HB 577: RELATING TO TAXATION.

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-     Public transportation subsidization tax credit.  (a)  There shall be allowed to each individual or corporate taxpayer who is not claimed, or is not otherwise eligible to be claimed, as a dependent by another taxpayer for federal or state income tax purposes, a public transportation subsidization tax credit that shall be deductible from the taxpayer's net income tax liability imposed by this chapter for the taxable year in which the tax credit is properly claimed.

     (b)  To qualify for the tax credit, the taxpayer shall be an employer having a place of business in any county in the State.

     (c)  The amount of the tax credit shall be equal to      per cent of the amount spent by the taxpayer during the taxable year to purchase fares or passes for the employer's employees to use public transportation.

     (d)  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; provided that no credit carried forward under this subsection shall be used as a credit for a taxable year beginning after December 31, 2030.

     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 tax credit may be claimed.  Failure to meet the filing requirements of this subsection shall constitute a waiver of the right to claim the tax credit.

     (e)  No other tax credit or deduction shall be claimed under this chapter for the expenses used to claim a tax credit under this section for the taxable year.

     (f)  The director of taxation:

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

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

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

     (g)  The tax credit authorized under this section shall not be available for taxable years beginning after December 31, 2029.

     (h)  The director of taxation shall submit to the legislature reports regarding the tax credit authorized under this section.  Each report shall be submitted no later than twenty days prior to the convening of the regular sessions of 2027, 2028, 2029, and 2030.  Each report shall include, at minimum:

     (1)  The number and value of the credits granted under this section for the prior calendar year; and

     (2)  The total number and value of the credits granted under this section since its enactment.

     (i)  For the purposes of this section, "public transportation" means any mass transportation program that is:

     (1)  Open to the general public; and

     (2)  Operated or contracted by the State or a county."

     SECTION 2.  New statutory material is underscored.

     SECTION 3.  This Act shall take effect on July 1, 3000; provided that it shall apply to taxable years beginning after December 31, 2025.

Report Title:

Tax Credit; Businesses; Employees; Public Transportation; Legislature; Reports

Description:

Authorizes a tax credit for businesses that pay the public transportation costs of employees.  Requires reports to the Legislature.  Applies for taxable years beginning after 12/31/2025 but not beginning after 12/31/2029.  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 be appropriately designated and to read as follows:

     "§235-     Public transportation subsidization tax credit.  (a)  There shall be allowed to each individual or corporate taxpayer who is not claimed, or is not otherwise eligible to be claimed, as a dependent by another taxpayer for federal or state income tax purposes, a public transportation subsidization tax credit that shall be deductible from the taxpayer's net income tax liability imposed by this chapter for the taxable year in which the tax credit is properly claimed.

     (b)  To qualify for the tax credit, the taxpayer shall be an employer having a place of business in any county in the State.

     (c)  The amount of the tax credit shall be equal to the amount spent by the taxpayer during the taxable year to purchase fares or passes for the employer's employees to use public transportation.

     (d)  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; provided that no credit carried forward under this subsection shall be used as a credit for a taxable year beginning after December 31, 2030.

     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 tax credit may be claimed.  Failure to meet the filing requirements of this subsection shall constitute a waiver of the right to claim the tax credit.

     (e)  No other tax credit or deduction shall be claimed under this chapter for the expenses used to claim a tax credit under this section for the taxable year.

     (f)  The director of taxation:

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

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

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

     (g)  The tax credit authorized under this section shall not be available for taxable years beginning after December 31, 2029.

     (h)  The director of taxation shall submit to the legislature reports regarding the tax credit authorized under this section.  Each report shall be submitted twenty days prior to the convening of the regular sessions of 2027, 2028, 2029, and 2030.  Each report shall include, at minimum:

     (1)  The number and value of the credits granted under this section for the prior calendar year; and

     (2)  The total number and value of the credits granted under this section since its enactment.

     (i)  For the purposes of this section, "public transportation" means any mass transportation program that is:

     (1)  Open to the general public; and

     (2)  Operated or contracted by the State or a county."

     SECTION 2.  New statutory material is underscored.

     SECTION 3.  This Act shall take effect on July 1, 3000; provided that it shall apply to taxable years beginning after December 31, 2025.

Report Title:

Tax Credit; Businesses; Employees; Public Transportation; Legislature; Reports

Description:

Authorizes a tax credit for businesses that pay the public transportation costs of employees.  Requires reports to the Legislature.  Applies for taxable years beginning after 12/31/2025 but not beginning after 12/31/2029.  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-     Public transportation subsidization tax credit.  (a)  There shall be allowed to each individual or corporate taxpayer who is not claimed, or is not otherwise eligible to be claimed, as a dependent by another taxpayer for federal or state income tax purposes, a public transportation subsidization tax credit that shall be deductible from the taxpayer's net income tax liability imposed by this chapter for the taxable year in which the tax credit is properly claimed.

