HB 2546: DBEDT; Tax Credit; Research Activities; Qualified High Technology Businesses; Annual Cap; Tax Credit Distribution; Certification
- Session Year: 2025-2026
- House: House
- Latest Version Date: 2026-04-08
Current Status:
Failed
(2026-05-01: Conference committee meeting to reconvene on 05-01-26 5:40 PM; Conference Room 309.)
Introduced
In Committee
First Chamber
In Committee
Second Chamber
Final Decking
Enacted
What does this bill do?
The bill changes Hawaii's research tax credit so qualifying high-technology businesses can claim the credit on all qualified research expenses without using the federal “base amount” limit. It also moves the DBEDT filing deadline from March 31 to March 1, requires DBEDT to run an annual application period and notify applicants, and when the $5 million yearly cap is reached the credit is split among all qualified businesses based on their research expenses; the credit is set to expire on January 1, 2029.
The summary is provided by generative AI which can make mistakes. For original language, please view the details in the table below.
Amends the tax credit for research activities by: allowing qualifying taxpayers to claim the credit for all qualified research expenses without regard to the amount of expenses for previous years; amending from March 31 to March 1 the deadline for qualified high technology businesses to submit to the Department of Business, Economic development, and Tourism written, certified statements identifying qualified expenditures and the tax amount of tax credits claimed in the previous taxable year; for any taxable year the annual aggregate cap is reached, requiring the credit to be divided between all qualified high technology businesses in proportion to the amount of qualified research expenses claimed; and requiring DBEDT to establish an annual application period and notify each qualified high technology business applicant of the credit amount certified. Applies to costs incurred beginning after 12/31/2025. Repeals the credit on 1/1/2029. Effective 7/1/3050. (SD2)
Amends the tax credit for research activities by: allowing taxpayers to claim credits for all qualified research expenses without regard to prior-year expenses; amending from March 31 to March 1, the deadline for qualified high technology businesses to submit a written, certified statement to the Department of Business, Economic Development, and Tourism identifying its qualified expenditures and research activities tax credits claimed in the previous taxable year; increasing the annual statewide cap amount for the tax credit; requiring the tax credit to be divided between all qualified high technology businesses for that year on a proportional basis if the annual statewide cap is reached; and requiring DBEDT to establish an annual application period and notify each qualified high technology business applicant of the credit amount certified. Applies to costs incurred beginning after 12/31/2025. Effective 7/1/3050. (SD1)
Amends the tax credit for research activities by: allowing taxpayers to claim all qualified research expenses without regard to prior-year expenses; increasing the annual cap; requiring the tax credit to be divided on a proportional basis if the annual statewide cap is reached; and requiring the Department of Business, Economic Development, and Tourism to establish an annual application period and notify each qualified high technology business applicant of the credit amount certified. Applies retroactive to taxable years beginning after 12/31/2024. Effective 7/1/3000. (HD2)
Amends the tax credit for research activities by: allowing taxpayers to claim all qualified research expenses without regard to prior-year expenses; increasing the annual cap; requiring the tax credit to be divided on a proportional basis if the annual statewide cap is reached; and requiring the Department of Business, Economic Development, and Tourism to establish an annual application period and notify each qualified high technology business applicant of the credit amount certified. Applies retroactive to taxable years beginning after 12/31/2024. Effective 7/1/3000. (HD1)
Restores the provision that makes references to the Internal Revenue Code's base-amount requirement inapplicable to the Research Activities Tax Credit, allowing all qualified research expenses to be claimed without regard to prior-year expenses. Increases the annual cap for the Research Activities Tax Credit.
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HOUSE OF REPRESENTATIVES |
H.B. NO. |
2546 |
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THIRTY-THIRD LEGISLATURE, 2026 |
H.D. 2 |
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STATE OF HAWAII |
S.D. 2 |
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A BILL FOR AN ACT
RELATING TO TAX CREDIT FOR RESEARCH ACTIVITIES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that Hawaii must diversify its economy by encouraging and promoting research and development activities. These efforts will help attract and retain technology companies in the State and provide high-paying jobs that are necessary for residents to thrive in Hawaii.
The legislature further finds that Hawaii has an opportunity to create careers that allow its young people to build their futures at home. When local graduates can find work that matches their education and ambition, they are more likely to remain in the State, raise families, start businesses, and strengthen the communities that raised them. Research and development jobs offer these meaningful careers rooted in imagination and skill.
The legislature also finds that while tourism remains vital to Hawaii's economy, the State can and should build additional engines of growth. An economy grounded in research and innovation creates value from ideas--drawing on the creativity, education, and talent of its people. This approach increases economic resilience by ensuring that when one sector faces disruption, as tourism did during the COVID-19 pandemic and following the Lahaina wildfire, other industries can help sustain families and communities.
The legislature additionally finds that economic research supports this approach. The 2018 Nobel Prize in Economic Sciences was awarded for research demonstrating that sustained economic growth comes from investing in people and ideas. The 2025 Nobel Prize in Economic Sciences further showed how innovation drives long-term growth by creating new technologies, products, and production methods that replace old ones. Economies that support research and development grow from within, generating prosperity that compounds over generations.
The legislature further finds that Hawaii's research activities tax credit has proven its value, as demand consistently exceeds available funding. For the past three years, the $5,000,000 annual cap has been reached almost immediately upon opening applications, demonstrating strong interest from companies ready to invest in Hawaii. Additionally, removing the federal base-amount calculation will encourage companies to expand their research activities year after year without being penalized for prior investments and eliminates the uncertainty for businesses planning multi-year research investments in Hawaii.
