SB 3125
- Session Year: 2025-2026
- House: Senate
- Latest Version Date: 2026-05-06
Current Status:
Passed
(2026-05-21: Act 024, on 05/21/2026 (Gov. Msg. No. 1124).)
Introduced
In Committee
First Chamber
In Committee
Second Chamber
Final Decking
Enacted
What does this bill do?
The amendment limits a tax provision in the bill so that it no longer applies to tax years starting after December 31, 2029, and identifies changes to Hawaii tax law in sections 235‑12.5 and 235‑51. It also sets when each part takes effect: section 1 is largely retroactive to tax years after Dec. 31, 2025 (but changes to 235‑12.5(a) begin for tax years after Dec. 31, 2026), sections 2–4 apply to tax years after Dec. 31, 2026, section 6 starts Jan. 1, 2028, and section 5 starts Jan. 1, 2029, affecting Hawaii taxpayers' state tax treatment for those years.
The summary is provided by generative AI which can make mistakes. For original language, please view the details in the table below.
PART I: Repeals certain future adjustments to income tax brackets. Changes income tax rates. Amends the Renewable Energy Technologies Income Tax Credit by adding an aggregate cap amount, setting income thresholds, adding a certification requirement, and adding a sunset date. Adds sunset dates to the Capital Goods Excise Tax Credit and Renewable Fuels Production Tax Credit. PART II: Beginning 1/1/2028, repeals the Technology Infrastructure Renovation Tax Credit. Beginning 1/1/2029, repeals the High Technology Business Investment Tax Credit and Tax Credit for Research Activities. (CD2)
PART I: Repeals certain future adjustments to income tax brackets. Changes income tax rates. Amends the Renewable Energy Technologies Income Tax Credit by adding an aggregate cap amount, setting income thresholds, adding a certification requirement, and adding a sunset date. Adds sunset dates to the Capital Goods Excise Tax Credit and Renewable Fuels Production Tax Credit. PART II: Beginning 1/1/2028, repeals the Technology Infrastructure Renovation Tax Credit. Beginning 1/1/2029, repeals the High Technology Business Investment Tax Credit and Tax Credit for Research Activities. (CD2)
PART I: Repeals certain future adjustments to income tax brackets. Changes income tax rates. Amends the Renewable Energy Technologies Income Tax Credit by adding an aggregate cap amount, setting income thresholds, adding a certification requirement, and adding a sunset date. Adds sunset dates to the Capital Goods Excise Tax Credit and Renewable Fuels Production Tax Credit. PART II: Beginning 1/1/2028, repeals the Technology Infrastructure Renovation Tax Credit. Beginning 1/1/2029, repeals the High Technology Business Investment Tax Credit and Tax Credit for Research Activities. (CD1)
PART I: Repeals future adjustments to income tax brackets. For taxable years beginning after 12/31/2026, adds an income tax bracket and increases the income tax rates for the three highest income tax brackets by one percentage point each. Increases a taxpayer's applicable percentage of employment-related expenses that is used to calculate the household and dependent care services tax credit and increases income eligibility thresholds for the credit. Establishes certain disallowance periods following a final decision that a claim for the credit was due to fraud and that the claim was disallowed. Extends the sunset for enhancements made by Act 163, SLH 2023, to the Household and Dependent Care Services Tax Credit, Earned Income Tax Credit, and Food/Excise Tax Credit to 12/31/2032. PART II: Amends the renewable energy technologies income tax credit by: for taxable years beginning after 12/31/26, limiting claims for certain solar energy systems that are not third-party financed systems and installed and placed in service on a single-family residential property to taxpayers with an adjusted gross income of $250,000 or less if filing as an individual or $350,000 or less if filing jointly; removing certain cap amounts for solar energy systems that are not third-party financed systems; and increasing the maximum adjusted gross income an individual taxpayer must be below in order to be eligible to have any excess credits refunded and limiting credit refundability to systems that are not third-party financed systems. Effective 7/1/3000. (HD1)
PART I: Repeals certain future adjustments to income tax brackets. Changes income tax rates. Amends the child and dependent care tax credit by: (1) Changing the applicable percentage of the employment-related expenses for which the credit may be claimed to an unspecified percentage; (2) Providing for a disallowance period when there is a final administrative or judicial decision finding that the claim was due to fraud or disallowing the credit; and (3) Defining "adjusted gross income". Extends the repeal date for amendments made by Act 163, SLH 2023 to the child and dependent care tax credit, earned income tax credit, and food/excise tax credit to an unspecified date. PART II: Beginning 1/1/2029, repeals the following tax credits: Renewable Energy Technologies Income Tax Credit, Capital Goods Excise Tax Credit, High Technology Business Investment Tax Credit, Renewable Fuels Production Tax Credit, Technology Infrastructure Renovation Tax Credit, Ship Repair Industry Tax Credit, and Tax Credit for Research Activities. Effective 7/1/2050. (SD1)
PART I: Repeals certain future adjustments to income tax brackets. Changes the applicable percentage of the employment-related expenses for which the child and dependent care tax credit may be claimed to an unspecified percentage; provides for a disallowance period when there is a final administrative or judicial decision finding that the claim was due to fraud or disallowing the credit; and defines "adjusted gross income" for purposes of the child and dependent care tax credit as adjusted gross income as defined by the Internal Revenue Code of 1986, as amended. Extends the sunset for amendments made by Act 163, SLH 2023 to the child and dependent care tax credit, earned income tax credit, and food/excise tax credit to an unspecified date. PART II: Beginning 1/1/2029, repeals the following tax credits: Renewable Energy Technologies Tax Credit, Capital Goods Excise Tax Credit, High Technology Business Investment Tax Credit, Renewable Fuels Production Tax Credit, Technology Infrastructure Renovation Tax Credit, Ship Repair Industry Tax Credit, and Tax Credit for Research Activities. Effective 7/1/2050. (Proposed SD1)
Repeals future adjustments to the standard deduction and income tax brackets. Increases the applicable percentage of the employment-related expenses for which the child and dependent care tax credit may be claimed; provides for a disallowance period when there is a final administrative or judicial decision finding that the claim was due to fraud or disallowing the credit; and defines "adjusted gross income" for purposes of the child and dependent care tax credit as adjusted gross income as defined by the Internal Revenue Code of 1986, as amended. Extends the sunset for amendments made by Act 163, SLH 2023 to the child and dependent care tax credit, earned income tax credit, and food/excise tax credit.
HOUSE OF REPRESENTATIVES
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AMENDMENT TO: |
Senate Bill No. 3125, S.D. 1, H.D. 1, C.D. 1 |
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OFFERED BY: |
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SECTION 1. Senate Bill No. 3125, S.D. 1, H.D. 1, C.D. 1, is amended by amending section 1, page 1, lines 2-3, to read:
"SECTION 1. Section 235-12.5, Hawaii Revised Statutes, is amended to read as follows:"
SECTION 2. Senate Bill No. 3125, S.D. 1, H.D. 1, C.D. 1, is amended by amending section 1, page 13, lines 13-14, to read:
"(p) This section shall not apply to taxable years beginning after December 31, 2029.""
SECTION 3. Senate Bill No. 3125, S.D. 1, H.D. 1, C.D. 1, is amended by amending section 2, page 13, lines 15-17, to read:
"SECTION 2. Section 235-51, Hawaii Revised Statutes, is amended by amending subsections (a), (b), and (c) to read as follows:"
SECTION 4. Senate Bill No. 3125, S.D. 1, H.D. 1, C.D. 1, is amended by amending section 9 to read:
"SECTION 9. This Act shall take effect upon its approval; provided that:
(1) Section 1 shall apply retroactively to taxable years beginning after December 31, 2025; provided that the amendments to section 235-12.5(a), Hawaii Revised Statutes, shall apply to taxable years beginning after December 31, 2026;
(2) Sections 2, 3, and 4 shall apply to taxable years beginning after December 31, 2026;
(3) Section 6 shall take effect on January 1, 2028; and
(4) Section 5 shall take effect on January 1, 2029."
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CHIEF CLERK, HOUSE OF REPRESENTATIVES |
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SENATE FLOOR AMENDMENT
FLOOR AMENDMENT NO. Date____________________
TO: Senate Bill No. 3125, S.D. 1, H.D. 1, C.D. 1
SECTION 1. Senate Bill No. 3125, S.D. 1, H.D. 1, C.D. 1, is amended by amending section 1, page 1, lines 2-3, to read:
"SECTION 1. Section 235-12.5, Hawaii Revised Statutes, is amended to read as follows:"
SECTION 2. Senate Bill No. 3125, S.D. 1, H.D. 1, C.D. 1, is amended by amending section 1, page 13, lines 13-14, to read:
"(p) This section shall not apply to taxable years beginning after December 31, 2029.""
SECTION 3. Senate Bill No. 3125, S.D. 1, H.D. 1, C.D. 1, is amended by amending section 2, page 13, lines 15-17, to read:
"SECTION 2. Section 235-51, Hawaii Revised Statutes, is amended by amending subsections (a), (b), and (c) to read as follows:"
SECTION 4. Senate Bill No. 3125, S.D. 1, H.D. 1, C.D. 1, is amended by amending section 9 to read:
"SECTION 9. This Act shall take effect upon its approval; provided that:
(1) Section 1 shall apply retroactively to taxable years beginning after December 31, 2025; provided further that the amendments to section 235-12.5(a), Hawaii Revised Statutes, shall apply to taxable years beginning after December 31, 2026;
(2) Sections 2, 3, and 4 shall apply to taxable years beginning after December 31, 2026;
(3) Section 6 shall take effect on January 1, 2028; and
(4) Section 5 shall take effect on January 1, 2029."
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THE SENATE |
S.B. NO. |
3125 |
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THIRTY-THIRD LEGISLATURE, 2026 |
S.D. 1 |
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STATE OF HAWAII |
H.D. 1 |
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C.D. 2 |
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A BILL FOR AN ACT
RELATING TO INCOME TAX.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Section 235-12.5, Hawaii Revised Statutes, is amended to read as follows:
"§235-12.5 Renewable energy
technologies; income tax credit. (a) Each individual or corporate
taxpayer that files an individual or corporate net income tax return for a
taxable year may claim a tax credit under this section against the Hawaii state
individual or corporate net income tax[.]; provided that the
taxpayer's adjusted gross income does not exceed $175,000 if filing as an
individual, or $350,000 if filing jointly. The tax credit may be claimed
for every eligible renewable energy technology system that is installed and
placed in service in the State by a taxpayer during the taxable year. The tax
credit may be claimed as follows:
(1) For each solar energy system: thirty-five per cent of the actual cost or the cap amount determined in subsection (b); provided that:
(A) For taxable years beginning after December 31, 2019, and except as provided in subparagraphs (B) and (C), no tax credit may be claimed for a solar energy system that is five megawatts in total output capacity or larger and requires a power purchase agreement approved by the public utilities commission;
(B) A solar energy system that is five megawatts in total output capacity or larger, installed and placed in service pursuant to a power purchase agreement approved or pending approval by a decision and order by the public utilities commission prior to December 31, 2019, shall continue to receive a tax credit equal to thirty‑five per cent of the actual cost, or $500,000 per solar energy system that has a total output capacity of at least one thousand kilowatts per system of direct current, whichever is less; and
(C) For each solar energy system integrated with a pumped hydroelectric energy storage system, the tax credit may be claimed for thirty-five per cent of the actual cost or the cap amount determined in subsection (b), whichever is less; provided that applicable project approval filings have been made to the public utilities commission by December 31, 2021; or
(2) For each wind-powered energy system: twenty per cent of the actual cost or the cap amount determined in subsection (b), whichever is less;
provided further that multiple owners of a single system shall be entitled to a single tax credit; and provided further that the tax credit shall be apportioned between the owners in proportion to their contribution to the cost of the system.
In the case of a partnership, S corporation, estate, or trust, the tax credit allowable is for every eligible renewable energy technology system that is installed and placed in service in the State by the entity. The cost upon which the tax credit is computed shall be determined at the entity level. Distribution and share of credit shall be determined pursuant to administrative rule.
(b) The amount of credit allowed for each eligible renewable energy technology system shall not exceed the applicable cap amount, which is determined as follows:
(1) If the primary purpose of the solar energy system is to use energy from the sun to heat water for household use, then the cap amounts shall be:
(A) $2,250 per system for single-family residential property;
(B) $350 per unit per system for multi-family residential property; and
(C) $250,000 per system for commercial property;
(2) For all other solar energy systems, the cap amounts shall be:
(A) $5,000 per system for single-family residential property; provided that if all or a portion of the system is used to fulfill the substitute renewable energy technology requirement pursuant to section 196-6.5(a)(3), the credit shall be reduced by thirty-five per cent of the actual system cost or $2,250, whichever is less;
(B) $350 per unit per system for multi-family residential property; and
(C) $500,000 per system for commercial property; and
(3) For all wind-powered energy systems, the cap amounts shall be:
(A) $1,500 per system for single-family residential property; provided that if all or a portion of the system is used to fulfill the substitute renewable energy technology requirement pursuant to section 196-6.5(a)(3), the credit shall be reduced by twenty per cent of the actual system cost or $1,500, whichever is less;
(B) $200 per unit per system for multi-family residential property; and
(C) $500,000 per system for commercial property.
(c) The total amount of tax credits allowed under this section in any particular year shall be as follows:
(1) For calendar year 2027, $40,000,000;
(2) For calendar year 2028, $40,000,000;
(3) For calendar year 2029, $40,000,000;
(4) For calendar year 2030, $40,000,000; and
(5) Beginning January 1, 2031, $0.
[(c)] (d) For the purposes of
this section:
"Actual cost" means costs related to the renewable energy technology systems under subsection (a), including accessories and installation, but not including the cost of consumer incentive premiums unrelated to the operation of the system or offered with the sale of the system and costs for which another credit is claimed under this chapter.
"Household use" means any use to which heated water is commonly put in a residential setting, including commercial application of those uses.
"Renewable energy technology system" means a new system that captures and converts a renewable source of energy, such as solar or wind energy, into:
(1) A usable source of thermal or mechanical energy;
(2) Electricity; or
(3) Fuel.
