HB 2212: Taxation; DLIR; Income Tax; Workforce Builder Tax Credit; Report; Appropriation

A BILL FOR AN ACT

RELATING TO A WORKFORCE BUILDER TAX CREDIT.

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

     SECTION 1.  The legislature finds that Hawaii's long-term economic competitiveness depends on a skilled, adaptable, and locally trained workforce aligned with the needs of the State's private-sector employers.  Employers across multiple industries report that the costs associated with recruiting, training, and supervising interns and apprentices are a significant barrier to expanding work-based learning opportunities.

     The legislature further finds that, while Hawaii currently provides indirect workforce support through grants, training reimbursements, and federal programs, the State does not offer a direct, broad-based tax incentive to encourage private-sector employers to create and sustain internship and apprenticeship placements.  While the State has established workforce-related tax credits and incentive programs administered by the department of labor and industrial relations, employer participation in certain existing credit programs has been limited, in part due to narrow eligibility criteria, administrative complexity, and lack of alignment with employer-driven workforce needs.

     The legislature also finds that employer-led, demand-driven workforce initiatives have demonstrated higher levels of private-sector engagement.  In particular, sector partnerships coordinated by the Chamber of Commerce Hawaii have successfully engaged a broad cross-section of employers to collaboratively identify workforce needs, develop training pathways, and support work-based learning opportunities aligned with industry demand.

     The legislature additionally finds that expanding private-sector participation in internships and apprenticeships requires a broad-based and accessible incentive that complements existing workforce programs, leverages proven employer networks, and reduces the cost barriers faced by businesses — particularly small- and medium-sized employers — when offering paid work-based learning placements.

     The purpose of this Act is to establish a workforce builder tax credit to incentivize private-sector employers to provide paid internships and apprenticeships, increase employer participation in work-based learning, and strengthen Hawaii's workforce pipeline through employer-led, industry-aligned pathways.

     SECTION 2.  Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

     "§235-     Workforce builder tax credit.  (a)  There shall be allowed to each eligible employer subject to the taxes imposed under this chapter a nonrefundable income tax credit for each qualified intern or qualified apprentice employed by the eligible employer during the taxable year.

     (b)  The amount of the tax credit shall be:

     (1)  $1,000 for each qualified intern; or

     (2)  $2,000 for each qualified apprentice,

employed by the eligible employer during the taxable year; provided that the total credit claimed by any eligible employer under this section shall not exceed the eligible employer's tax liability for the taxable year.

     (c)  The department of taxation shall allow the credit under this section upon certification by the department of labor and industrial relations that the eligible employer has employed a qualified intern or qualified apprentice during the taxable year.

     (d)  The total amount of tax credits allowed under this section shall not exceed $5,000,000 in the aggregate for all taxable years combined; provided that the department of taxation shall disallow any credit claimed once the aggregate cap has been reached.

     (e)  The department of labor and industrial relations, in coordination with the department of taxation, shall adopt rules pursuant to chapter 91 necessary to carry out the purposes of this section.

     (f)  This section shall apply to taxable years beginning after December 31, 2026.

     (g)  As used in this section:

     "Eligible employer" means a private-sector business entity subject to taxation under this chapter that employs one or more qualified interns or qualified apprentices in the State.

     "Qualified apprentice" means an individual who is:

     (1)  A resident of the State; and

     (2)  Employed by an eligible employer and registered in a state or federally recognized apprenticeship program.

     "Qualified intern" means an individual who is:

     (1)  A resident of the State;

     (2)  Engaged in a paid internship or work-based learning placement with an eligible employer for no less than three months during the taxable year; and

     (3)  Participating in a structured internship or work-based learning program connected to an educational institution, workforce training program, or industry-recognized credential pathway, as determined by the department of labor and industrial relations."

     SECTION 3.  The department of labor and industrial relations, in coordination with the department of taxation, shall submit a report to the legislature no later than December 1, 2029, on the implementation and effectiveness of the workforce builder tax credit.  The report shall include:

     (1)  The number of participating employers;

     (2)  The number of interns and apprentices supported;

     (3)  The industry sectors represented;

     (4)  The fiscal impact of the tax credit; and

     (5)  Any recommendation for continuation, modification, or expansion of the program.

The report shall be submitted in accordance with section 93-16, Hawaii Revised Statutes.

     SECTION 4.  There is appropriated out of the general revenues of the State of Hawaii the sum of $5,000,000 or so much thereof as may be necessary for fiscal year 2026-2027 to implement the workforce builder tax credit established under this Act.

     The sum appropriated shall be expended by the department of taxation for the purposes of this Act.

     SECTION 5.  New statutory material is underscored.

     SECTION 6.  This Act shall take effect on July 1, 2026.

Report Title:

Taxation; DLIR; Income Tax; Workforce Builder Tax Credit; Report; Appropriation

Description:

Establishes an income tax credit for eligible employers who employ qualified interns or apprentices.  Requires the Department of Labor and Industrial Relations, in coordination with the Department of Taxation, to report to the Legislature on the tax credit.  Appropriates funds.

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