The legislature also finds that strengthening this credit will position Hawaii to compete more effectively for innovation-driven companies and send a clear signal that the State believes in its people and invests in their potential and in Hawaii's future.
The purpose of this Act is to amend the tax credit for research activities by:
(1) Allowing qualifying taxpayers to claim the credit for all qualified research expenses without regard to the amount of expenses for previous years;
(2) Amending from March 31 to March 1 the deadline for qualified high technology businesses to submit to the department of business, economic development, and tourism written, certified statements identifying qualified expenditures and the tax amount of tax credits claimed in the previous taxable year;
(3) For any taxable year in which the annual aggregate cap is reached, requiring the credit to be divided between all qualified high technology businesses in proportion to the amount of qualified research expenses claimed;
(4) Requiring the department of business, economic development, and tourism to establish an annual application period and notify each qualified high technology business applicant of the credit amount certified; and
(5) Repealing the credit on January 1, 2029.
SECTION 2. Section 235-110.91, Hawaii Revised Statutes, is amended as follows:
1. By amending subsection (b) to read:
"(b) All references to Internal Revenue Code
sections within sections 41 and 280C(c) of the Internal Revenue Code shall be
operative for purposes of this section[.]; provided that references
to the base amount in section 41 of the Internal Revenue Code shall not apply,
and a credit for all qualified research expenses may be taken without regard to
the amount of expenses for previous years."
2. By amending subsection (d) to read:
"(d) Every qualified high technology business,
before March [31] 1 of each year in which qualified research and
development activity was conducted in the previous taxable year, shall submit a
written, certified statement to the department of business, economic
development, and tourism identifying:
(1) Qualified expenditures, if any, expended in the previous taxable year; and
(2) The amount of tax credits claimed pursuant to this section, if any, in the previous taxable year."
3. By amending subsection (f) to read:
"(f) If in any taxable year the annual amount of
certified credits reaches $5,000,000 in the aggregate, the [department of
business, economic development, and tourism shall immediately discontinue
certifying credits and notify the department of taxation.] $5,000,000
shall be divided between all qualified high technology businesses for that year
in proportion to the amount of qualified research expenses claimed by all
qualified high technology businesses; provided that:
(1) The department of business, economic development, and tourism shall establish an annual application period ending on March 1 of each year at 5:00 p.m. Hawaii Standard Time; provided further that the department shall determine the opening date of the application period by rule;
(2) By May 31 of each year the department of business, economic development, and tourism shall notify each qualified high technology business applicant of the credit amount certified; and
(3) If the total credits applied for by all qualified high technology businesses are no more than $5,000,000, each qualified high technology business shall receive the full amount of the credit applied for, subject to verification of qualified research expenses.
In no instance shall the department of business,
economic development, and tourism certify a total amount of credits exceeding
$5,000,000 per taxable year. [To
comply with this restriction, the department of business, economic development,
and tourism shall certify credits on a first come, first served basis.]
The department of taxation shall not allow the aggregate amount of credits claimed to exceed that amount per taxable year."
4. By amending subsection (n) to read:
"(n) This section shall not apply to taxable years
beginning after December 31, [2029.] 2028."
SECTION 3. Act 261, Session Laws of Hawaii 2019, as amended by section 2 of Act 139, Session Laws of Hawaii 2024 is amended by amending section 5 to read as follows:
"SECTION 5. This Act shall take effect upon its approval; provided that:
(1) Section 2 shall apply to taxable years beginning after December 31, 2019; and
(2) Part II shall take
effect on January 1, [2030.] 2029."
SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 5. This Act shall take effect on July 1, 3050, and shall apply to costs incurred beginning after December 31, 2025.
Report Title:
DBEDT; Tax Credit; Research Activities; Qualified High Technology Businesses; Annual Cap; Tax Credit Distribution; Certification
Description:
Amends the tax credit for research activities by: allowing qualifying taxpayers to claim the credit for all qualified research expenses without regard to the amount of expenses for previous years; amending from March 31 to March 1 the deadline for qualified high technology businesses to submit to the Department of Business, Economic development, and Tourism written, certified statements identifying qualified expenditures and the tax amount of tax credits claimed in the previous taxable year; for any taxable year the annual aggregate cap is reached, requiring the credit to be divided between all qualified high technology businesses in proportion to the amount of qualified research expenses claimed; and requiring DBEDT to establish an annual application period and notify each qualified high technology business applicant of the credit amount certified. Applies to costs incurred beginning after 12/31/2025. Repeals the credit on 1/1/2029. Effective 7/1/3050. (SD2)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
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HOUSE OF REPRESENTATIVES |
H.B. NO. |
2546 |
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THIRTY-THIRD LEGISLATURE, 2026 |
H.D. 2 |
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STATE OF HAWAII |
S.D. 1 |
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A BILL FOR AN ACT
RELATING TO TAX CREDIT FOR RESEARCH ACTIVITIES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that Hawaii must diversify its economy by encouraging and promoting research and development activities. These efforts will help attract and retain technology companies in the State and provide high-paying jobs that are necessary for residents to thrive in Hawaii.
The legislature further finds that Hawaii has an opportunity to create careers that allow its young people to build their futures at home. When local graduates can find work that matches their education and ambition, they are more likely to remain in the State, raise families, start businesses, and strengthen the communities that raised them. Research and development jobs offer these meaningful careers rooted in imagination and skill.