"Solar or wind energy system" means any identifiable facility, equipment, apparatus, or the like that converts solar or wind energy to useful thermal or electrical energy for heating, cooling, or reducing the use of other types of energy that are dependent upon fossil fuel for their generation.
[(d)] (e) For taxable years
beginning after December 31, 2005, the dollar amount of any utility rebate
shall be deducted from the cost of the qualifying system and its installation
before applying the state tax credit.
(f) Every taxpayer, before March 1 of each year in which a renewable energy technology system was installed and placed in service in the previous taxable year, shall submit a written, certified statement to the Hawaii state energy office of the department of business, economic development, and tourism identifying:
(1) The adjusted gross income of the taxpayer;
(2) The actual cost of each renewable energy technology system installed and placed in service in the previous taxable year; and
(3) The amount of tax credits claimed pursuant to this section, if any, in the previous taxable year.
(g) The Hawaii state energy office of the department of business, economic development, and tourism shall:
(1) Certify the eligibility of each system used to claim a credit under this section;
(2) Certify that each taxpayer claiming a credit under this section meets all requirements; and
(3) Issue a certificate to each taxpayer specifying the amount of credit the taxpayer may claim.
The taxpayer shall file the certificate with the taxpayer's tax return to the department of taxation. Notwithstanding the authority of the Hawaii state energy office, the director of taxation may audit and adjust the tax credit amount to conform to the facts.
(h) If in any calendar year the annual amount of certified credits reaches the amount specified in subsection (c) in the aggregate, the specified amount shall be divided between all taxpayers claiming a credit under this section for that year in proportion to the amount of costs claimed by all taxpayers; provided that:
(1) The Hawaii state energy office of 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 office shall determine the opening date of the application period by rule;
(2) By May 31 of each year the Hawaii state energy office shall notify each applicant of the credit amount certified; and
(3) If the total credits applied for by all taxpayers are no more than the amount specified in subsection (c), each taxpayer shall receive the full amount of the credit applied for, subject to verification of actual costs.
In no instance shall the Hawaii state energy office certify a total amount of credits exceeding the amount specified in subsection (c) per calendar year. The department of taxation shall not allow the aggregate amount of credits claimed to exceed that amount per calendar year.
[(e)] (i) The director of
taxation shall prepare any forms that may be necessary to claim a tax credit
under this section, including forms identifying the technology type of each tax
credit claimed under this section, whether for solar or wind. The director may
also require the taxpayer to furnish reasonable information to ascertain the
validity of the claim for credit made under this section and may adopt rules
necessary to effectuate the purposes of this section pursuant to chapter 91.
[(f)] (j) 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, unless otherwise elected by
the taxpayer pursuant to subsection [(g)] (k) or [(h).] (l).
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 subsection shall constitute a waiver of the right to claim the credit.
[(g)] (k) For solar energy
systems, a taxpayer may elect to reduce the eligible credit amount by thirty
per cent and if this reduced amount exceeds the amount of income tax payment
due from the taxpayer, the excess of the credit amount over payments due shall
be refunded to the taxpayer; provided that tax credit amounts properly claimed
by a taxpayer who has no income tax liability shall be paid to the taxpayer;
and provided further that no refund on account of the tax credit allowed by
this section shall be made for amounts less than $1.
The election required by this subsection shall be made in a manner prescribed by the director on the taxpayer's return for the taxable year in which the system is installed and placed in service. A separate election may be made for each separate system that generates a credit. An election once made is irrevocable.
[(h)] (l) Notwithstanding
subsection [(g),] (k), for any renewable energy technology
system, an individual taxpayer may elect to have any excess of the credit over
payments due refunded to the taxpayer, if:
(1) All of the taxpayer's income is exempt from taxation under section 235-7(a)(2) or (3); or
(2) The taxpayer's adjusted gross income is $20,000 or less (or $40,000 or less if filing a tax return as married filing jointly);
provided that tax credits properly claimed by a taxpayer who has no income tax liability shall be paid to the taxpayer; and provided further that no refund on account of the tax credit allowed by this section shall be made for amounts less than $1.
A husband and wife who do not file a joint tax return shall only be entitled to make this election to the extent that they would have been entitled to make the election had they filed a joint tax return.
The election required by this subsection shall be made in a manner prescribed by the director on the taxpayer's return for the taxable year in which the system is installed and placed in service. A separate election may be made for each separate system that generates a credit. An election once made is irrevocable.
[(i)] (m) No taxpayer shall be
allowed a credit under this section for the portion of the renewable energy
technology system required by section 196-6.5 that is installed and placed in
service on any newly constructed single-family residential property authorized
by a building permit issued on or after January 1, 2010.
[(j)] (n) To the extent
feasible, using existing resources to assist the energy-efficiency policy
review and evaluation, the department shall assist with data collection on the
following for each taxable year:
(1) The number of renewable energy technology systems that have qualified for a tax credit during the calendar year by:
(A) Technology type; and
(B) Taxpayer type (corporate and individual); and
(2) The total cost of the tax credit to the State during the taxable year by:
(A) Technology type; and
(B) Taxpayer type.
[(k)] (o) This section shall
apply to eligible renewable energy technology systems that are installed and
placed in service on or after July 1, 2009.
(p) This section shall not apply to taxable years beginning after December 31, 2029."
SECTION 2. Section 235-51, Hawaii Revised Statutes, is amended by amending subsections (a), (b), and (c) to read as follows:
"(a) There is hereby imposed on the taxable income of every:
(1) Taxpayer who files a joint return under section 235‑93; and
(2) Surviving spouse,
a tax determined in accordance with the following table:
In the case of any taxable year beginning after December 31, 2017:
If the taxable income is: The tax shall be:
Not over $4,800 1.40% of taxable income
Over $4,800 but $67.00 plus 3.20% of
not over $9,600 excess over $4,800
Over $9,600 but $221.00 plus 5.50% of
not over $19,200 excess over $9,600
Over $19,200 but $749.00 plus 6.40% of
not over $28,800 excess over $19,200
Over $28,800 but $1,363.00 plus 6.80% of
not over $38,400 excess over $28,800
Over $38,400 but $2,016.00 plus 7.20% of
not over $48,000 excess over $38,400
Over $48,000 but $2,707.00 plus 7.60% of
not over $72,000 excess over $48,000
Over $72,000 but $4,531.00 plus 7.90% of
not over $96,000 excess over $72,000
Over $96,000 but $6,427.00 plus 8.25% of
not over $300,000 excess over $96,000
Over $300,000 but $23,257.00 plus 9.00% of
not over $350,000 excess over $300,000
Over $350,000 but $27,757.00 plus 10.00% of
not over $400,000 excess over $350,000
Over $400,000 $32,757.00 plus 11.00% of
excess over $400,000.
In the case of any taxable year beginning after December 31, 2024:
If the taxable income is: The tax shall be:
Not over $19,200 1.40% of taxable income
Over $19,200 but $269.00 plus 3.20% of
not over $28,800 excess over $19,200
Over $28,800 but $576.00 plus 5.50% of
not over $38,400 excess over $28,800
Over $38,400 but $1,104.00 plus 6.40% of
not over $48,000 excess over $38,400
Over $48,000 but $1,718.00 plus 6.80% of
not over $72,000 excess over $48,000
Over $72,000 but $3,350.00 plus 7.20% of
not over $96,000 excess over $72,000
Over $96,000 but $5,078.00 plus 7.60% of
not over $250,000 excess over $96,000
Over $250,000 but $16,782.00 plus 7.90% of
not over $350,000 excess over $250,000
Over $350,000 but $24,682.00 plus 8.25% of
not over $450,000 excess over $350,000
Over $450,000 but $32,932.00 plus 9.00% of
not over $550,000 excess over $450,000
Over $550,000 but $41,932.00 plus 10.00% of
not over $650,000 excess over $550,000
Over $650,000 $51,932.00 plus 11.00% of
excess over $650,000.
[In the case of any taxable year beginning
after December 31, 2026:
If the taxable income is: The
tax shall be:
Not over $28,800 1.40%
of taxable income
Over $28,800 but $403.00
plus 3.20% of
not over $38,400 excess
over $28,800
Over $38,400 but $710.00
plus 5.50% of
not over $48,000 excess
over $38,400
Over $48,000 but $1,238.00
plus 6.40% of
not over $72,000 excess
over $48,000
Over $72,000 but $2,774.00
plus 6.80% of
not over $96,000 excess
over $72,000
Over $96,000 but $4,406.00
plus 7.20% of
not over $250,000 excess
over $96,000
Over $250,000 but $15,494.00
plus 7.60% of
not over $350,000 excess
over $250,000
Over $350,000 but $23,094.00
plus 7.90% of
not over $450,000 excess
over $350,000
Over $450,000 but $30,994.00
plus 8.25% of
not over $550,000 excess
over $450,000
Over $550,000 but $39,244.00
plus 9.00% of
not over $650,000 excess
over $550,000
Over
$650,000 but $48,244.00 plus 10.00% of
not over $800,000 excess
over $650,000
Over
$800,000 $63,244.00 plus 11.00% of
excess
over $800,000.
In the case of any taxable year beginning
after December 31, 2028:
If the taxable income is: The
tax shall be:
Not over $38,400 1.40%
of taxable income
Over $38,400 but $538.00
plus 3.20% of
not over $48,000 excess
over $38,400
Over $48,000 but $845.00
plus 5.50% of
not over $72,000 excess
over $48,000
Over $72,000 but $2,165.00
plus 6.40% of
not over $96,000 excess
over $72,000
Over $96,000 but $3,701.00
plus 6.80% of
not over $250,000 excess
over $96,000
Over $250,000 but $14,173.00
plus 7.20% of
not over $350,000 excess
over $250,000
Over $350,000 but $21,373.00
plus 7.60% of
not over $450,000 excess
over $350,000
Over $450,000 but $28,973.00
plus 7.90% of
not over $550,000 excess
over $450,000
Over $550,000 but $36,873.00
plus 8.25% of
not over $650,000 excess
over $550,000
Over $650,000 but $45,123.00
plus 9.00% of
not over $800,000 excess
over $650,000
Over
$800,000 but $58,623.00 plus 10.00% of
not over $950,000 excess
over $800,000
Over
$950,000 $73,623.00 plus 11.00% of
excess
over $950,000.]
In the case of any taxable year beginning after December 31, 2026:
If the taxable income is: The tax shall be:
Not over $28,800 1.40% of taxable income
Over $28,800 but $403.00 plus 2.50% of
not over $38,400 excess over $28,800
Over $38,400 but $643.00 plus 5.00% of
not over $48,000 excess over $38,400
Over $48,000 but $1,123.00 plus 6.40% of
not over $72,000 excess over $48,000
Over $72,000 but $2,659.00 plus 6.80% of
not over $96,000 excess over $72,000
Over $96,000 but $4,291.00 plus 7.20% of
not over $250,000 excess over $96,000
Over $250,000 but $15,379.00 plus 7.60% of
not over $350,000 excess over $250,000
Over $350,000 but $22,979.00 plus 8.25% of
not over $450,000 excess over $350,000
Over $450,000 but $31,229.00 plus 9.00% of
not over $550,000 excess over $450,000
Over $550,000 but $40,229.00 plus 10.00% of
not over $650,000 excess over $550,000
Over $650,000 but $50,229.00 plus 11.00% of
not over $1,000,000 excess over $650,000
Over $1,000,000 $88,729.00 plus 13.00% of
excess over $1,000,000.
In the case of any taxable year beginning after December 31, 2028:
If the taxable income is: The tax shall be:
Not over $38,400 1.40% of taxable income
Over $38,400 but $538.00 plus 2.50% of
not over $48,000 excess over $38,400
Over $48,000 but $778.00 plus 5.00% of
not over $72,000 excess over $48,000
Over $72,000 but $1,978.00 plus 6.40% of
not over $96,000 excess over $72,000
Over $96,000 but $3,514.00 plus 6.80% of
not over $250,000 excess over $96,000
Over $250,000 but $13,986.00 plus 7.20% of
not over $350,000 excess over $250,000
Over $350,000 but $21,186.00 plus 8.25% of
not over $450,000 excess over $350,000
Over $450,000 but $29,436.00 plus 9.00% of
not over $550,000 excess over $450,000
Over $550,000 but $38,436.00 plus 10.00% of
not over $650,000 excess over $550,000
Over $650,000 but $48,436.00 plus 11.00% of
not over $1,000,000 excess over $650,000
Over $1,000,000 $86,936.00 plus 13.00% of
excess over $1,000,000.
(b) There is hereby imposed on the taxable income of every head of a household a tax determined in accordance with the following table:
In the case of any taxable year beginning after December 31, 2017:
If the taxable income is: The tax shall be:
Not over $3,600 1.40% of taxable income
Over $3,600 but $50.00 plus 3.20% of
not over $7,200 excess over $3,600
Over $7,200 but $166.00 plus 5.50% of
not over $14,400 excess over $7,200
Over $14,400 but $562.00 plus 6.40% of
not over $21,600 excess over $14,400
Over $21,600 but $1,022.00 plus 6.80% of
not over $28,800 excess over $21,600
Over $28,800 but $1,512.00 plus 7.20% of
not over $36,000 excess over $28,800
Over $36,000 but $2,030.00 plus 7.60% of
not over $54,000 excess over $36,000
Over $54,000 but $3,398.00 plus 7.90% of
not over $72,000 excess over $54,000
Over $72,000 but $4,820.00 plus 8.25% of
not over $225,000 excess over $72,000
Over $225,000 but $17,443.00 plus 9.00% of
not over $262,500 excess over $225,000
Over $262,500 but $20,818.00 plus 10.00% of
not over $300,000 excess over $262,500
Over $300,000 $24,568.00 plus 11.00% of
excess over $300,000.