     (b)  To qualify for the tax credit, the taxpayer shall be an employer having a place of business in any county in the State having a population of seven hundred thousand or more.

     (c)  The amount of the tax credit shall be equal to the amount spent by the taxpayer during the taxable year to purchase fares or passes for the employer's employees to use public transportation.

     (d)  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 tax credit may be claimed.  Failure to meet the filing requirements of this subsection shall constitute a waiver of the right to claim the tax credit.

     (e)  The director of taxation:

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

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

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

     (f)  The tax credit authorized under this section shall not be available for taxable years beginning after December 31, 2029.

     (g)  The director of taxation shall submit to the legislature reports regarding the tax credit authorized under this section.  Each report shall be submitted twenty days prior to the convening of the 2027, 2028, 2029, and 2030 regular sessions.  Each report shall include, at minimum:

     (1)  The number and value of the credits granted under this section for the prior calendar year;

     (2)  The total number and value of the credits granted under this section since the enactment of this section;

     (3)  The impact of the tax credit authorized under this section; and

     (4)  A recommendation whether the State should continue to authorize the tax credit under this section.

     (h)  For the purposes of this section, "public transportation" means any mass transportation program that is:

     (1)  Open to the general public;

     (2)  Operated or contracted by the State or a county; and

     (3)  Operated within a county having a population of seven hundred thousand or more."

     SECTION 2.  New statutory material is underscored.

     SECTION 3.  This Act, upon its approval, shall apply to taxable years beginning after December 31, 2024.

Report Title:

Tax Credit; Businesses; Employees; Public Transportation; Legislature; Reports

Description:

Authorizes a tax credit for businesses that pay the public transportation costs of employees.  Applies to counties having populations of 700,000 or more.  Applies for taxable years beginning after 12/31/2024 but not beginning after 12/31/2029.  Requires reports to the Legislature.

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.  499

Honolulu, Hawaii

                , 2025

RE:   H.B. No. 577

      H.D. 2

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Madame:

     Your Committee on Economic Development & Technology, to which was referred H.B. No. 577, 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 authorize a tax credit for five years for businesses that pay the public transportation costs of employees.

     Your Committee received testimony in support of this measure from Retail Merchants of Hawaii and two individuals.  Your Committee received comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

     Your Committee finds that increased public transportation use will lead to reduced traffic congestion, greenhouse gas emissions, and wear on roads and infrastructure.  This measure seeks to increase public transportation usage by authorizing a tax credit for businesses that pay the public transportation costs of employees.

     Your Committee has amended this measure by:

     (1)  Changing the amount of the tax credit to an unspecified percentage; and

     (2)  Making a technical, nonsubstantive amendment for the purposes of clarity, consistency, and style.

     Your Committee notes the suggestion raised in the Department of Taxation's testimony to offer the tax credit at a rate of less than one hundred percent of the amount spent by the employer to purchase employees' fares or passes, in order to limit the potential for abuse and waste.

     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. 577, 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. 577, H.D. 2.

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

STAND. COM. REP. NO.  76

Honolulu, Hawaii

                , 2025

RE:   H.B. No. 577

      H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Madame:

     Your Committee on Transportation, to which was referred H.B. No. 577 entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

     The purpose of this measure is to establish a five-year tax credit for businesses in a county having a population of seven hundred thousand or more that pay for the public transportation costs of their employees.

     Your Committee received testimony in support of this measure from Retail Merchants of Hawaii and one individual.  Your Committee received comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

     Your Committee finds that this measure would help businesses subsidize certain transportation costs of their employees and encourage the use of public transportation.

     Your Committee has amended this measure by:

     (1)  Deleting language that would have limited the tax credit to an employer having a place of business in, and public transportation operated in, a county with a population of seven hundred thousand or more;

     (2)  Specifying that no tax credit carried forward shall be used as a credit for a taxable year beginning after December 31, 2030;

     (3)  Specifying that no other tax credit or deduction for the same expenses shall be claimed under the state income tax law;

     (4)  Deleting language that would have required the Director of Taxation to include in their report to the Legislature the impact of the tax credit and whether this tax credit should be continued;

     (5)  Specifying that this measure, upon its approval, applies to taxable years beginning after December 31, 2025;

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

     (7)  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 Transportation that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 577, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 577, H.D. 1, and be referred to your Committee on Economic Development & Technology.

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