The legislature also finds that while tourism remains vital to Hawaii's economy, the State can and should build additional engines of growth. An economy grounded in research and innovation creates value from ideas – drawing on the creativity, education, and talent of its people. This approach increases economic resilience by ensuring that when one sector faces disruption, as tourism did during the COVID-19 pandemic and following the Lahaina wildfire, other industries can help sustain families and communities.
The legislature additionally finds that economic research supports this approach. The 2018 Nobel Prize in Economic Sciences was awarded for research demonstrating that sustained economic growth comes from investing in people and ideas. The 2025 Nobel Prize in Economic Sciences further showed how innovation drives long-term growth by creating new technologies, products, and production methods that replace old ones. Economies that support research and development grow from within, generating prosperity that compounds over generations.
The legislature further finds that Hawaii's research activities tax credit has proven its value, as demand consistently exceeds available funding. For the past three years, the $5,000,000 annual cap has been reached almost immediately upon opening applications, demonstrating strong interest from companies ready to invest in Hawaii. Additionally, removing the federal base-amount calculation will encourage companies to expand their research activities year after year without being penalized for prior investments and eliminates the uncertainty for businesses planning multi-year research investments in Hawaii.
The legislature also finds that strengthening this credit will position Hawaii to compete more effectively for innovation-driven companies. Other states like Florida, Maryland, and Michigan have made significant commitments to research incentives, with annual caps ranging from $9,000,000 to $100,000,000. Increasing Hawaii's cap and simplifying the credit will send a clear signal that the State believes in its people and invests in their potential.
The purpose of this Act is to strengthen the research activities tax credit and invest in Hawaii's future by:
(1) Allowing taxpayers to claim credits for all qualified research expenses without reduction for prior-year spending;
(2) Increasing the annual statewide cap to meet demonstrated demand and support an economy in which Hawaii's families can thrive;
(3) Requiring the credit to be divided between all qualified high technology businesses for that calendar year in proportion to the amount of qualified research expenses claimed if the annual statewide cap is reached; and
(4) Requiring the department of business, economic development, and tourism to establish an annual application period and notify each qualified high technology business applicant of the credit amount certified.
SECTION 2. Section 235-110.91, Hawaii Revised Statutes, is amended as follows:
1. By amending subsection (b) to read:
"(b) All references to Internal Revenue Code
sections within sections 41 and 280C(c) of the Internal Revenue Code shall be
operative for purposes of this section[.]; provided that references
to the base amount in section 41 of the Internal Revenue Code shall not apply,
and a credit for all qualified research expenses may be taken without regard to
the amount of expenses for previous years."
2. By amending subsection (d) to read:
"(d) Every qualified high technology business,
before March [31] 1 of each year in which qualified research and
development activity was conducted in the previous taxable year, shall submit a
written, certified statement to the department of business, economic
development, and tourism identifying:
(1) Qualified expenditures, if any, expended in the previous taxable year; and
(2) The amount of tax credits claimed pursuant to this section, if any, in the previous taxable year."
3. By amending subsection (f) to read:
"(f) If in any taxable year the annual amount of
certified credits reaches [$5,000,000] $
in the aggregate, the [department of business, economic development, and
tourism shall immediately discontinue certifying credits and notify the
department of taxation.] $
shall be divided between all qualified high technology businesses for that year
in proportion to the amount of qualified research expenses claimed by all
qualified high technology businesses; provided that:
(1) The department of business, economic development, and tourism shall establish an annual application period ending on March 1 of each year at 5:00 p.m. Hawaii Standard Time; provided further that the department shall determine the opening date of the application period by rule;
(2) By May 31 of each year the department of business, economic development, and tourism shall notify each qualified high technology business applicant of the credit amount certified; and
(3) If the total credits applied for by all qualified high technology businesses are $ or less, each qualified high technology business shall receive the full amount of the credit applied for, subject to verification of qualified research expenses.
In no instance shall the department of business,
economic development, and tourism certify a total amount of credits exceeding [$5,000,000]
$ per
taxable year. [To comply with this restriction,
the department of business, economic development, and tourism shall certify
credits on a first come, first served basis.]
The department of taxation shall not allow the aggregate amount of credits claimed to exceed that amount per taxable year."
SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 4. This Act shall take effect on July 1, 3050, and shall apply to costs incurred beginning after December 31, 2025.
Report Title:
DBEDT; Tax Credit; Research Activities; Qualified High Technology Businesses; Annual Cap; Tax Credit Distribution; Certification
Description:
Amends the tax credit for research activities by: allowing taxpayers to claim credits for all qualified research expenses without regard to prior-year expenses; amending from March 31 to March 1, the deadline for qualified high technology businesses to submit a written, certified statement to the Department of Business, Economic Development, and Tourism identifying its qualified expenditures and research activities tax credits claimed in the previous taxable year; increasing the annual statewide cap amount for the tax credit; requiring the tax credit to be divided between all qualified high technology businesses for that year on a proportional basis if the annual statewide cap is reached; and requiring DBEDT to establish an annual application period and notify each qualified high technology business applicant of the credit amount certified. Applies to costs incurred beginning after 12/31/2025. Effective 7/1/3050. (SD1)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
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HOUSE OF REPRESENTATIVES |
H.B. NO. |
2546 |
|
THIRTY-THIRD LEGISLATURE, 2026 |
H.D. 2 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO TAX CREDIT FOR RESEARCH ACTIVITIES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that Hawaii must diversify its economy by encouraging and promoting research and development activities. These efforts will help attract and retain technology companies in the State and provide high-paying jobs that are necessary for residents to thrive in Hawaii.