In the case of any taxable year beginning after December 31, 2024:
If the taxable income is: The tax shall be:
Not over $14,400 1.40% of taxable income
Over $14,400 but $202.00 plus 3.20% of
not over $21,600 excess over $14,400
Over $21,600 but $432.00 plus 5.50% of
not over $28,800 excess over $21,600
Over $28,800 but $828.00 plus 6.40% of
not over $36,000 excess over $28,800
Over $36,000 but $1,289.00 plus 6.80% of
not over $54,000 excess over $36,000
Over $54,000 but $2,513.00 plus 7.20% of
not over $72,000 excess over $54,000
Over $72,000 but $3,809.00 plus 7.60% of
not over $187,500 excess over $72,000
Over $187,500 but $12,587.00 plus 7.90% of
not over $262,500 excess over $187,500
Over $262,500 but $18,512.00 plus 8.25% of
not over $337,500 excess over $262,500
Over $337,500 but $24,699.00 plus 9.00% of
not over $412,500 excess over $337,500
Over $412,500 but $31,449.00 plus 10.00% of
not over $487,500 excess over $412,500
Over $487,500 $38,949.00 plus 11.00% of
excess over $487,500.
[In the case of any taxable year beginning
after December 31, 2026:
If the taxable income is: The
tax shall be:
Not over $21,600 1.40%
of taxable income
Over $21,600 but $302.00
plus 3.20% of
not over $28,800 excess
over $21,600
Over $28,800 but $533.00
plus 5.50% of
not over $36,000 excess
over $28,800
Over $36,000 but $929.00
plus 6.40% of
not over $54,000 excess
over $36,000
Over $54,000 but $2,081.00
plus 6.80% of
not over $72,000 excess
over $54,000
Over $72,000 but $3,305.00
plus 7.20% of
not over $187,500 excess
over $72,000
Over $187,500 but $11,621.00
plus 7.60% of
not over $262,500 excess
over $187,500
Over $262,500 but $17,321.00
plus 7.90% of
not over $337,500 excess
over $262,500
Over $337,500 but $23,246.00
plus 8.25% of
not over $412,500 excess
over $337,500
Over $412,500 but $29,433.00
plus 9.00% of
not over $487,500 excess
over $412,500
Over
$487,500 but $36,183.00 plus 10.00% of
not over $600,000 excess
over $487,500
Over
$600,000 $47,433.00 plus 11.00% of
excess
over $600,000.
In the case of any taxable year beginning
after December 31, 2028:
If the taxable income is: The
tax shall be:
Not over $28,800 1.40%
of taxable income
Over $28,800 but $403.00
plus 3.20% of
not over $36,000 excess
over $28,800
Over $36,000 but $634.00
plus 5.50% of
not over $54,000 excess
over $36,000
Over $54,000 but $1,624.00
plus 6.40% of
not over $72,000 excess
over $54,000
Over $72,000 but $2,776.00
plus 6.80% of
not over $187,500 excess
over $72,000
Over $187,500 but $10,630.00
plus 7.20% of
not over $262,500 excess
over $187,500
Over $262,500 but $16,030.00
plus 7.60% of
not over $337,500 excess
over $262,500
Over $337,500 but $21,730.00
plus 7.90% of
not over $412,500 excess
over $337,500
Over $412,500 but $27,655.00
plus 8.25% of
not over $487,500 excess
over $412,500
Over $487,500 but $33,842.00
plus 9.00% of
not over $600,000 excess
over $487,500
Over
$600,000 but $43,967.00 plus 10.00% of
not over $712,500 excess
over $600,000
Over
$712,500 $55,217.00 plus 11.00% of
excess
over $712,500.]
In the case of any taxable year beginning after December 31, 2026:
If the taxable income is: The tax shall be:
Not over $21,600 1.40% of taxable income
Over $21,600 but $302.00 plus 2.50% of
not over $28,800 excess over $21,600
Over $28,800 but $482.00 plus 5.00% of
not over $36,000 excess over $28,800
Over $36,000 but $842.00 plus 6.40% of
not over $54,000 excess over $36,000
Over $54,000 but $1,994.00 plus 6.80% of
not over $72,000 excess over $54,000
Over $72,000 but $3,218.00 plus 7.20% of
not over $187,500 excess over $72,000
Over $187,500 but $11,534.00 plus 7.60% of
not over $262,500 excess over $187,500
Over $262,500 but $17,234.00 plus 8.25% of
not over $337,500 excess over $262,500
Over $337,500 but $23,422.00 plus 9.00% of
not over $412,500 excess over $337,500
Over $412,500 but $30,172.00 plus 10.00% of
not over $487,500 excess over $412,500
Over $487,500 but $37,672.00 plus 11.00% of
not over $750,000 excess over $487,500
Over $750,000 $66,547.00 plus 13.00% of
excess over $750,000.
In the case of any taxable year beginning after December 31, 2028:
If the taxable income is: The tax shall be:
Not over $28,800 1.40% of taxable income
Over $28,800 but $403.00 plus 2.50% of
not over $36,000 excess over $28,800
Over $36,000 but $583.00 plus 5.00% of
not over $54,000 excess over $36,000
Over $54,000 but $1,483.00 plus 6.40% of
not over $72,000 excess over $54,000
Over $72,000 but $2,635.00 plus 6.80% of
not over $187,500 excess over $72,000
Over $187,500 but $10,489.00 plus 7.20% of
not over $262,500 excess over $187,500
Over $262,500 but $15,889.00 plus 8.25% of
not over $337,500 excess over $262,500
Over $337,500 but $22,077.00 plus 9.00% of
not over $412,500 excess over $337,500
Over $412,500 but $28,827.00 plus 10.00% of
not over $487,500 excess over $412,500
Over $487,500 but $36,327.00 plus 11.00% of
not over $750,000 excess over $487,500
Over $750,000 $65,202.00 plus 13.00% of
excess over $750,000.
(c) There is hereby imposed on the taxable income of (1) every unmarried individual (other than a surviving spouse, or the head of a household) and (2) on the taxable income of every married individual who does not make a single return jointly with the individual's spouse under section 235-93 a tax determined in accordance with the following table:
In the case of any taxable year beginning after December 31, 2017:
If the taxable income is: The tax shall be:
Not over $2,400 1.40% of taxable income
Over $2,400 but $34.00 plus 3.20% of
not over $4,800 excess over $2,400
Over $4,800 but $110.00 plus 5.50% of
not over $9,600 excess over $4,800
Over $9,600 but $374.00 plus 6.40% of
not over $14,400 excess over $9,600
Over $14,400 but $682.00 plus 6.80% of
not over $19,200 excess over $14,400
Over $19,200 but $1,008.00 plus 7.20% of
not over $24,000 excess over $19,200
Over $24,000 but $1,354.00 plus 7.60% of
not over $36,000 excess over $24,000
Over $36,000 but $2,266.00 plus 7.90% of
not over $48,000 excess over $36,000
Over $48,000 but $3,214.00 plus 8.25% of
not over $150,000 excess over $48,000
Over $150,000 but $11,629.00 plus 9.00% of
not over $175,000 excess over $150,000
Over $175,000 but $13,879.00 plus 10.00% of
not over $200,000 excess over $175,000
Over $200,000 $16,379.00 plus 11.00% of
excess over $200,000.
In the case of any taxable year beginning after December 31, 2024:
If the taxable income is: The tax shall be:
Not over $9,600 1.40% of taxable income
Over $9,600 but $134.00 plus 3.20% of
not over $14,400 excess over $9,600
Over $14,400 but $288.00 plus 5.50% of
not over $19,200 excess over $14,400
Over $19,200 but $552.00 plus 6.40% of
not over $24,000 excess over $19,200
Over $24,000 but $859.00 plus 6.80% of
not over $36,000 excess over $24,000
Over $36,000 but $1,675.00 plus 7.20% of
not over $48,000 excess over $36,000
Over $48,000 but $2,539.00 plus 7.60% of
not over $125,000 excess over $48,000
Over $125,000 but $8,391.00 plus 7.90% of
not over $175,000 excess over $125,000
Over $175,000 but $12,341.00 plus 8.25% of
not over $225,000 excess over $175,000
Over $225,000 but $16,466.00 plus 9.00% of
not over $275,000 excess over $225,000
Over $275,000 but $20,966.00 plus 10.00% of
not over $325,000 excess over $275,000
Over $325,000 $25,966.00 plus 11.00% of
excess over $325,000.
[In the case of any taxable year beginning
after December 31, 2026:
If the taxable income is: The
tax shall be:
Not over $14,400 1.40%
of taxable income
Over $14,400 but $202.00
plus 3.20% of
not over $19,200 excess
over $14,400
Over $19,200 but $355.00
plus 5.50% of
not over $24,000 excess
over $19,200
Over $24,000 but $619.00
plus 6.40% of
not over $36,000 excess
over $24,000
Over $36,000 but $1,387.00
plus 6.80% of
not over $48,000 excess
over $36,000
Over $48,000 but $2,203.00
plus 7.20% of
not over $125,000 excess
over $48,000
Over $125,000 but $7,747.00
plus 7.60% of
not over $175,000 excess
over $125,000
Over $175,000 but $11,547.00
plus 7.90% of
not over $225,000 excess
over $175,000
Over $225,000 but $15,497.00
plus 8.25% of
not over $275,000 excess
over $225,000
Over $275,000 but $19,622.00
plus 9.00% of
not over $325,000 excess
over $275,000
Over
$325,000 but $24,122.00 plus 10.00% of
not over $400,000 excess
over $325,000
Over
$400,000 $31,622.00 plus 11.00% of
excess
over $400,000.
In the case of any taxable year beginning
after December 31, 2028:
If the taxable income is: The
tax shall be:
Not over $19,200 1.40%
of taxable income
Over $19,200 but $269.00
plus 3.20% of
not over $24,000 excess
over $19,200
Over $24,000 but $422.00
plus 5.50% of
not over $36,000 excess
over $24,000
Over $36,000 but $1,082.00
plus 6.40% of
not over $48,000 excess
over $36,000
Over $48,000 but $1,850.00
plus 6.80% of
not over $125,000 excess
over $48,000
Over $125,000 but $7,086.00
plus 7.20% of
not over $175,000 excess
over $125,000
Over $175,000 but $10,686.00
plus 7.60% of
not over $225,000 excess
over $175,000
Over $225,000 but $14,486.00
plus 7.90% of
not over $275,000 excess
over $225,000
Over $275,000 but $18,436.00
plus 8.25% of
not over $325,000 excess
over $275,000
Over $325,000 but $22,561.00
plus 9.00% of
not over $400,000 excess
over $325,000
Over
$400,000 but $29,311.00 plus 10.00% of
not over $475,000 excess
over $400,000
Over
$475,000 $36,811.00 plus 11.00% of
excess
over $475,000.]
In the case of any taxable year beginning after December 31, 2026:
If the taxable income is: The tax shall be:
Not over $14,400 1.40% of taxable income
Over $14,400 but $202.00 plus 2.50% of
not over $19,200 excess over $14,400
Over $19,200 but $322.00 plus 5.00% of
not over $24,000 excess over $19,200
Over $24,000 but $562.00 plus 6.40% of
not over $36,000 excess over $24,000
Over $36,000 but $1,330.00 plus 6.80% of
not over $48,000 excess over $36,000
Over $48,000 but $2,146.00 plus 7.20% of
not over $125,000 excess over $48,000
Over $125,000 but $7,690.00 plus 7.60% of
not over $175,000 excess over $125,000
Over $175,000 but $11,490.00 plus 8.25% of
not over $225,000 excess over $175,000
Over $225,000 but $15,615.00 plus 9.00% of
not over $275,000 excess over $225,000
Over $275,000 but $20,115.00 plus 10.00% of
not over $325,000 excess over $275,000
Over $325,000 but $25,115.00 plus 11.00% of
not over $500,000 excess over $325,000
Over $500,000 $44,365.00 plus 13.00% of
excess over $500,000.
In the case of any taxable year beginning after December 31, 2028:
If the taxable income is: The tax shall be:
Not over $19,200 1.40% of taxable income
Over $19,200 but $269.00 plus 2.50% of
not over $24,000 excess over $19,200
Over $24,000 but $389.00 plus 5.00% of
not over $36,000 excess over $24,000
Over $36,000 but $989.00 plus 6.40% of
not over $48,000 excess over $36,000
Over $48,000 but $1,757.00 plus 6.80% of
not over $125,000 excess over $48,000
Over $125,000 but $6,993.00 plus 7.20% of
not over $175,000 excess over $125,000
Over $175,000 but $10,593.00 plus 8.25% of
not over $225,000 excess over $175,000
Over $225,000 but $14,718.00 plus 9.00% of
not over $275,000 excess over $225,000
Over $275,000 but $19,218.00 plus 10.00% of
not over $325,000 excess over $275,000
Over $325,000 but $24,218.00 plus 11.00% of
not over $500,000 excess over $325,000
Over $500,000 $43,468.00 plus 13.00% of
excess over $500,000."
SECTION 3. Section 235-110.7, Hawaii Revised Statutes, is amended to read as follows:
"§235-110.7 Capital goods excise tax credit. (a) There shall be allowed to each taxpayer subject to the tax imposed by this chapter a capital goods excise tax credit, which 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.
The amount of the tax credit shall be four per cent of the cost of the eligible depreciable tangible personal property used by the taxpayer in a trade or business and placed in service within Hawaii after December 31, 2009.
In the case of a partnership, S corporation, estate, or trust, the tax credit allowable is for eligible depreciable tangible personal property that is placed in service by the entity. The cost upon which the tax credit is computed shall be determined at the entity level. Distribution and share of credit shall be determined by rules.
In the case of eligible depreciable tangible personal property for which a credit for sales or use taxes paid to another state is allowable under section 238-3(i), the amount of the tax credit allowed under this section shall not exceed the amount of use tax actually paid under chapter 238 relating to the tangible personal property.
If a deduction is taken under section 179 (with respect to election to expense certain depreciable business assets) of the Internal Revenue Code of 1954, as amended, no tax credit shall be allowed for that portion of the cost of property for which the deduction was taken.
(b) If the capital goods excise tax credit allowed under subsection (a) exceeds the taxpayer's net income tax liability, the excess of credit over liability shall be refunded to the taxpayer; provided that no refunds or payment on account of the tax credit allowed by this section shall be made for amounts less than $1.
All claims for tax credits under this section, including any amended claims, must be filed on or before the end of the twelfth month following the close of the taxable year for which the credits may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.
(c) Application for the capital goods excise tax credit shall be upon forms provided by the department of taxation.
(d) Sections 47 (with respect to dispositions of section 38 property and the recapture percentages) of the Internal Revenue Code of 1954, as amended, as of December 31, 1984, and 280F as operative for this chapter (with respect to limitation on investment tax credit and depreciation for luxury automobiles; limitation where certain property used for personal purposes) of the Internal Revenue Code of 1954, as amended, shall be operative for purposes of this section.
