Relations; Kohala Coast Resort Association; Hawaii Food Industry Association; Chamber of Commerce Hawaii; and Maui Chamber of Commerce.  Your Committee received comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

     Your Committee finds that apprenticeship programs provide critical workforce training and help address labor shortages in key industries.  Your Committee further finds that apprenticeship programs offer an attractive opportunity for Hawaii's young workforce and can help keep young professionals in the State.  However, the costs associated with supporting apprenticeships can deter employer participation.  This measure encourages the expansion of apprenticeship opportunities by establishing an income tax credit to help offset qualified program costs.

     Your Committee has amended this measure by:

     (1)  Inserting an aggregate cap for the Apprenticeship Program Income Tax Credit of $1,500,000;

     (2)  Inserting a sunset date of December 31, 2036; and

     (3)  Making technical, nonsubstantive amendments for the purposes of clarity, consistency, and style.

     As affirmed by the record of votes of the members of your Committee on Economic Development & Technology that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1851, H.D. 1, as amended herein, and recommends that it be referred to your Committee on Finance in the form attached hereto as H.B. No. 1851, H.D. 2.

Respectfully submitted on behalf of the members of the Committee on Economic Development & Technology,

STAND. COM. REP. NO.  19-26

Honolulu, Hawaii

                , 2026

RE:   H.B. No. 1851

      H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Madame:

     Your Committee on Labor, to which was referred H.B. No. 1851 entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

     The purpose of this measure is to establish an apprenticeship program income tax credit for certain qualified costs incurred by a qualified apprenticeship program.

     Your Committee received testimony in support of this measure from the Department of Labor and Industrial Relations; Hawaii Primary Care Association; Hawaii Food Industry Association; and Maui Chamber of Commerce.  Your Committee received comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

     Your Committee finds that employers and training providers across the State continue to face challenges in expanding apprenticeship opportunities due to the high costs associated with program compliance, instruction, and maintaining high‑quality, industry‑aligned training.  These financial barriers limit the number of apprentices who can be trained and reduce the capacity of programs to respond to workforce shortages in key sectors.  This measure addresses these issues by providing a targeted income tax credit that supports qualified apprenticeship programs and helps strengthen workforce development statewide.

     Your Committee has amended this measure by:

     (1)  Changing the tax credit amount to be $4,800 or fifty percent of the wages, whichever is less, paid to each apprentice and clarifying the definition of "qualified cost";

     (2)  Authorizing a taxpayer to apply the credit to the same apprentice for up to two consecutive taxable years;

     (3)  Inserting an unspecified sunset date;

     (4)  Changing the effective date to July 1, 3000, to encourage further discussion; and

     (5)  Making technical, nonsubstantive amendments for clarity, consistency, and style.

     Your Committee respectfully requests your Committee on Economic Development & Technology, should it deliberate on this measure, to consider the following:

     (1)  Inserting a cap for the tax credit of $1,500,000 per taxable year;

     (2)  Applying the measure to taxable years beginning after December 31, 2026; and

     (3)  Inserting a sunset date of December 31, 2036.

     As affirmed by the record of votes of the members of your Committee on Labor that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1851, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1851, H.D. 1, and be referred to your Committee on Economic Development & Technology.

Respectfully submitted on behalf of the members of the Committee on Labor,