The legislature further finds that Hawaii has an opportunity to create careers that allow its young people to build their futures at home. When local graduates can find work that matches their education and ambition, they are more likely to remain in the State, raise families, start businesses, and strengthen the communities that raised them. Research and development jobs offer these meaningful careers rooted in imagination and skill.
The legislature also finds that while tourism remains vital to Hawaii's economy, the State can and should build additional engines of growth. An economy grounded in research and innovation creates value from ideas – drawing on the creativity, education, and talent of its people. This approach increases economic resilience by ensuring that when one sector faces disruption, as tourism did during the COVID-19 pandemic and following the Lahaina wildfire, other industries can help sustain families and communities.
The legislature additionally finds that economic research supports this approach. The 2018 Nobel Prize in Economic Sciences was awarded for research demonstrating that sustained economic growth comes from investing in people and ideas. The 2025 Nobel Prize in Economic Sciences further showed how innovation drives long-term growth by creating new technologies, products, and production methods that replace old ones. Economies that support research and development grow from within, generating prosperity that compounds over generations.
The legislature further finds that Hawaii's research activities tax credit has proven its value, as demand consistently exceeds available funding. For the past three years, the $5,000,000 annual cap has been reached almost immediately upon opening applications, demonstrating strong interest from companies ready to invest in Hawaii. Additionally, removing the federal base-amount calculation will encourage companies to expand their research activities year after year without being penalized for prior investments and eliminates the uncertainty for businesses planning multi-year research investments in Hawaii.
The legislature also finds that strengthening this credit will position Hawaii to compete more effectively for innovation-driven companies. Other states like Florida, Maryland, and Michigan have made significant commitments to research incentives, with annual caps ranging from $9,000,000 to $100,000,000. Increasing Hawaii's cap and simplifying the credit will send a clear signal that the State believes in its people and invests in their potential.
The purpose of this Act is to strengthen the research activities tax credit and invest in Hawaii's future by:
(1) Allowing taxpayers to claim credits for all qualified research expenses without reduction for prior-year spending;
(2) Increasing the annual statewide cap to meet demonstrated demand and support an economy in which Hawaii's families can thrive;
(3) Requiring the credit to be divided between all qualified high technology businesses for that calendar year in proportion to the amount of qualified research expenses claimed if the annual statewide cap is reached; and
(4) Requiring the department of business, economic development, and tourism to establish an annual application period and notify each qualified high technology business applicant of the credit amount certified.
SECTION 2. Section 235-110.91, Hawaii Revised Statutes, is amended as follows:
1. By amending subsection (b) to read:
"(b) All references to Internal Revenue Code
sections within sections 41 and 280C(c) of the Internal Revenue Code shall be
operative for purposes of this section[.]; provided that references
to the base amount in section 41 of the Internal Revenue Code shall not apply,
and a credit for all qualified research expenses may be taken without regard to
the amount of expenses for previous years."
2. By amending subsection (f) to read:
"(f) If in any taxable year the annual amount of
certified credits reaches [$5,000,000] $
in the aggregate, the [department of business, economic development, and
tourism shall immediately discontinue certifying credits and notify the
department of taxation.] $
shall be divided between all qualified high technology businesses for that year
in proportion to the amount of qualified research expenses claimed by all
qualified high technology businesses; provided that:
(1) The department of business, economic development, and tourism shall establish an annual application period ending on March 1 of each year at 5:00 p.m. Hawaii Standard Time; provided that the department shall determine the opening date of the application period by rule;
(2) By May 31 of each year the department of business, economic development, and tourism shall notify each qualified high technology business applicant of the credit amount certified; and
(3) If the total credits applied for by all qualified high technology businesses are $ or less, each qualified high technology business shall receive the full amount of the credit applied for, subject to verification of qualified research expenses.
In no instance shall the department of business,
economic development, and tourism certify a total amount of credits exceeding [$5,000,000]
$ per
taxable year. [To comply with this
restriction, the department of business, economic development, and tourism
shall certify credits on a first come, first served basis.]
The department of taxation shall not allow the aggregate amount of credits claimed to exceed that amount per taxable year."
SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 4. This Act shall take effect on July 1, 3000, and shall apply retroactive to taxable years beginning after December 31, 2024.
Report Title:
Tax Credit; Research Activities; Qualified High Technology Businesses; Annual Cap; Tax Credit Distribution; Certification; DBEDT
Description:
Amends the tax credit for research activities by: allowing taxpayers to claim all qualified research expenses without regard to prior-year expenses; increasing the annual cap; requiring the tax credit to be divided on a proportional basis if the annual statewide cap is reached; and requiring the Department of Business, Economic Development, and Tourism to establish an annual application period and notify each qualified high technology business applicant of the credit amount certified. Applies retroactive to taxable years beginning after 12/31/2024. 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.
|
HOUSE OF REPRESENTATIVES |
H.B. NO. |
2546 |
|
THIRTY-THIRD LEGISLATURE, 2026 |
H.D. 1 |
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STATE OF HAWAII |
|
|
|
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|
|
|
|
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|
||
A BILL FOR AN ACT
RELATING TO TAX CREDIT FOR RESEARCH ACTIVITIES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that Hawaii must diversify its economy by encouraging and promoting research and development activities. These efforts will help attract and retain technology companies in the State and provide high-paying jobs that are necessary for residents to thrive in Hawaii.
The legislature further finds that Hawaii has an opportunity to create careers that allow its young people to build their futures at home. When local graduates can find work that matches their education and ambition, they are more likely to remain in the State, raise families, start businesses, and strengthen the communities that raised them. Research and development jobs offer these meaningful careers rooted in imagination and skill.