(e) As used in this section, the definition of section 38 property (with respect to investment in depreciable tangible personal property) as defined by section 48(a)(1)(A), (a)(1)(B), (a)(3), (a)(4), (a)(7), (a)(8), (a)(10)(A), (b), (c), (f), (l), (m), and (s) of the Internal Revenue Code of 1954, as amended as of December 31, 1984, is operative for the purposes of this section only.
(f) This section shall not apply to taxable years beginning after December 31, 2027.
[(f)] (g)
As used in this section:
"Cost" means the:
(1) Actual invoice price of the tangible personal property; or
(2) Basis from which depreciation is taken under section 167 (with respect to depreciation) or from which a deduction may be taken under section 168 (with respect to accelerated cost recovery system) of the Internal Revenue Code of 1954, as amended,
whichever is less.
"Eligible depreciable tangible personal property" is section 38 property as defined by the operative provisions of section 48 and having a depreciable life under section 167 or for which a deduction may be taken under section 168 of the Internal Revenue Code of 1954, as amended.
"Placed in service" means the earliest of the following taxable years:
(1) The taxable year in which, under the:
(A) Taxpayer's depreciation practice, the period for depreciation; or
(B) Accelerated cost recovery system, a claim for recovery allowances,
with respect to the property begins; or
(2) The taxable year in which the property is placed in a condition or state of readiness and availability for a specifically assigned function.
"Purchase" means an acquisition of property.
"Tangible personal property" means tangible personal property that is placed in service within Hawaii after December 31, 1987, and the purchase or importation of which resulted in a transaction that was subject to the imposition and payment of tax at the rate of four per cent under chapter 237 or 238. "Tangible personal property" does not include tangible personal property that is an integral part of a building or structure or tangible personal property used in a foreign-trade zone, as defined under chapter 212."
SECTION 4. Section 235-110.32, Hawaii Revised Statutes, is amended to read as follows:
"[[]§235-110.32[]]
Renewable fuels production tax credit. (a) Each year during the credit
period, there shall be allowed to each taxpayer subject to the taxes imposed by
this chapter a renewable fuels production tax credit that shall be applied to
the taxpayer's net income tax liability, if any, imposed by this chapter for
the taxable year in which the credit is properly claimed.
For each taxpayer producing renewable fuels, the annual dollar amount of the renewable fuels production tax credit during the ten-year credit period shall be equal to 20 cents per seventy-six thousand British thermal units of renewable fuels using the lower heating value sold for distribution in the State; provided that the taxpayer's production of renewable fuels is not less than two billion five hundred million British thermal units of renewable fuels per calendar year; provided further that the amount of the tax credit claimed under this section by a taxpayer shall not exceed $3,500,000 per taxable year; provided further that the tax credit shall only be claimed for fuels with lifecycle emissions below that of fossil fuels. No other tax credit may be claimed under this chapter for the costs incurred to produce the renewable fuels that are used to properly claim a tax credit under this section for the taxable year.
Each taxpayer, together with all of its related entities as determined under section 267(b) of the Internal Revenue Code and all business entities under common control, as determined under sections 414(b), 414(c), and 1563(a) of the Internal Revenue Code, shall not be eligible for more than a single ten-year credit period.
(b) In the case of a partnership, S corporation, estate, or trust, distribution and share of the renewable fuels production tax credit shall be determined pursuant to section 704(b) (with respect to a partner's distributive share) of the Internal Revenue Code of 1986, as amended. For a fiscal year taxpayer, the taxpayer shall report the credit in the taxable year in which the calendar year end is included.
(c) No later than thirty days following the close of the calendar year, every taxpayer claiming a credit under this section shall complete and file an independent, third-party certified statement, at the taxpayer's sole expense, with and in the form prescribed by the Hawaii state energy office, providing the following information:
(1) The type, quantity, and British thermal unit value, using the lower heating value, of each qualified fuel, broken down by the type of fuel, produced and sold during the previous calendar year;
(2) The feedstock used for each type of qualified fuel;
(3) The proposed total amount of credit to which the taxpayer is entitled for each calendar year and the cumulative amount of the tax credit the taxpayer received during the credit period;
(4) The number of full-time and number of part-time employees of the facility and those employees' states of residency, totaled per state;
(5) The number and location of all renewable fuel production facilities within and outside of the State; and
(6) The lifecycle greenhouse gas emissions per British thermal units for each type of qualified fuel produced.
(d) Within thirty calendar days after the due date of the statement required under subsection (c), the Hawaii state energy office shall:
(1) Acknowledge, in writing, receipt of the statement;
(2) Issue a certificate to the taxpayer reporting the amount of renewable fuels produced and sold, the amount of credit that the taxpayer is entitled to claim for the previous calendar year, and the cumulative amount of the tax credit during the credit period; and
(3) Provide the taxpayer with a determination of whether the lifecycle greenhouse gas emissions for each type of qualified fuel produced is lower than that of fossil fuels.
(e) The taxpayer shall file the certificate issued under subsection (d) with the taxpayer's tax return with the department of taxation. The director of taxation may audit and adjust the certification to conform to the facts.
(f) The total amount of tax credits allowed under this section shall not exceed $20,000,000 for all eligible taxpayers in any calendar year. In the event that the credit claims under this section exceed $20,000,000 for all eligible taxpayers in any given calendar year, the $20,000,000 shall be divided between all eligible taxpayers for that year in proportion to the total amount of renewable fuels produced by all eligible taxpayers. Upon reaching $20,000,000 in the aggregate, the Hawaii state energy office shall immediately discontinue issuing certificates and notify the department of taxation. In no instance shall the total dollar amount of certificates issued exceed $20,000,000 per calendar year.
(g) Notwithstanding any other law to the contrary, the information collected and compiled by the Hawaii state energy office under subsections (c) and (d) for the purposes of the renewable fuels production tax credit shall be available for public inspection and dissemination, subject to chapter 92F.
(h) If the credit under this section exceeds the taxpayer's net income tax liability, the excess of the credit over liability may be used as a credit against the taxpayer's net income tax liability in subsequent years until exhausted, unless otherwise elected by the taxpayer pursuant to subsections (i) or (j). All claims for a credit under this section shall be properly 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 the foregoing provision or to provide the certified statement required under subsection (c) shall constitute a waiver of the right to claim the credit.
(i) A taxpayer may elect to reduce the eligible credit amount by thirty per cent and if this reduced amount exceeds the amount of income tax payment due from the taxpayer, the excess of the credit amount over payments due shall be refunded to the taxpayer; provided that tax credit amounts properly claimed by a taxpayer who has no income tax liability shall be paid to the taxpayer; provided further that no refund on account of the tax credit allowed by this section shall be made for amounts less than $1.
The election required by this subsection shall be made in a manner prescribed by the director on the taxpayer's return for the taxable year in which the credit is claimed. An election once made is irrevocable.
(j) Notwithstanding subsection (i), an individual taxpayer may elect to have any excess of the credit over payments due refunded to the taxpayer, if:
(1) All of the taxpayer's income is exempt from taxation under section 235-7(a)(2) or (3); or
(2) The taxpayer's adjusted gross income is $20,000 or less (or $40,000 or less if filing a tax return as married filing jointly);
provided that tax credits properly claimed by a taxpayer who has no income tax liability shall be paid to the taxpayer; provided further that no refund on account of the tax credit allowed by this section shall be made for amounts less than $1.
A married couple who does not file a joint tax return shall only be entitled to make this election to the extent that they would have been entitled to make the election had they filed a joint tax return.
The election required by this subsection shall be made in a manner prescribed by the director on the taxpayer's return for the taxable year in which the credit is claimed. An election once made is irrevocable.
(k) Before the production of any renewable fuels for the calendar year, the taxpayer shall provide written notice of the taxpayer's intention to begin production of renewable fuels. The written notice shall be provided to the department of taxation and the Hawaii state energy office and shall include information on the taxpayer, facility location, facility production capacity, anticipated production start date, and the taxpayer's contact information. Notwithstanding any other law to the contrary, the written notice described in this subsection, including taxpayer and facility information, shall be available for public inspection and dissemination, subject to chapter 92F.
(l) The taxpayer shall provide written notice to the director of taxation and the chief energy officer of the Hawaii state energy office within thirty days following the start of production. The notice shall include the production start date and expected renewable fuels production for the next twelve months. Notwithstanding any other law to the contrary, the written notice described in this subsection shall be available for public inspection and dissemination, subject to chapter 92F.
(m) Following each calendar year in which a credit under this section has been claimed, the chief energy officer of the Hawaii state energy office shall submit a written report to the governor and legislature regarding the production and sale of renewable fuels. The report shall include:
(1) The number and location of renewable fuels production facilities in the State and outside the State that have claimed a credit under this section;
(2) The total number of British thermal units of renewable fuels, itemized by type of fuel produced and sold during the previous calendar year; and
(3) The projected number of British thermal units of renewable fuels production for the succeeding year.
(n) 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 pursuant to chapter 91 necessary to effectuate the purposes of this section.
(o) This section shall not apply to taxable years beginning after December 31, 2028.
[(o)] (p) As used in this
section:
"Credit period" means a maximum period of ten consecutive years, beginning from the first taxable year in which a taxpayer begins renewable fuels production at a level of at least two billion five-hundred million British thermal units of renewable fuels per calendar year.
"Net income tax liability" means income tax liability reduced by all other credits allowed under this chapter.
"Renewable feedstocks" means:
(1) Biomass crops and other renewable organic material, including but not limited to logs, wood chips, wood pellets, and wood bark;
(2) Agricultural residue;
(3) Oil crops, including but not limited to algae, canola, jatropha, palm, soybean, and sunflower;
(4) Sugar and starch crops, including but not limited to sugar cane and cassava;
(5) Other agricultural crops;
(6) Grease and waste cooking oil;
(7) Food wastes;
(8) Municipal solid wastes and industrial wastes;
(9) Water, including wastewater; and
(10) Animal residues and wastes,
that can be used to generate energy.
"Renewable fuels" means fuels produced from renewable feedstocks; provided that the fuel:
(1) Is sold as a fuel in the State; and
(2) Meets the relevant ASTM International specifications or other industry specifications for the particular fuel, including but not limited to:
(A) Methanol, ethanol, or other alcohols;
(B) Hydrogen;
(C) Biodiesel or renewable diesel;
(D) Biogas;
(E) Other biofuels;
(F) Renewable jet fuel or renewable gasoline; or
(G) Logs, wood chips, wood pellets, or wood bark."
PART II
SECTION 5. Section 235-110.9, Hawaii Revised Statutes, is repealed.
["§235-110.9 High technology
business investment tax credit. (a) There shall be allowed to each
taxpayer subject to the taxes imposed by this chapter a high technology
business investment 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 investment was made and the following four years provided the credit
is properly claimed. The tax credit shall be as follows:
(1) In the year the investment was made,
thirty-five per cent;
(2) In the first year following the year in
which the investment was made, twenty-five per cent;
(3) In the second year following the
investment, twenty per cent;
(4) In the third year following the
investment, ten per cent; and
(5) In the fourth year following the
investment, ten per cent;
of the investment made by the taxpayer in each
qualified high technology business, up to a maximum allowed credit in the year
the investment was made, $700,000; in the first year following the year in
which the investment was made, $500,000; in the second year following the year
in which the investment was made, $400,000; in the third year following the
year in which the investment was made, $200,000; and in the fourth year
following the year in which the investment was made, $200,000.
(b) The credit allowed under this
section shall be claimed against the net income tax liability for the taxable
year. For the purpose of this section, "net income tax liability"
means net income tax liability reduced by all other credits allowed under this
chapter.
(c) If the tax credit under this section
exceeds the taxpayer's income tax liability for any of the five years that the
credit is taken, the excess of the tax credit over liability may be used as a
credit against the taxpayer's income tax liability in subsequent years until
exhausted. Every claim, including amended claims, for a tax credit under this
section 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 the foregoing provision shall constitute a waiver of the right to claim
the credit.
(d) If at the close of any taxable year in
the five-year period in subsection (a):
(1) The business no longer qualifies as a
qualified high technology business;
(2) The business or an interest in the
business has been sold by the taxpayer investing in the qualified high
technology business; or
(3) The taxpayer has withdrawn the
taxpayer's investment wholly or partially from the qualified high technology
business;
the credit claimed under this section shall be
recaptured. The recapture shall be equal to ten per cent of the amount of the
total tax credit claimed under this section in the preceding two taxable
years. The amount of the credit recaptured shall apply only to the investment
in the particular qualified high technology business that meets the
requirements of paragraph (1), (2), or (3). The recapture provisions of this
subsection shall not apply to a tax credit claimed for a qualified high
technology business that does not fall within the provisions of paragraph (1),
(2), or (3). The amount of the recaptured tax credit determined under this
subsection shall be added to the taxpayer's tax liability for the taxable year
in which the recapture occurs under this subsection.
(e) Every taxpayer, before March 31 of each
year in which an investment in a qualified high technology business was made in
the previous taxable year, shall submit a written, certified statement to the
director of taxation identifying:
(1) Qualified investments, 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.
(f) The department shall:
(1) Maintain records of the names and
addresses of the taxpayers claiming the credits under this section and the
total amount of the qualified investment costs upon which the tax credit is
based;
(2) Verify the nature and amount of the
qualifying investments;
(3) Total all qualifying and cumulative
investments that the department certifies; and
(4) Certify the amount of the tax credit
for each taxable year and cumulative amount of the tax credit.
Upon each determination made under this
subsection, the department shall issue a certificate to the taxpayer verifying
information submitted to the department, including qualifying investment
amounts, the credit amount certified for each taxable year, and the cumulative
amount of the tax credit during the credit period. The taxpayer shall file the
certificate with the taxpayer's tax return with the department.
The director of taxation may assess and
collect a fee to offset the costs of certifying tax credits claims under this
section. All fees collected under this section shall be deposited into the tax
administration special fund established under section 235-20.5.