The legislature also finds that while tourism remains vital to Hawaii's economy, the State can and should build additional engines of growth. An economy grounded in research and innovation creates value from ideas – drawing on the creativity, education, and talent of its people. This approach increases economic resilience by ensuring that when one sector faces disruption, as tourism did during the COVID-19 pandemic and following the Lahaina wildfire, other industries can help sustain families and communities.
The legislature additionally finds that economic research supports this approach. The 2018 Nobel Prize in Economic Sciences was awarded for research demonstrating that sustained economic growth comes from investing in people and ideas. The 2025 Nobel Prize in Economic Sciences further showed how innovation drives long-term growth by creating new technologies, products, and production methods that replace old ones. Economies that support research and development grow from within, generating prosperity that compounds over generations.
The legislature further finds that Hawaii's research activities tax credit has proven its value, as demand consistently exceeds available funding. For the past three years, the $5,000,000 annual cap has been reached almost immediately upon opening applications, demonstrating strong interest from companies ready to invest in Hawaii. Additionally, removing the federal base-amount calculation will encourage companies to expand their research activities year after year without being penalized for prior investments and eliminates the uncertainty for businesses planning multi-year research investments in Hawaii.
The legislature also finds that strengthening this credit will position Hawaii to compete more effectively for innovation-driven companies. Other states like Florida, Maryland, and Michigan have made significant commitments to research incentives, with annual caps ranging from $9,000,000 to $100,000,000. Increasing Hawaii's cap and simplifying the credit will send a clear signal that the State believes in its people and invests in their potential.
The purpose of this Act is to strengthen the research activities tax credit and invest in Hawaii's future by:
(1) Allowing taxpayers to claim credits for all qualified research expenses without reduction for prior-year spending;
(2) Increasing the annual statewide cap from $5,000,000 to $15,000,000 to meet demonstrated demand and support an economy in which Hawaii's families can thrive;
(3) Requiring the credit to be divided between all qualified high technology businesses for that calendar year in proportion to the amount of qualified research expenses claimed if the annual statewide cap is reached; and
(4) Requiring the department of business, economic development, and tourism to establish an annual application period and notify each qualified high technology business applicant of the credit amount certified.
SECTION 2. Section 235-110.91, Hawaii Revised Statutes, is amended as follows:
1. By amending subsection (b) to read:
"(b) All references to Internal Revenue Code
sections within sections 41 and 280C(c) of the Internal Revenue Code shall be
operative for purposes of this section[.]; provided that references
to the base amount in section 41 of the Internal Revenue Code shall not apply,
and a credit for all qualified research expenses may be taken without regard to
the amount of expenses for previous years."
2. By amending subsection (f) to read:
"(f) If in any taxable year the annual amount of
certified credits reaches [$5,000,000] $15,000,000 in the
aggregate, the [department of business, economic development, and tourism
shall immediately discontinue certifying credits and notify the department of
taxation.] $15,000,000 shall be divided between all qualified high
technology businesses for that year in proportion to the amount of qualified
research expenses claimed by all qualified high technology businesses; provided
that:
(1) The department of business, economic development, and tourism shall establish an annual application period ending on March 1 of each year at 5:00 p.m. Hawaii Standard Time; provided that the department shall determine the opening date of the application period by rule;
(2) By May 31 of each year the department of business, economic development, and tourism shall notify each qualified high technology business applicant of the credit amount certified; and
(3) If the total credits applied for by all qualified high technology businesses are $15,00,000 or less, each qualified high technology business shall receive the full amount of the credit applied for, subject to verification of qualified research expenses.
In no instance shall the department of business,
economic development, and tourism certify a total amount of credits exceeding
$5,000,000 per taxable year. [To
comply with this restriction, the department of business, economic development,
and tourism shall certify credits on a first come, first served basis.]
The department of taxation shall not allow the aggregate amount of credits claimed to exceed that amount per taxable year."
SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 4. This Act shall take effect on July 1, 3000, and shall apply retroactive to taxable years beginning after December 31, 2024.
Report Title:
Tax Credit; Research Activities; Qualified High Technology Businesses; Annual Cap; Tax Credit Distribution; Certification; DBEDT
Description:
Amends the tax credit for research activities by: allowing taxpayers to claim all qualified research expenses without regard to prior-year expenses; increasing the annual cap; requiring the tax credit to be divided on a proportional basis if the annual statewide cap is reached; and requiring the Department of Business, Economic Development, and Tourism to establish an annual application period and notify each qualified high technology business applicant of the credit amount certified. Applies retroactive to taxable years beginning after 12/31/2024. 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.
|
HOUSE OF REPRESENTATIVES |
H.B. NO. |
2546 |
|
THIRTY-THIRD LEGISLATURE, 2026 |
|
|
|
STATE OF HAWAII |
|
|
|
|
|
|
|
|
||
|
|
||
A BILL FOR AN ACT
RELATING TO TAX CREDIT FOR RESEARCH ACTIVITIES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that Hawaii must diversify its economy by encouraging and promoting research and development activities. These efforts will help attract and retain technology companies in the State and provide high-paying jobs that are necessary for residents to thrive in Hawaii.
The legislature further finds that Hawaii has an opportunity to create careers that allow its young people to build their futures at home. When local graduates can find work that matches their education and ambition, they are more likely to remain in the State, raise families, start businesses, and strengthen the communities that raised them. Research and development jobs offer these meaningful careers rooted in imagination and skill.
The legislature also finds that while tourism remains vital to Hawaii's economy, the State can and should build additional engines of growth. An economy grounded in research and innovation creates value from ideas – drawing on the creativity, education, and talent of its people. This approach increases economic resilience by ensuring that when one sector faces disruption, as tourism did during the COVID-19 pandemic and following the Lahaina wildfire, other industries can help sustain families and communities.
The legislature additionally finds that economic research supports this approach. The 2018 Nobel Prize in Economic Sciences was awarded for research demonstrating that sustained economic growth comes from investing in people and ideas. The 2025 Nobel Prize in Economic Sciences further showed how innovation drives long-term growth by creating new technologies, products, and production methods that replace old ones. Economies that support research and development grow from within, generating prosperity that compounds over generations.
The legislature further finds that Hawaii's research activities tax credit has proven its value, as demand consistently exceeds available funding. For the past three years, the $5,000,000 annual cap has been reached almost immediately upon opening applications, demonstrating strong interest from companies ready to invest in Hawaii. Additionally, removing the federal base-amount calculation will encourage companies to expand their research activities year after year without being penalized for prior investments and eliminates the uncertainty for businesses planning multi-year research investments in Hawaii.
The legislature also finds that strengthening this credit will position Hawaii to compete more effectively for innovation-driven companies. Other states like Florida, Maryland, and Michigan have made significant commitments to research incentives, with annual caps ranging from $9,000,000 to $100,000,000. Increasing Hawaii's cap and simplifying the credit will send a clear signal that the State believes in its people and invests in their potential.
The purpose of this Act is to strengthen the research activities tax credit and invest in Hawaii's future by:
(1) Allowing taxpayers to claim credits for all qualified research expenses without reduction for prior-year spending; and
(2) Increasing the annual statewide cap from $5,000,000 to $15,000,000 to meet demonstrated demand and support an economy in which Hawaii's families can thrive.
SECTION 2. Section 235-110.91, Hawaii Revised Statutes, is amended as follows:
1. By amending subsection (b) to read:
"(b) All references to Internal Revenue Code
sections within sections 41 and 280C(c) of the Internal Revenue Code shall be
operative for purposes of this section[.]; provided that references
to the base amount in section 41 of the Internal Revenue Code shall not apply,
and a credit for all qualified research expenses may be taken without regard to
the amount of expenses for previous years."
2. By amending subsection (f) to read:
"(f) If in any taxable year the annual amount of
certified credits reaches [$5,000,000] $15,000,000 in the
aggregate, the department of business, economic development, and tourism shall
immediately discontinue certifying credits and notify the department of
taxation. In no instance shall the
department of business, economic development, and tourism certify a total
amount of credits exceeding [$5,000,000] $15,000,000 per taxable
year. To comply with this restriction,
the department of business, economic development, and tourism shall certify
credits on a [first come, first served] first-come, first-served
basis.
The department of taxation shall not allow the aggregate amount of credits claimed to exceed that amount per taxable year."
SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 4. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2025.
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INTRODUCED BY: |
_____________________________ |
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Report Title:
Tax Credit; Research Activities
Description:
Restores the provision that makes references to the Internal Revenue Code's base-amount requirement inapplicable to the Research Activities Tax Credit, allowing all qualified research expenses to be claimed without regard to prior-year expenses. Increases the annual cap for the Research Activities Tax Credit.
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
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Date
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Status
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| May 1, 2026 | Conference committee meeting to reconvene on 05-01-26 5:40 PM; Conference Room 309. |
| May 1, 2026 | Conference committee meeting to reconvene on 05-01-26 5:37 PM; Conference Room 329. |
| May 1, 2026 | Conference Committee Meeting will reconvene on Friday, 05-01-26 at 4:31PM in Conference Room 411. |
| May 1, 2026 | Conference Committee Meeting will reconvene on Friday, 05-01-26 at 11:30AM in Conference Room 411. |
| Apr 30, 2026 | Conference Committee Meeting will reconvene on Friday 05-01-26 8:01AM in conference room 411. |
| Apr 28, 2026 | Bill scheduled for Conference Committee Meeting on Thursday, 04-30-26 8:30AM in conference room 411. |
| Apr 23, 2026 | Received notice of Senate conferees (Sen. Com. No. 725). |
| Apr 22, 2026 | Senate Conferees Appointed: DeCoite Chair; Wakai Co-Chair; Fevella. |
| Apr 20, 2026 | Received notice of appointment of House conferees (Hse. Com. No. 786). |
| Apr 20, 2026 | House Conferees Appointed: Ilagan, Hussey Co-Chairs; Tam, Gedeon. |
| Apr 17, 2026 | Received notice of disagreement (Hse. Com. No. 780). |
| Apr 16, 2026 | House disagrees with Senate amendment (s). |
| Apr 14, 2026 | Returned from Senate (Sen. Com. No. 701) in amended form (SD 2). |