(g) As used in this section:
"Investment tax credit allocation
ratio" means, with respect to a taxpayer that has made an investment in a
qualified high technology business, the ratio of:
(1) The amount of the credit under this
section that is, or is to be, received by or allocated to the taxpayer over the
life of the investment, as a result of the investment; to
(2) The amount of the investment in the
qualified high technology business.
"Qualified high technology
business" means a business, employing or owning capital or property, or
maintaining an office, in this State; provided that:
(1) More than fifty per cent of its total
business activities are qualified research; and provided further that the
business conducts more than seventy‑five per cent of its qualified
research in this State; or
(2) More than seventy-five per cent of its
gross income is derived from qualified research; and provided further that this
income is received from:
(A) Products sold from,
manufactured in, or produced in this State; or
(B) Services performed in this
State.
"Qualified research" means the
same as defined in section 235-7.3.
(h) Common law principles, including the
doctrine of economic substance and business purpose, shall apply to any
investment. There exists a presumption that a transaction satisfies the
doctrine of economic substance and business purpose to the extent that the
special allocation of the high technology business tax credit has an investment
tax credit ratio of 1.5 or less of credit for every dollar invested.
Transactions for which an investment tax
credit allocation ratio greater than 1.5 but not more than 2.0 of credit for
every dollar invested and claimed may be reviewed by the department for
applicable doctrines of economic substance and business purpose.
Businesses claiming a tax credit for
transactions with investment tax credit allocation ratios greater than 2.0 of
credit for every dollar invested shall substantiate economic merit and business
purpose consistent with this section.
(i) For investments made on or after May 1,
2009, notwithstanding any other law to the contrary, no allocations, special or
otherwise, of credits under this section may exceed the amount of the
investment made by the taxpayer ultimately claiming this credit; and investment
tax credit allocation ratios greater than 1.0 of credit for every dollar
invested shall not be allowed. In addition, the credit shall be allowed only
in accordance with subsection (a).
(j) This section shall not apply to taxable
years beginning after December 31, 2010."]
SECTION 6. Section 235-110.51, Hawaii Revised Statutes, is repealed.
["§235-110.51 Technology
infrastructure renovation tax credit. (a) There shall be allowed
to each taxpayer subject to the taxes imposed by this chapter, an income tax
credit which 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 credit shall be four
per cent of the renovation costs incurred during the taxable year for each
commercial building located in Hawaii.
(c) In the case of a partnership, S
corporation, estate, trust, or any developer of a commercial building, the tax
credit allowable is for renovation costs incurred by the entity for the taxable
year. The cost upon which the tax credit is computed shall be determined at
the entity level. Distribution and share of credit shall be determined
pursuant to section 235-110.7(a).
(d) If a deduction is taken under section
179 (with respect to election to expense depreciable business assets) of the
Internal Revenue Code, no tax credit shall be allowed for that portion of the
renovation cost for which the deduction is taken.
(e) The basis of eligible property for
depreciation or accelerated cost recovery system purposes for state income
taxes shall be reduced by the amount of credit allowable and claimed. In the
alternative, the taxpayer shall treat the amount of the credit allowable and
claimed as a taxable income item for the taxable year in which it is properly
recognized under the method of accounting used to compute taxable income.
(f) The credit allowed under this section
shall be claimed against the net income tax liability for the taxable year.
(g) If the tax credit under this section
exceeds the taxpayer's income tax liability, the excess of credit over
liability may be carried forward until exhausted.
(h) The tax credit allowed under this
section shall not be available for taxable years beginning after December 31,
2010.
(i) As used in this section:
"Net income tax liability" means
income tax liability reduced by all other credits allowed under this chapter.
"Renovation costs" means costs
incurred after December 31, 2000, to plan, design, install, construct, and
purchase technology-enabled infrastructure equipment to provide a commercial
building with technology-enabled infrastructure.
"Technology-enabled
infrastructure" means:
(1) High speed telecommunications systems
that provide Internet access, direct satellite communications access, and
videoconferencing facilities;
(2) Physical security systems that identify
and verify valid entry to secure spaces, detect invalid entry or entry
attempts, and monitor activity in these spaces;
(3) Environmental systems to include
heating, ventilation, air conditioning, fire detection and suppression, and
other life safety systems; and
(4) Backup and emergency electric power
systems.
(j) No taxpayer that claims a credit under
this section shall claim any other credit under this chapter."]
SECTION 7. Act 261, Session Laws of Hawaii 2019, as amended by 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.]
January 1, 2029."
PART III
SECTION 8. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 9. This Act shall take effect upon its approval; provided that:
(1) Section 1 shall apply retroactively to taxable years beginning after December 31, 2025; provided that the amendments to section 235-12.5(a), Hawaii Revised Statutes, shall apply to taxable years beginning after December 31, 2026;
(2) Sections 2, 3, and 4 shall apply to taxable years beginning after December 31, 2026;
(3) Section 6 shall take effect on January 1, 2028; and
Report Title:
Income Tax; Income Tax Brackets; Income Tax Rates; Renewable Energy Technologies Income Tax Credit; Capital Goods Excise Tax Credit; High Technology Business Investment Tax Credit; Renewable Fuels Production Tax Credit; Technology Infrastructure Renovation Tax Credit; Tax Credit for Research Activities; Repeal
Description:
PART I: Repeals certain future adjustments to income tax brackets. Changes income tax rates. Amends the Renewable Energy Technologies Income Tax Credit by adding an aggregate cap amount, setting income thresholds, adding a certification requirement, and adding a sunset date. Adds sunset dates to the Capital Goods Excise Tax Credit and Renewable Fuels Production Tax Credit. PART II: Beginning 1/1/2028, repeals the Technology Infrastructure Renovation Tax Credit. Beginning 1/1/2029, repeals the High Technology Business Investment Tax Credit and Tax Credit for Research Activities. (CD2)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
SENATE FLOOR AMENDMENT
FLOOR AMENDMENT NO. Date____________________
TO: Senate Bill No. 3125, S.D. 1, H.D. 1, C.D. 1
SECTION 1. Senate Bill No. 3125, S.D. 1, H.D. 1, C.D. 1, is amended by amending section 1, page 1, lines 2-3, to read:
"SECTION 1. Section 235-12.5, Hawaii Revised Statutes, is amended to read as follows:"
SECTION 2. Senate Bill No. 3125, S.D. 1, H.D. 1, C.D. 1, is amended by amending section 1, page 13, lines 13-14, to read:
"(p) This section shall not apply to taxable years beginning after December 31, 2029.""
SECTION 3. Senate Bill No. 3125, S.D. 1, H.D. 1, C.D. 1, is amended by amending section 2, page 13, lines 15-17, to read:
"SECTION 2. Section 235-51, Hawaii Revised Statutes, is amended by amending subsections (a), (b), and (c) to read as follows:"
SECTION 4. Senate Bill No. 3125, S.D. 1, H.D. 1, C.D. 1, is amended by amending section 9 to read:
"SECTION 9. This Act shall take effect upon its approval; provided that:
(1) Section 1 shall apply retroactively to taxable years beginning after December 31, 2025; provided further that the amendments to section 235-12.5(a), Hawaii Revised Statutes, shall apply to taxable years beginning after December 31, 2026;
(2) Sections 2, 3, and 4 shall apply to taxable years beginning after December 31, 2026;
(3) Section 6 shall take effect on January 1, 2028; and
(4) Section 5 shall take effect on January 1, 2029."
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THE SENATE |
S.B. NO. |
3125 |
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THIRTY-THIRD LEGISLATURE, 2026 |
S.D. 1 |
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STATE OF HAWAII |
H.D. 1 |
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C.D. 2 |
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A BILL FOR AN ACT
RELATING TO INCOME TAX.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Section 235-12.5, Hawaii Revised Statutes, is amended to read as follows:
"§235-12.5 Renewable energy
technologies; income tax credit. (a) Each individual or corporate
taxpayer that files an individual or corporate net income tax return for a
taxable year may claim a tax credit under this section against the Hawaii state
individual or corporate net income tax[.]; provided that the
taxpayer's adjusted gross income does not exceed $175,000 if filing as an
individual, or $350,000 if filing jointly. The tax credit may be claimed
for every eligible renewable energy technology system that is installed and
placed in service in the State by a taxpayer during the taxable year. The tax
credit may be claimed as follows:
(1) For each solar energy system: thirty-five per cent of the actual cost or the cap amount determined in subsection (b); provided that:
(A) For taxable years beginning after December 31, 2019, and except as provided in subparagraphs (B) and (C), no tax credit may be claimed for a solar energy system that is five megawatts in total output capacity or larger and requires a power purchase agreement approved by the public utilities commission;
(B) A solar energy system that is five megawatts in total output capacity or larger, installed and placed in service pursuant to a power purchase agreement approved or pending approval by a decision and order by the public utilities commission prior to December 31, 2019, shall continue to receive a tax credit equal to thirty‑five per cent of the actual cost, or $500,000 per solar energy system that has a total output capacity of at least one thousand kilowatts per system of direct current, whichever is less; and
(C) For each solar energy system integrated with a pumped hydroelectric energy storage system, the tax credit may be claimed for thirty-five per cent of the actual cost or the cap amount determined in subsection (b), whichever is less; provided that applicable project approval filings have been made to the public utilities commission by December 31, 2021; or
(2) For each wind-powered energy system: twenty per cent of the actual cost or the cap amount determined in subsection (b), whichever is less;
provided further that multiple owners of a single system shall be entitled to a single tax credit; and provided further that the tax credit shall be apportioned between the owners in proportion to their contribution to the cost of the system.
In the case of a partnership, S corporation, estate, or trust, the tax credit allowable is for every eligible renewable energy technology system that is installed and placed in service in the State by the entity. The cost upon which the tax credit is computed shall be determined at the entity level. Distribution and share of credit shall be determined pursuant to administrative rule.
(b) The amount of credit allowed for each eligible renewable energy technology system shall not exceed the applicable cap amount, which is determined as follows:
(1) If the primary purpose of the solar energy system is to use energy from the sun to heat water for household use, then the cap amounts shall be:
(A) $2,250 per system for single-family residential property;
(B) $350 per unit per system for multi-family residential property; and
(C) $250,000 per system for commercial property;
(2) For all other solar energy systems, the cap amounts shall be:
(A) $5,000 per system for single-family residential property; provided that if all or a portion of the system is used to fulfill the substitute renewable energy technology requirement pursuant to section 196-6.5(a)(3), the credit shall be reduced by thirty-five per cent of the actual system cost or $2,250, whichever is less;
(B) $350 per unit per system for multi-family residential property; and
(C) $500,000 per system for commercial property; and
(3) For all wind-powered energy systems, the cap amounts shall be:
(A) $1,500 per system for single-family residential property; provided that if all or a portion of the system is used to fulfill the substitute renewable energy technology requirement pursuant to section 196-6.5(a)(3), the credit shall be reduced by twenty per cent of the actual system cost or $1,500, whichever is less;
(B) $200 per unit per system for multi-family residential property; and
(C) $500,000 per system for commercial property.
(c) The total amount of tax credits allowed under this section in any particular year shall be as follows:
(1) For calendar year 2027, $40,000,000;
(2) For calendar year 2028, $40,000,000;
(3) For calendar year 2029, $40,000,000;
(4) For calendar year 2030, $40,000,000; and
(5) Beginning January 1, 2031, $0.
[(c)] (d) For the purposes of
this section:
"Actual cost" means costs related to the renewable energy technology systems under subsection (a), including accessories and installation, but not including the cost of consumer incentive premiums unrelated to the operation of the system or offered with the sale of the system and costs for which another credit is claimed under this chapter.
"Household use" means any use to which heated water is commonly put in a residential setting, including commercial application of those uses.
"Renewable energy technology system" means a new system that captures and converts a renewable source of energy, such as solar or wind energy, into:
(1) A usable source of thermal or mechanical energy;
(2) Electricity; or
(3) Fuel.
"Solar or wind energy system" means any identifiable facility, equipment, apparatus, or the like that converts solar or wind energy to useful thermal or electrical energy for heating, cooling, or reducing the use of other types of energy that are dependent upon fossil fuel for their generation.
[(d)] (e) For taxable years
beginning after December 31, 2005, the dollar amount of any utility rebate
shall be deducted from the cost of the qualifying system and its installation
before applying the state tax credit.
(f) Every taxpayer, before March 1 of each year in which a renewable energy technology system was installed and placed in service in the previous taxable year, shall submit a written, certified statement to the Hawaii state energy office of the department of business, economic development, and tourism identifying:
(1) The adjusted gross income of the taxpayer;
(2) The actual cost of each renewable energy technology system installed and placed in service in the previous taxable year; and
(3) The amount of tax credits claimed pursuant to this section, if any, in the previous taxable year.
(g) The Hawaii state energy office of the department of business, economic development, and tourism shall:
(1) Certify the eligibility of each system used to claim a credit under this section;
(2) Certify that each taxpayer claiming a credit under this section meets all requirements; and
(3) Issue a certificate to each taxpayer specifying the amount of credit the taxpayer may claim.
The taxpayer shall file the certificate with the taxpayer's tax return to the department of taxation. Notwithstanding the authority of the Hawaii state energy office, the director of taxation may audit and adjust the tax credit amount to conform to the facts.
(h) If in any calendar year the annual amount of certified credits reaches the amount specified in subsection (c) in the aggregate, the specified amount shall be divided between all taxpayers claiming a credit under this section for that year in proportion to the amount of costs claimed by all taxpayers; provided that:
(1) The Hawaii state energy office of 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 office shall determine the opening date of the application period by rule;
(2) By May 31 of each year the Hawaii state energy office shall notify each applicant of the credit amount certified; and
(3) If the total credits applied for by all taxpayers are no more than the amount specified in subsection (c), each taxpayer shall receive the full amount of the credit applied for, subject to verification of actual costs.
In no instance shall the Hawaii state energy office certify a total amount of credits exceeding the amount specified in subsection (c) per calendar year. The department of taxation shall not allow the aggregate amount of credits claimed to exceed that amount per calendar year.
[(e)] (i) The director of
taxation shall prepare any forms that may be necessary to claim a tax credit
under this section, including forms identifying the technology type of each tax
credit claimed under this section, whether for solar or wind. The director may
also require the taxpayer to furnish reasonable information to ascertain the
validity of the claim for credit made under this section and may adopt rules
necessary to effectuate the purposes of this section pursuant to chapter 91.