| Apr 14, 2026 | Report adopted; Passed Third Reading, as amended (SD 2). Ayes, 25; Aye(s) with reservations: none . Noes, 0 (none). Excused, 0 (none). Transmitted to House. |
| Apr 9, 2026 | 48 Hrs. Notice 04-14-26. |
| Apr 9, 2026 | Reported from WAM (Stand. Com. Rep. No. 3686) with recommendation of passage on Third Reading, as amended (SD 2). |
| Apr 6, 2026 | The committee(s) on WAM recommend(s) that the measure be PASSED, WITH AMENDMENTS. The votes in WAM were as follows: 12 Aye(s): Senator(s) Dela Cruz, Moriwaki, DeCoite, Elefante, Hashimoto, Inouye, Kanuha, Kidani, Kim, Richards, Wakai, Fevella; Aye(s) with reservations: none ; 0 No(es): none; and 1 Excused: Senator(s) Lee, C.. |
| Apr 1, 2026 | The committee(s) on WAM deferred the measure until 04-06-26 10:31AM; Conference Room 211 & Videoconference. |
| Mar 30, 2026 | Report adopted; Passed Second Reading, as amended (SD 1) and referred to WAM. |
| Mar 30, 2026 | The committee(s) on WAM will hold a public decision making on 04-01-26 10:03AM; Conference Room 211 & Videoconference. |
| Mar 30, 2026 | Reported from EDT (Stand. Com. Rep. No. 3238) with recommendation of passage on Second Reading, as amended (SD 1) and referral to WAM. |
| Mar 24, 2026 | The committee(s) on EDT recommend(s) that the measure be PASSED, WITH AMENDMENTS. The votes in EDT were as follows: 4 Aye(s): Senator(s) DeCoite, Wakai, Kim, Fevella; Aye(s) with reservations: none ; 0 No(es): none; and 1 Excused: Senator(s) Fukunaga. |
| Mar 20, 2026 | The committee(s) on EDT has scheduled a public hearing on 03-24-26 1:04PM; Conference Room 229 & Videoconference. |
| Mar 12, 2026 | Referred to EDT, WAM. |
| Mar 12, 2026 | Passed First Reading. |
| Mar 12, 2026 | Received from House (Hse. Com. No. 435). |
| Mar 10, 2026 | Passed Third Reading as amended in HD 2 with Representative(s) Iwamoto voting aye with reservations; none voting no (0) and Representative(s) Pierick excused (1). Transmitted to Senate. |
| Mar 6, 2026 | Forty-eight (48) hours notice Tuesday, 03-10-26. |
| Mar 6, 2026 | Reported from FIN (Stand. Com. Rep. No. 1111-26) as amended in HD 2, recommending passage on Third Reading. |
| Mar 2, 2026 | The committee on FIN recommend that the measure be PASSED, WITH AMENDMENTS. The votes were as follows: 16 Ayes: Representative(s) Todd, Takenouchi, Hartsfield, Hussey, Keohokapu-Lee Loy, Kitagawa, Kusch, Lee, M., Miyake, Morikawa, Perruso, Templo, Yamashita, Alcos, Gedeon, Reyes Oda; Ayes with reservations: none; Noes: none; and Excused: none. |
| Feb 27, 2026 | Bill scheduled to be heard by FIN on Monday, 03-02-26 2:00PM in House conference room 308 VIA VIDEOCONFERENCE. |
| Feb 19, 2026 | Passed Second Reading as amended in HD 1 and referred to the committee(s) on FIN with none voting aye with reservations; none voting no (0) and none excused (0). |
| Feb 19, 2026 | Reported from ECD (Stand. Com. Rep. No. 511-26) as amended in HD 1, recommending passage on Second Reading and referral to FIN. |
| Feb 13, 2026 | The committee on ECD recommend that the measure be PASSED, WITH AMENDMENTS. The votes were as follows: 7 Ayes: Representative(s) Ilagan, Hussey, Holt, Tam, Templo, Yamashita, Gedeon; Ayes with reservations: none; Noes: none; and Excused: none. |
| Feb 10, 2026 | Bill scheduled to be heard by ECD on Friday, 02-13-26 8:30AM in House conference room 423 VIA VIDEOCONFERENCE. |
| Feb 2, 2026 | Referred to ECD, FIN, referral sheet 6 |
| Jan 28, 2026 | Introduced and Pass First Reading. |
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Date
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Description
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Location
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Votes
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| Apr 14, 2026 | Third Reading | Senate Floor |
Passed |
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| Apr 6, 2026 | The committee(s) on WAM recommend(s) that the measure be PASSED, WITH AMENDMENTS | Senate Standing Committee on Ways and Means |
Passed |
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| Mar 24, 2026 | The committee(s) on EDT recommend(s) that the measure be PASSED, WITH AMENDMENTS | Senate Standing Committee on Economic Development and Tourism |
Passed |
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| Mar 10, 2026 | Third Reading | House Floor |
Passed |
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| Mar 2, 2026 | The committee on FIN recommend that the measure be PASSED, WITH AMENDMENTS | House Standing Committee on Finance |
Passed |
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| Feb 13, 2026 | The committee on ECD recommend that the measure be PASSED, WITH AMENDMENTS | House Standing Committee on Economic Development & Technology |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
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Organization
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Position
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Date
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|---|---|---|
| Ai.Fish Inc | *** Support | Mar 31, 2026 |
| Black Sand Solutions LLC | ** Support | |
| Black Sand Solutions LLC | *** Support | Mar 3, 2026 |
| Chamber of Commerce Hawaii | *** Support | Mar 31, 2026 |
| CivicNexus | *** Support | Mar 31, 2026 |
| Department of Business, Economic Development, and Tourism | *** Support | Mar 31, 2026 |
| eWorld Enterprise Solutions, Inc | ** Support | |
| eWorld Enterprise Solutions, Inc. | *** Support | Mar 3, 2026 |
| Hawaii Technology Development Corporation | *** Support | Mar 24, 2026 |
| Hawaii Fibers | *** Support | Mar 31, 2026 |
| Hawaii Fish Company | *** Support | Mar 31, 2026 |
| Hawaii Technology Development Corporation | *** Support | Mar 31, 2026 |
| Hyperspective Studios, Inc. | *** Support | Mar 31, 2026 |
| Makai Ocean Engineering, Inc. | *** Support | Mar 31, 2026 |
| Maui Chamber of Commerce | *** Support | Mar 24, 2026 |
| Nalu Scientific | *** Support | Mar 31, 2026 |
| Nalu Scientific | *** Support | Mar 3, 2026 |
| Namaka Algae, Inc. | ** Support | |
| NeuroMuse LLC | ** Support | |
| Oceanit Laboratories, Inc. | *** Support | Mar 31, 2026 |
| Pacific Impact Zone Solutions Inc. | *** Support | Mar 31, 2026 |
| Simonpietri Enterprises LLC | *** Support | Mar 31, 2026 |
| Small Kine Farm | *** Support | Mar 31, 2026 |
| WaiHome LLC | *** Support | Mar 31, 2026 |
STAND. COM. REP. NO. 1111-26
Honolulu, Hawaii
, 2026
RE: H.B. No. 2546
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 Finance, to which was referred H.B. No. 2546, H.D. 1, entitled:
"A BILL FOR AN ACT RELATING TO TAX CREDIT FOR RESEARCH ACTIVITIES,"
begs leave to report as follows:
The purpose of this measure is to amend the Research Activities Tax Credit by:
(1) Allowing taxpayers to claim credits for all qualified research expenses without regard to prior-year expenses;
(2) Increasing the annual statewide cap;
(3) Requiring the tax credit to be distributed in proportion to the amount of qualified research expenses claimed by all qualified high technology businesses if the annual statewide cap is reached, instead of on a first-come, first-served basis; and
(4) Requiring the Department of Business, Economic Development, and Tourism to establish an annual application period and notify each qualified high technology business applicant of the credit amount certified.
Your Committee received testimony in support of this measure from the Department of Business, Economic Development and Tourism; Hawaiʻi Technology Development Corporation; Chamber of Commerce Hawaii; Oceanit Laboratories, Inc.; Small Kine Farm; Ai.Fish; Namaka Algae, Inc.; Black Sand Solutions LLC; NeuroMuse LLC; and eWorld Enterprise Solutions, Inc. Your Committee received comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.
Your Committee has amended this measure by:
(1) Changing the amount of the annual statewide cap to an unspecified amount; and
(2) 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 Finance that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2546, H.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 2546, H.D. 2.
Respectfully submitted on behalf of the members of the Committee on Finance,
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____________________________ CHRIS TODD, Chair |
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STAND. COM. REP. NO. 511-26
Honolulu, Hawaii
, 2026
RE: H.B. No. 2546
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 Economic Development & Technology, to which was referred H.B. No. 2546 entitled:
"A BILL FOR AN ACT RELATING TO TAX CREDIT FOR RESEARCH ACTIVITIES,"
begs leave to report as follows:
The purpose of this measure is to amend the Research Activities Tax Credit by:
(1) Allowing taxpayers to claim credits for all qualified research expenses without reduction for prior-year spending; and
(2) Increasing the annual statewide cap from $5,000,000 to $15,000,000.
Your Committee received testimony in support of this measure from the Department of Business, Economic Development, and Tourism; Hawaiʻi Technology Development Corporation; Makai Ocean Engineering, Inc.; Oceanit Laboratories, Inc.; Nalu Scientific; Simonpietri Enterprises LLC; and Chamber of Commerce Hawaii. Your Committee received comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.
Your Committee finds that incentivizing research and development activities in the State would help attract and retain technology companies, create high-paying jobs, and enhance career opportunities for young people looking to build their futures in Hawaii. Your Committee further finds that the Research Activities Tax Credit is an appropriate mechanism to provide such incentives. Your Committee recognizes, however, that demand for the tax credit has consistently exceeded the existing cap, limiting companies' ability to expand local research operations. This measure encourages continued investment by removing the federal base‑amount calculation and increasing the annual cap of the Research Activities Tax Credit.
Your Committee has amended this measure by:
(1) Requiring the tax credit to be distributed in proportion to the amount of qualified research expenses claimed by all qualified high technology businesses if the annual statewide cap is reached, instead of on a first-come, first-served basis;
(2) Requiring the Department of Business, Economic Development, and Tourism to establish an annual application period and notify each qualified high technology business applicant of the credit amount certified;
(3) Applying the measure retroactive to taxable years beginning after December 31, 2024;
(4) Changing the effective date to July 1, 3000, to encourage further discussion; and
(5) 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. 2546, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2546, H.D. 1, and be referred to your Committee on Finance.
Respectfully submitted on behalf of the members of the Committee on Economic Development & Technology,
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____________________________ GREGGOR ILAGAN, Chair |
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Date
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Testimony PDF
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|---|---|
| Mar 31, 2026 | HB2546_SD1_TESTIMONY_WAM_04-01-26_.PDF |
| Mar 24, 2026 | HB2546_HD2_TESTIMONY_EDT_03-24-26_.PDF |
| Mar 3, 2026 | HB2546_HD1_TESTIMONY_FIN_03-02-26_.PDF |
| Feb 13, 2026 | HB2546_TESTIMONY_ECD_02-13-26_.PDF |
Discussed in Hearing
40SEC
Conference Committee
2MIN
Conference Committee
1MIN
Conference Committee
38SEC
Conference Committee
41SEC
Conference Committee
1MIN
Conference Committee
18MIN
Senate Standing Committee on Housing
18MIN
Senate Standing Committee on Economic Development and Tourism
Bill Author