[(f)] (j) 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, unless otherwise elected by
the taxpayer pursuant to subsection [(g)] (k) or [(h).] (l).
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 subsection shall constitute a waiver of the right to claim the credit.
[(g)] (k) For solar energy
systems, a taxpayer may elect to reduce the eligible credit amount by thirty
per cent and if this reduced amount exceeds the amount of income tax payment
due from the taxpayer, the excess of the credit amount over payments due shall
be refunded to the taxpayer; provided that tax credit amounts properly claimed
by a taxpayer who has no income tax liability shall be paid to the taxpayer;
and provided further that no refund on account of the tax credit allowed by
this section shall be made for amounts less than $1.
The election required by this subsection shall be made in a manner prescribed by the director on the taxpayer's return for the taxable year in which the system is installed and placed in service. A separate election may be made for each separate system that generates a credit. An election once made is irrevocable.
[(h)] (l) Notwithstanding
subsection [(g),] (k), for any renewable energy technology
system, an individual taxpayer may elect to have any excess of the credit over
payments due refunded to the taxpayer, if:
(1) All of the taxpayer's income is exempt from taxation under section 235-7(a)(2) or (3); or
(2) The taxpayer's adjusted gross income is $20,000 or less (or $40,000 or less if filing a tax return as married filing jointly);
provided that tax credits properly claimed by a taxpayer who has no income tax liability shall be paid to the taxpayer; and provided further that no refund on account of the tax credit allowed by this section shall be made for amounts less than $1.
A husband and wife who do not file a joint tax return shall only be entitled to make this election to the extent that they would have been entitled to make the election had they filed a joint tax return.
The election required by this subsection shall be made in a manner prescribed by the director on the taxpayer's return for the taxable year in which the system is installed and placed in service. A separate election may be made for each separate system that generates a credit. An election once made is irrevocable.
[(i)] (m) No taxpayer shall be
allowed a credit under this section for the portion of the renewable energy
technology system required by section 196-6.5 that is installed and placed in
service on any newly constructed single-family residential property authorized
by a building permit issued on or after January 1, 2010.
[(j)] (n) To the extent
feasible, using existing resources to assist the energy-efficiency policy
review and evaluation, the department shall assist with data collection on the
following for each taxable year:
(1) The number of renewable energy technology systems that have qualified for a tax credit during the calendar year by:
(A) Technology type; and
(B) Taxpayer type (corporate and individual); and
(2) The total cost of the tax credit to the State during the taxable year by:
(A) Technology type; and
(B) Taxpayer type.
[(k)] (o) This section shall
apply to eligible renewable energy technology systems that are installed and
placed in service on or after July 1, 2009.
(p) This section shall not apply to taxable years beginning after December 31, 2029."
SECTION 2. Section 235-51, Hawaii Revised Statutes, is amended by amending subsections (a), (b), and (c) to read as follows:
"(a) There is hereby imposed on the taxable income of every:
(1) Taxpayer who files a joint return under section 235‑93; and
(2) Surviving spouse,
a tax determined in accordance with the following table:
In the case of any taxable year beginning after December 31, 2017:
If the taxable income is: The tax shall be:
Not over $4,800 1.40% of taxable income
Over $4,800 but $67.00 plus 3.20% of
not over $9,600 excess over $4,800
Over $9,600 but $221.00 plus 5.50% of
not over $19,200 excess over $9,600
Over $19,200 but $749.00 plus 6.40% of
not over $28,800 excess over $19,200
Over $28,800 but $1,363.00 plus 6.80% of
not over $38,400 excess over $28,800
Over $38,400 but $2,016.00 plus 7.20% of
not over $48,000 excess over $38,400
Over $48,000 but $2,707.00 plus 7.60% of
not over $72,000 excess over $48,000
Over $72,000 but $4,531.00 plus 7.90% of
not over $96,000 excess over $72,000
Over $96,000 but $6,427.00 plus 8.25% of
not over $300,000 excess over $96,000
Over $300,000 but $23,257.00 plus 9.00% of
not over $350,000 excess over $300,000
Over $350,000 but $27,757.00 plus 10.00% of
not over $400,000 excess over $350,000
Over $400,000 $32,757.00 plus 11.00% of
excess over $400,000.
In the case of any taxable year beginning after December 31, 2024:
If the taxable income is: The tax shall be:
Not over $19,200 1.40% of taxable income
Over $19,200 but $269.00 plus 3.20% of
not over $28,800 excess over $19,200
Over $28,800 but $576.00 plus 5.50% of
not over $38,400 excess over $28,800
Over $38,400 but $1,104.00 plus 6.40% of
not over $48,000 excess over $38,400
Over $48,000 but $1,718.00 plus 6.80% of
not over $72,000 excess over $48,000
Over $72,000 but $3,350.00 plus 7.20% of
not over $96,000 excess over $72,000
Over $96,000 but $5,078.00 plus 7.60% of
not over $250,000 excess over $96,000
Over $250,000 but $16,782.00 plus 7.90% of
not over $350,000 excess over $250,000
Over $350,000 but $24,682.00 plus 8.25% of
not over $450,000 excess over $350,000
Over $450,000 but $32,932.00 plus 9.00% of
not over $550,000 excess over $450,000
Over $550,000 but $41,932.00 plus 10.00% of
not over $650,000 excess over $550,000
Over $650,000 $51,932.00 plus 11.00% of
excess over $650,000.
[In the case of any taxable year beginning
after December 31, 2026:
If the taxable income is: The
tax shall be:
Not over $28,800 1.40%
of taxable income
Over $28,800 but $403.00
plus 3.20% of
not over $38,400 excess
over $28,800
Over $38,400 but $710.00
plus 5.50% of
not over $48,000 excess
over $38,400
Over $48,000 but $1,238.00
plus 6.40% of
not over $72,000 excess
over $48,000
Over $72,000 but $2,774.00
plus 6.80% of
not over $96,000 excess
over $72,000
Over $96,000 but $4,406.00
plus 7.20% of
not over $250,000 excess
over $96,000
Over $250,000 but $15,494.00
plus 7.60% of
not over $350,000 excess
over $250,000
Over $350,000 but $23,094.00
plus 7.90% of
not over $450,000 excess
over $350,000
Over $450,000 but $30,994.00
plus 8.25% of
not over $550,000 excess
over $450,000
Over $550,000 but $39,244.00
plus 9.00% of
not over $650,000 excess
over $550,000
Over
$650,000 but $48,244.00 plus 10.00% of
not over $800,000 excess
over $650,000
Over
$800,000 $63,244.00 plus 11.00% of
excess
over $800,000.
In the case of any taxable year beginning
after December 31, 2028:
If the taxable income is: The
tax shall be:
Not over $38,400 1.40%
of taxable income
Over $38,400 but $538.00
plus 3.20% of
not over $48,000 excess
over $38,400
Over $48,000 but $845.00
plus 5.50% of
not over $72,000 excess
over $48,000
Over $72,000 but $2,165.00
plus 6.40% of
not over $96,000 excess
over $72,000
Over $96,000 but $3,701.00
plus 6.80% of
not over $250,000 excess
over $96,000
Over $250,000 but $14,173.00
plus 7.20% of
not over $350,000 excess
over $250,000
Over $350,000 but $21,373.00
plus 7.60% of
not over $450,000 excess
over $350,000
Over $450,000 but $28,973.00
plus 7.90% of
not over $550,000 excess
over $450,000
Over $550,000 but $36,873.00
plus 8.25% of
not over $650,000 excess
over $550,000
Over $650,000 but $45,123.00
plus 9.00% of
not over $800,000 excess
over $650,000
Over
$800,000 but $58,623.00 plus 10.00% of
not over $950,000 excess
over $800,000
Over
$950,000 $73,623.00 plus 11.00% of
excess
over $950,000.]
In the case of any taxable year beginning after December 31, 2026:
If the taxable income is: The tax shall be:
Not over $28,800 1.40% of taxable income
Over $28,800 but $403.00 plus 2.50% of
not over $38,400 excess over $28,800
Over $38,400 but $643.00 plus 5.00% of
not over $48,000 excess over $38,400
Over $48,000 but $1,123.00 plus 6.40% of
not over $72,000 excess over $48,000
Over $72,000 but $2,659.00 plus 6.80% of
not over $96,000 excess over $72,000
Over $96,000 but $4,291.00 plus 7.20% of
not over $250,000 excess over $96,000
Over $250,000 but $15,379.00 plus 7.60% of
not over $350,000 excess over $250,000
Over $350,000 but $22,979.00 plus 8.25% of
not over $450,000 excess over $350,000
Over $450,000 but $31,229.00 plus 9.00% of
not over $550,000 excess over $450,000
Over $550,000 but $40,229.00 plus 10.00% of
not over $650,000 excess over $550,000
Over $650,000 but $50,229.00 plus 11.00% of
not over $1,000,000 excess over $650,000
Over $1,000,000 $88,729.00 plus 13.00% of
excess over $1,000,000.
In the case of any taxable year beginning after December 31, 2028:
If the taxable income is: The tax shall be:
Not over $38,400 1.40% of taxable income
Over $38,400 but $538.00 plus 2.50% of
not over $48,000 excess over $38,400
Over $48,000 but $778.00 plus 5.00% of
not over $72,000 excess over $48,000
Over $72,000 but $1,978.00 plus 6.40% of
not over $96,000 excess over $72,000
Over $96,000 but $3,514.00 plus 6.80% of
not over $250,000 excess over $96,000
Over $250,000 but $13,986.00 plus 7.20% of
not over $350,000 excess over $250,000
Over $350,000 but $21,186.00 plus 8.25% of
not over $450,000 excess over $350,000
Over $450,000 but $29,436.00 plus 9.00% of
not over $550,000 excess over $450,000
Over $550,000 but $38,436.00 plus 10.00% of
not over $650,000 excess over $550,000
Over $650,000 but $48,436.00 plus 11.00% of
not over $1,000,000 excess over $650,000
Over $1,000,000 $86,936.00 plus 13.00% of
excess over $1,000,000.
(b) There is hereby imposed on the taxable income of every head of a household a tax determined in accordance with the following table:
In the case of any taxable year beginning after December 31, 2017:
If the taxable income is: The tax shall be:
Not over $3,600 1.40% of taxable income
Over $3,600 but $50.00 plus 3.20% of
not over $7,200 excess over $3,600
Over $7,200 but $166.00 plus 5.50% of
not over $14,400 excess over $7,200
Over $14,400 but $562.00 plus 6.40% of
not over $21,600 excess over $14,400
Over $21,600 but $1,022.00 plus 6.80% of
not over $28,800 excess over $21,600
Over $28,800 but $1,512.00 plus 7.20% of
not over $36,000 excess over $28,800
Over $36,000 but $2,030.00 plus 7.60% of
not over $54,000 excess over $36,000
Over $54,000 but $3,398.00 plus 7.90% of
not over $72,000 excess over $54,000
Over $72,000 but $4,820.00 plus 8.25% of
not over $225,000 excess over $72,000
Over $225,000 but $17,443.00 plus 9.00% of
not over $262,500 excess over $225,000
Over $262,500 but $20,818.00 plus 10.00% of
not over $300,000 excess over $262,500
Over $300,000 $24,568.00 plus 11.00% of
excess over $300,000.
In the case of any taxable year beginning after December 31, 2024:
If the taxable income is: The tax shall be:
Not over $14,400 1.40% of taxable income
Over $14,400 but $202.00 plus 3.20% of
not over $21,600 excess over $14,400
Over $21,600 but $432.00 plus 5.50% of
not over $28,800 excess over $21,600
Over $28,800 but $828.00 plus 6.40% of
not over $36,000 excess over $28,800
Over $36,000 but $1,289.00 plus 6.80% of
not over $54,000 excess over $36,000
Over $54,000 but $2,513.00 plus 7.20% of
not over $72,000 excess over $54,000
Over $72,000 but $3,809.00 plus 7.60% of
not over $187,500 excess over $72,000
Over $187,500 but $12,587.00 plus 7.90% of
not over $262,500 excess over $187,500
Over $262,500 but $18,512.00 plus 8.25% of
not over $337,500 excess over $262,500
Over $337,500 but $24,699.00 plus 9.00% of
not over $412,500 excess over $337,500
Over $412,500 but $31,449.00 plus 10.00% of
not over $487,500 excess over $412,500
Over $487,500 $38,949.00 plus 11.00% of
excess over $487,500.
[In the case of any taxable year beginning
after December 31, 2026:
If the taxable income is: The
tax shall be:
Not over $21,600 1.40%
of taxable income
Over $21,600 but $302.00
plus 3.20% of
not over $28,800 excess
over $21,600
Over $28,800 but $533.00
plus 5.50% of
not over $36,000 excess
over $28,800
Over $36,000 but $929.00
plus 6.40% of
not over $54,000 excess
over $36,000
Over $54,000 but $2,081.00
plus 6.80% of
not over $72,000 excess
over $54,000
Over $72,000 but $3,305.00
plus 7.20% of
not over $187,500 excess
over $72,000
Over $187,500 but $11,621.00
plus 7.60% of
not over $262,500 excess
over $187,500
Over $262,500 but $17,321.00
plus 7.90% of
not over $337,500 excess
over $262,500
Over $337,500 but $23,246.00
plus 8.25% of
not over $412,500 excess
over $337,500
Over $412,500 but $29,433.00
plus 9.00% of
not over $487,500 excess
over $412,500
Over
$487,500 but $36,183.00 plus 10.00% of
not over $600,000 excess
over $487,500
Over
$600,000 $47,433.00 plus 11.00% of
excess
over $600,000.
In the case of any taxable year beginning
after December 31, 2028:
If the taxable income is: The
tax shall be:
Not over $28,800 1.40%
of taxable income
Over $28,800 but $403.00
plus 3.20% of
not over $36,000 excess
over $28,800
Over $36,000 but $634.00
plus 5.50% of
not over $54,000 excess
over $36,000
Over $54,000 but $1,624.00
plus 6.40% of
not over $72,000 excess
over $54,000
Over $72,000 but $2,776.00
plus 6.80% of
not over $187,500 excess
over $72,000
Over $187,500 but $10,630.00
plus 7.20% of
not over $262,500 excess
over $187,500
Over $262,500 but $16,030.00
plus 7.60% of
not over $337,500 excess
over $262,500
Over $337,500 but $21,730.00
plus 7.90% of
not over $412,500 excess
over $337,500
Over $412,500 but $27,655.00
plus 8.25% of
not over $487,500 excess
over $412,500
Over $487,500 but $33,842.00
plus 9.00% of
not over $600,000 excess
over $487,500
Over
$600,000 but $43,967.00 plus 10.00% of
not over $712,500 excess
over $600,000
Over $712,500 $55,217.00
plus 11.00% of
excess
over $712,500.]
In the case of any taxable year beginning after December 31, 2026:
If the taxable income is: The tax shall be:
Not over $21,600 1.40% of taxable income
Over $21,600 but $302.00 plus 2.50% of
not over $28,800 excess over $21,600
Over $28,800 but $482.00 plus 5.00% of
not over $36,000 excess over $28,800
Over $36,000 but $842.00 plus 6.40% of
not over $54,000 excess over $36,000
Over $54,000 but $1,994.00 plus 6.80% of
not over $72,000 excess over $54,000
Over $72,000 but $3,218.00 plus 7.20% of
not over $187,500 excess over $72,000
Over $187,500 but $11,534.00 plus 7.60% of
not over $262,500 excess over $187,500
Over $262,500 but $17,234.00 plus 8.25% of
not over $337,500 excess over $262,500
Over $337,500 but $23,422.00 plus 9.00% of
not over $412,500 excess over $337,500
Over $412,500 but $30,172.00 plus 10.00% of
not over $487,500 excess over $412,500
Over $487,500 but $37,672.00 plus 11.00% of
not over $750,000 excess over $487,500
Over $750,000 $66,547.00 plus 13.00% of
excess over $750,000.
In the case of any taxable year beginning after December 31, 2028:
If the taxable income is: The tax shall be:
Not over $28,800 1.40% of taxable income
Over $28,800 but $403.00 plus 2.50% of
not over $36,000 excess over $28,800
Over $36,000 but $583.00 plus 5.00% of
not over $54,000 excess over $36,000
Over $54,000 but $1,483.00 plus 6.40% of
not over $72,000 excess over $54,000
Over $72,000 but $2,635.00 plus 6.80% of
not over $187,500 excess over $72,000
Over $187,500 but $10,489.00 plus 7.20% of
not over $262,500 excess over $187,500
Over $262,500 but $15,889.00 plus 8.25% of
not over $337,500 excess over $262,500
Over $337,500 but $22,077.00 plus 9.00% of
not over $412,500 excess over $337,500
Over $412,500 but $28,827.00 plus 10.00% of
not over $487,500 excess over $412,500
Over $487,500 but $36,327.00 plus 11.00% of
not over $750,000 excess over $487,500
Over $750,000 $65,202.00 plus 13.00% of
excess over $750,000.
(c) There is hereby imposed on the taxable income of (1) every unmarried individual (other than a surviving spouse, or the head of a household) and (2) on the taxable income of every married individual who does not make a single return jointly with the individual's spouse under section 235-93 a tax determined in accordance with the following table:
In the case of any taxable year beginning after December 31, 2017:
If the taxable income is: The tax shall be:
Not over $2,400 1.40% of taxable income
Over $2,400 but $34.00 plus 3.20% of
not over $4,800 excess over $2,400
Over $4,800 but $110.00 plus 5.50% of
not over $9,600 excess over $4,800
Over $9,600 but $374.00 plus 6.40% of
not over $14,400 excess over $9,600
Over $14,400 but $682.00 plus 6.80% of
not over $19,200 excess over $14,400
Over $19,200 but $1,008.00 plus 7.20% of
not over $24,000 excess over $19,200
Over $24,000 but $1,354.00 plus 7.60% of
not over $36,000 excess over $24,000
Over $36,000 but $2,266.00 plus 7.90% of
not over $48,000 excess over $36,000
Over $48,000 but $3,214.00 plus 8.25% of
not over $150,000 excess over $48,000
Over $150,000 but $11,629.00 plus 9.00% of
not over $175,000 excess over $150,000
Over $175,000 but $13,879.00 plus 10.00% of
not over $200,000 excess over $175,000
Over $200,000 $16,379.00 plus 11.00% of
excess over $200,000.
In the case of any taxable year beginning after December 31, 2024:
If the taxable income is: The tax shall be:
Not over $9,600 1.40% of taxable income
Over $9,600 but $134.00 plus 3.20% of
not over $14,400 excess over $9,600
Over $14,400 but $288.00 plus 5.50% of
not over $19,200 excess over $14,400
Over $19,200 but $552.00 plus 6.40% of
not over $24,000 excess over $19,200
Over $24,000 but $859.00 plus 6.80% of
not over $36,000 excess over $24,000
Over $36,000 but $1,675.00 plus 7.20% of
not over $48,000 excess over $36,000
Over $48,000 but $2,539.00 plus 7.60% of
not over $125,000 excess over $48,000
Over $125,000 but $8,391.00 plus 7.90% of
not over $175,000 excess over $125,000
Over $175,000 but $12,341.00 plus 8.25% of
not over $225,000 excess over $175,000
Over $225,000 but $16,466.00 plus 9.00% of
not over $275,000 excess over $225,000
Over $275,000 but $20,966.00 plus 10.00% of
not over $325,000 excess over $275,000
Over $325,000 $25,966.00 plus 11.00% of
excess over $325,000.
[In the case of any taxable year beginning
after December 31, 2026:
If the taxable income is: The
tax shall be:
Not over $14,400 1.40%
of taxable income
Over $14,400 but $202.00
plus 3.20% of
not over $19,200 excess
over $14,400
Over $19,200 but $355.00
plus 5.50% of
not over $24,000 excess
over $19,200
Over $24,000 but $619.00
plus 6.40% of
not over $36,000 excess
over $24,000
Over $36,000 but $1,387.00
plus 6.80% of
not over $48,000 excess
over $36,000
Over $48,000 but $2,203.00
plus 7.20% of
not over $125,000 excess
over $48,000
Over $125,000 but $7,747.00
plus 7.60% of
not over $175,000 excess
over $125,000
Over $175,000 but $11,547.00
plus 7.90% of
not over $225,000 excess
over $175,000
Over $225,000 but $15,497.00
plus 8.25% of
not over $275,000 excess
over $225,000
Over $275,000 but $19,622.00
plus 9.00% of
not over $325,000 excess
over $275,000
Over
$325,000 but $24,122.00 plus 10.00% of
not over $400,000 excess
over $325,000
Over
$400,000 $31,622.00 plus 11.00% of
excess
over $400,000.
In the case of any taxable year beginning
after December 31, 2028:
If the taxable income is: The
tax shall be:
Not over $19,200 1.40%
of taxable income
Over $19,200 but $269.00
plus 3.20% of
not over $24,000 excess
over $19,200
Over $24,000 but $422.00
plus 5.50% of
not over $36,000 excess
over $24,000
Over $36,000 but $1,082.00
plus 6.40% of
not over $48,000 excess
over $36,000
Over $48,000 but $1,850.00
plus 6.80% of
not over $125,000 excess
over $48,000
Over $125,000 but $7,086.00
plus 7.20% of
not over $175,000 excess
over $125,000
Over $175,000 but $10,686.00
plus 7.60% of
not over $225,000 excess
over $175,000
Over $225,000 but $14,486.00
plus 7.90% of
not over $275,000 excess
over $225,000
Over $275,000 but $18,436.00
plus 8.25% of
not over $325,000 excess
over $275,000
Over $325,000 but $22,561.00
plus 9.00% of
not over $400,000 excess
over $325,000
Over
$400,000 but $29,311.00 plus 10.00% of
not over $475,000 excess
over $400,000
Over
$475,000 $36,811.00 plus 11.00% of
excess
over $475,000.]
In the case of any taxable year beginning after December 31, 2026:
If the taxable income is: The tax shall be:
Not over $14,400 1.40% of taxable income
Over $14,400 but $202.00 plus 2.50% of
not over $19,200 excess over $14,400
Over $19,200 but $322.00 plus 5.00% of
not over $24,000 excess over $19,200
Over $24,000 but $562.00 plus 6.40% of
not over $36,000 excess over $24,000
Over $36,000 but $1,330.00 plus 6.80% of
not over $48,000 excess over $36,000
Over $48,000 but $2,146.00 plus 7.20% of
not over $125,000 excess over $48,000
Over $125,000 but $7,690.00 plus 7.60% of
not over $175,000 excess over $125,000
Over $175,000 but $11,490.00 plus 8.25% of
not over $225,000 excess over $175,000
Over $225,000 but $15,615.00 plus 9.00% of
not over $275,000 excess over $225,000
Over $275,000 but $20,115.00 plus 10.00% of
not over $325,000 excess over $275,000
Over $325,000 but $25,115.00 plus 11.00% of
not over $500,000 excess over $325,000
Over $500,000 $44,365.00 plus 13.00% of
excess over $500,000.
In the case of any taxable year beginning after December 31, 2028:
If the taxable income is: The tax shall be:
Not over $19,200 1.40% of taxable income
Over $19,200 but $269.00 plus 2.50% of
not over $24,000 excess over $19,200
Over $24,000 but $389.00 plus 5.00% of
not over $36,000 excess over $24,000
Over $36,000 but $989.00 plus 6.40% of
not over $48,000 excess over $36,000
Over $48,000 but $1,757.00 plus 6.80% of
not over $125,000 excess over $48,000
Over $125,000 but $6,993.00 plus 7.20% of
not over $175,000 excess over $125,000
Over $175,000 but $10,593.00 plus 8.25% of
not over $225,000 excess over $175,000
Over $225,000 but $14,718.00 plus 9.00% of
not over $275,000 excess over $225,000
Over $275,000 but $19,218.00 plus 10.00% of
not over $325,000 excess over $275,000
Over $325,000 but $24,218.00 plus 11.00% of
not over $500,000 excess over $325,000
Over $500,000 $43,468.00 plus 13.00% of
excess over $500,000."
SECTION 3. Section 235-110.7, Hawaii Revised Statutes, is amended to read as follows:
"§235-110.7 Capital goods excise tax credit. (a) There shall be allowed to each taxpayer subject to the tax imposed by this chapter a capital goods excise tax credit, which 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.
The amount of the tax credit shall be four per cent of the cost of the eligible depreciable tangible personal property used by the taxpayer in a trade or business and placed in service within Hawaii after December 31, 2009.
In the case of a partnership, S corporation, estate, or trust, the tax credit allowable is for eligible depreciable tangible personal property that is placed in service by the entity. The cost upon which the tax credit is computed shall be determined at the entity level. Distribution and share of credit shall be determined by rules.
In the case of eligible depreciable tangible personal property for which a credit for sales or use taxes paid to another state is allowable under section 238-3(i), the amount of the tax credit allowed under this section shall not exceed the amount of use tax actually paid under chapter 238 relating to the tangible personal property.
If a deduction is taken under section 179 (with respect to election to expense certain depreciable business assets) of the Internal Revenue Code of 1954, as amended, no tax credit shall be allowed for that portion of the cost of property for which the deduction was taken.
(b) If the capital goods excise tax credit allowed under subsection (a) exceeds the taxpayer's net income tax liability, the excess of credit over liability shall be refunded to the taxpayer; provided that no refunds or payment on account of the tax credit allowed by this section shall be made for amounts less than $1.
All claims for tax credits under this section, including any amended claims, must be filed on or before the end of the twelfth month following the close of the taxable year for which the credits may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.
(c) Application for the capital goods excise tax credit shall be upon forms provided by the department of taxation.
(d) Sections 47 (with respect to dispositions of section 38 property and the recapture percentages) of the Internal Revenue Code of 1954, as amended, as of December 31, 1984, and 280F as operative for this chapter (with respect to limitation on investment tax credit and depreciation for luxury automobiles; limitation where certain property used for personal purposes) of the Internal Revenue Code of 1954, as amended, shall be operative for purposes of this section.
(e) As used in this section, the definition of section 38 property (with respect to investment in depreciable tangible personal property) as defined by section 48(a)(1)(A), (a)(1)(B), (a)(3), (a)(4), (a)(7), (a)(8), (a)(10)(A), (b), (c), (f), (l), (m), and (s) of the Internal Revenue Code of 1954, as amended as of December 31, 1984, is operative for the purposes of this section only.
(f) This section shall not apply to taxable years beginning after December 31, 2027.
[(f)] (g)
As used in this section:
"Cost" means the:
(1) Actual invoice price of the tangible personal property; or
(2) Basis from which depreciation is taken under section 167 (with respect to depreciation) or from which a deduction may be taken under section 168 (with respect to accelerated cost recovery system) of the Internal Revenue Code of 1954, as amended,
whichever is less.
"Eligible depreciable tangible personal property" is section 38 property as defined by the operative provisions of section 48 and having a depreciable life under section 167 or for which a deduction may be taken under section 168 of the Internal Revenue Code of 1954, as amended.
"Placed in service" means the earliest of the following taxable years:
(1) The taxable year in which, under the:
(A) Taxpayer's depreciation practice, the period for depreciation; or
(B) Accelerated cost recovery system, a claim for recovery allowances,
with respect to the property begins; or
(2) The taxable year in which the property is placed in a condition or state of readiness and availability for a specifically assigned function.
"Purchase" means an acquisition of property.
"Tangible personal property" means tangible personal property that is placed in service within Hawaii after December 31, 1987, and the purchase or importation of which resulted in a transaction that was subject to the imposition and payment of tax at the rate of four per cent under chapter 237 or 238. "Tangible personal property" does not include tangible personal property that is an integral part of a building or structure or tangible personal property used in a foreign-trade zone, as defined under chapter 212."
SECTION 4. Section 235-110.32, Hawaii Revised Statutes, is amended to read as follows:
"[[]§235-110.32[]]
Renewable fuels production tax credit. (a) Each year during the credit
period, there shall be allowed to each taxpayer subject to the taxes imposed by
this chapter a renewable fuels production tax credit that shall be applied to
the taxpayer's net income tax liability, if any, imposed by this chapter for
the taxable year in which the credit is properly claimed.
For each taxpayer producing renewable fuels, the annual dollar amount of the renewable fuels production tax credit during the ten-year credit period shall be equal to 20 cents per seventy-six thousand British thermal units of renewable fuels using the lower heating value sold for distribution in the State; provided that the taxpayer's production of renewable fuels is not less than two billion five hundred million British thermal units of renewable fuels per calendar year; provided further that the amount of the tax credit claimed under this section by a taxpayer shall not exceed $3,500,000 per taxable year; provided further that the tax credit shall only be claimed for fuels with lifecycle emissions below that of fossil fuels. No other tax credit may be claimed under this chapter for the costs incurred to produce the renewable fuels that are used to properly claim a tax credit under this section for the taxable year.
Each taxpayer, together with all of its related entities as determined under section 267(b) of the Internal Revenue Code and all business entities under common control, as determined under sections 414(b), 414(c), and 1563(a) of the Internal Revenue Code, shall not be eligible for more than a single ten-year credit period.
(b) In the case of a partnership, S corporation, estate, or trust, distribution and share of the renewable fuels production tax credit shall be determined pursuant to section 704(b) (with respect to a partner's distributive share) of the Internal Revenue Code of 1986, as amended. For a fiscal year taxpayer, the taxpayer shall report the credit in the taxable year in which the calendar year end is included.
(c) No later than thirty days following the close of the calendar year, every taxpayer claiming a credit under this section shall complete and file an independent, third-party certified statement, at the taxpayer's sole expense, with and in the form prescribed by the Hawaii state energy office, providing the following information:
(1) The type, quantity, and British thermal unit value, using the lower heating value, of each qualified fuel, broken down by the type of fuel, produced and sold during the previous calendar year;
(2) The feedstock used for each type of qualified fuel;
(3) The proposed total amount of credit to which the taxpayer is entitled for each calendar year and the cumulative amount of the tax credit the taxpayer received during the credit period;
(4) The number of full-time and number of part-time employees of the facility and those employees' states of residency, totaled per state;
(5) The number and location of all renewable fuel production facilities within and outside of the State; and
(6) The lifecycle greenhouse gas emissions per British thermal units for each type of qualified fuel produced.
(d) Within thirty calendar days after the due date of the statement required under subsection (c), the Hawaii state energy office shall:
(1) Acknowledge, in writing, receipt of the statement;
(2) Issue a certificate to the taxpayer reporting the amount of renewable fuels produced and sold, the amount of credit that the taxpayer is entitled to claim for the previous calendar year, and the cumulative amount of the tax credit during the credit period; and
(3) Provide the taxpayer with a determination of whether the lifecycle greenhouse gas emissions for each type of qualified fuel produced is lower than that of fossil fuels.
(e) The taxpayer shall file the certificate issued under subsection (d) with the taxpayer's tax return with the department of taxation. The director of taxation may audit and adjust the certification to conform to the facts.
(f) The total amount of tax credits allowed under this section shall not exceed $20,000,000 for all eligible taxpayers in any calendar year. In the event that the credit claims under this section exceed $20,000,000 for all eligible taxpayers in any given calendar year, the $20,000,000 shall be divided between all eligible taxpayers for that year in proportion to the total amount of renewable fuels produced by all eligible taxpayers. Upon reaching $20,000,000 in the aggregate, the Hawaii state energy office shall immediately discontinue issuing certificates and notify the department of taxation. In no instance shall the total dollar amount of certificates issued exceed $20,000,000 per calendar year.
(g) Notwithstanding any other law to the contrary, the information collected and compiled by the Hawaii state energy office under subsections (c) and (d) for the purposes of the renewable fuels production tax credit shall be available for public inspection and dissemination, subject to chapter 92F.
(h) If the credit under this section exceeds the taxpayer's net income tax liability, the excess of the credit over liability may be used as a credit against the taxpayer's net income tax liability in subsequent years until exhausted, unless otherwise elected by the taxpayer pursuant to subsections (i) or (j). All claims for a credit under this section shall be properly 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 the foregoing provision or to provide the certified statement required under subsection (c) shall constitute a waiver of the right to claim the credit.
(i) A taxpayer may elect to reduce the eligible credit amount by thirty per cent and if this reduced amount exceeds the amount of income tax payment due from the taxpayer, the excess of the credit amount over payments due shall be refunded to the taxpayer; provided that tax credit amounts properly claimed by a taxpayer who has no income tax liability shall be paid to the taxpayer; provided further that no refund on account of the tax credit allowed by this section shall be made for amounts less than $1.
The election required by this subsection shall be made in a manner prescribed by the director on the taxpayer's return for the taxable year in which the credit is claimed. An election once made is irrevocable.
(j) Notwithstanding subsection (i), an individual taxpayer may elect to have any excess of the credit over payments due refunded to the taxpayer, if:
(1) All of the taxpayer's income is exempt from taxation under section 235-7(a)(2) or (3); or
(2) The taxpayer's adjusted gross income is $20,000 or less (or $40,000 or less if filing a tax return as married filing jointly);
provided that tax credits properly claimed by a taxpayer who has no income tax liability shall be paid to the taxpayer; provided further that no refund on account of the tax credit allowed by this section shall be made for amounts less than $1.
A married couple who does not file a joint tax return shall only be entitled to make this election to the extent that they would have been entitled to make the election had they filed a joint tax return.
The election required by this subsection shall be made in a manner prescribed by the director on the taxpayer's return for the taxable year in which the credit is claimed. An election once made is irrevocable.
(k) Before the production of any renewable fuels for the calendar year, the taxpayer shall provide written notice of the taxpayer's intention to begin production of renewable fuels. The written notice shall be provided to the department of taxation and the Hawaii state energy office and shall include information on the taxpayer, facility location, facility production capacity, anticipated production start date, and the taxpayer's contact information. Notwithstanding any other law to the contrary, the written notice described in this subsection, including taxpayer and facility information, shall be available for public inspection and dissemination, subject to chapter 92F.
(l) The taxpayer shall provide written notice to the director of taxation and the chief energy officer of the Hawaii state energy office within thirty days following the start of production. The notice shall include the production start date and expected renewable fuels production for the next twelve months. Notwithstanding any other law to the contrary, the written notice described in this subsection shall be available for public inspection and dissemination, subject to chapter 92F.
(m) Following each calendar year in which a credit under this section has been claimed, the chief energy officer of the Hawaii state energy office shall submit a written report to the governor and legislature regarding the production and sale of renewable fuels. The report shall include:
(1) The number and location of renewable fuels production facilities in the State and outside the State that have claimed a credit under this section;
(2) The total number of British thermal units of renewable fuels, itemized by type of fuel produced and sold during the previous calendar year; and
(3) The projected number of British thermal units of renewable fuels production for the succeeding year.
(n) 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 pursuant to chapter 91 necessary to effectuate the purposes of this section.
(o) This section shall not apply to taxable years beginning after December 31, 2028.
[(o)] (p) As used in this
section:
"Credit period" means a maximum period of ten consecutive years, beginning from the first taxable year in which a taxpayer begins renewable fuels production at a level of at least two billion five-hundred million British thermal units of renewable fuels per calendar year.
"Net income tax liability" means income tax liability reduced by all other credits allowed under this chapter.
"Renewable feedstocks" means:
(1) Biomass crops and other renewable organic material, including but not limited to logs, wood chips, wood pellets, and wood bark;
(2) Agricultural residue;
(3) Oil crops, including but not limited to algae, canola, jatropha, palm, soybean, and sunflower;
(4) Sugar and starch crops, including but not limited to sugar cane and cassava;
(5) Other agricultural crops;
(6) Grease and waste cooking oil;
(7) Food wastes;
(8) Municipal solid wastes and industrial wastes;
(9) Water, including wastewater; and
(10) Animal residues and wastes,
that can be used to generate energy.
"Renewable fuels" means fuels produced from renewable feedstocks; provided that the fuel:
(1) Is sold as a fuel in the State; and
(2) Meets the relevant ASTM International specifications or other industry specifications for the particular fuel, including but not limited to:
(A) Methanol, ethanol, or other alcohols;
(B) Hydrogen;
(C) Biodiesel or renewable diesel;
(D) Biogas;
(E) Other biofuels;
(F) Renewable jet fuel or renewable gasoline; or
(G) Logs, wood chips, wood pellets, or wood bark."
PART II
SECTION 5. Section 235-110.9, Hawaii Revised Statutes, is repealed.
["§235-110.9 High technology
business investment tax credit. (a) There shall be allowed to each
taxpayer subject to the taxes imposed by this chapter a high technology
business investment 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 investment was made and the following four years provided the credit
is properly claimed. The tax credit shall be as follows:
(1) In the year the investment was made,
thirty-five per cent;
(2) In the first year following the year in
which the investment was made, twenty-five per cent;
(3) In the second year following the
investment, twenty per cent;
(4) In the third year following the
investment, ten per cent; and
(5) In the fourth year following the
investment, ten per cent;
of the investment made by the taxpayer in each
qualified high technology business, up to a maximum allowed credit in the year
the investment was made, $700,000; in the first year following the year in
which the investment was made, $500,000; in the second year following the year
in which the investment was made, $400,000; in the third year following the
year in which the investment was made, $200,000; and in the fourth year
following the year in which the investment was made, $200,000.
(b) The credit allowed under this
section shall be claimed against the net income tax liability for the taxable
year. For the purpose of this section, "net income tax liability"
means net income tax liability reduced by all other credits allowed under this
chapter.
(c) If the tax credit under this section
exceeds the taxpayer's income tax liability for any of the five years that the
credit is taken, the excess of the tax credit over liability may be used as a
credit against the taxpayer's income tax liability in subsequent years until
exhausted. Every claim, including amended claims, for a tax credit under this
section 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 the foregoing provision shall constitute a waiver of the right to claim
the credit.
(d) If at the close of any taxable year in
the five-year period in subsection (a):
(1) The business no longer qualifies as a
qualified high technology business;
(2) The business or an interest in the
business has been sold by the taxpayer investing in the qualified high
technology business; or
(3) The taxpayer has withdrawn the
taxpayer's investment wholly or partially from the qualified high technology
business;
the credit claimed under this section shall be
recaptured. The recapture shall be equal to ten per cent of the amount of the
total tax credit claimed under this section in the preceding two taxable
years. The amount of the credit recaptured shall apply only to the investment
in the particular qualified high technology business that meets the
requirements of paragraph (1), (2), or (3). The recapture provisions of this
subsection shall not apply to a tax credit claimed for a qualified high
technology business that does not fall within the provisions of paragraph (1),
(2), or (3). The amount of the recaptured tax credit determined under this
subsection shall be added to the taxpayer's tax liability for the taxable year
in which the recapture occurs under this subsection.
(e) Every taxpayer, before March 31 of each
year in which an investment in a qualified high technology business was made in
the previous taxable year, shall submit a written, certified statement to the
director of taxation identifying:
(1) Qualified investments, 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.
(f) The department shall:
(1) Maintain records of the names and
addresses of the taxpayers claiming the credits under this section and the
total amount of the qualified investment costs upon which the tax credit is
based;
(2) Verify the nature and amount of the
qualifying investments;
(3) Total all qualifying and cumulative
investments that the department certifies; and
(4) Certify the amount of the tax credit
for each taxable year and cumulative amount of the tax credit.
Upon each determination made under this
subsection, the department shall issue a certificate to the taxpayer verifying
information submitted to the department, including qualifying investment
amounts, the credit amount certified for each taxable year, and the cumulative
amount of the tax credit during the credit period. The taxpayer shall file the
certificate with the taxpayer's tax return with the department.
The director of taxation may assess and
collect a fee to offset the costs of certifying tax credits claims under this
section. All fees collected under this section shall be deposited into the tax
administration special fund established under section 235-20.5.
(g) As used in this section:
"Investment tax credit allocation
ratio" means, with respect to a taxpayer that has made an investment in a
qualified high technology business, the ratio of:
(1) The amount of the credit under this
section that is, or is to be, received by or allocated to the taxpayer over the
life of the investment, as a result of the investment; to
(2) The amount of the investment in the
qualified high technology business.
"Qualified high technology
business" means a business, employing or owning capital or property, or
maintaining an office, in this State; provided that:
(1) More than fifty per cent of its total
business activities are qualified research; and provided further that the
business conducts more than seventy‑five per cent of its qualified
research in this State; or
(2) More than seventy-five per cent of its
gross income is derived from qualified research; and provided further that this
income is received from:
(A) Products sold from,
manufactured in, or produced in this State; or
(B) Services performed in this
State.
"Qualified research" means the
same as defined in section 235-7.3.
(h) Common law principles, including the
doctrine of economic substance and business purpose, shall apply to any
investment. There exists a presumption that a transaction satisfies the
doctrine of economic substance and business purpose to the extent that the
special allocation of the high technology business tax credit has an investment
tax credit ratio of 1.5 or less of credit for every dollar invested.
Transactions for which an investment tax
credit allocation ratio greater than 1.5 but not more than 2.0 of credit for
every dollar invested and claimed may be reviewed by the department for
applicable doctrines of economic substance and business purpose.
Businesses claiming a tax credit for
transactions with investment tax credit allocation ratios greater than 2.0 of
credit for every dollar invested shall substantiate economic merit and business
purpose consistent with this section.
(i) For investments made on or after May 1,
2009, notwithstanding any other law to the contrary, no allocations, special or
otherwise, of credits under this section may exceed the amount of the
investment made by the taxpayer ultimately claiming this credit; and investment
tax credit allocation ratios greater than 1.0 of credit for every dollar
invested shall not be allowed. In addition, the credit shall be allowed only
in accordance with subsection (a).
(j) This section shall not apply to taxable
years beginning after December 31, 2010."]
SECTION 6. Section 235-110.51, Hawaii Revised Statutes, is repealed.
["§235-110.51 Technology
infrastructure renovation tax credit. (a) There shall be allowed
to each taxpayer subject to the taxes imposed by this chapter, an income tax
credit which 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 credit shall be four
per cent of the renovation costs incurred during the taxable year for each
commercial building located in Hawaii.
(c) In the case of a partnership, S
corporation, estate, trust, or any developer of a commercial building, the tax
credit allowable is for renovation costs incurred by the entity for the taxable
year. The cost upon which the tax credit is computed shall be determined at
the entity level. Distribution and share of credit shall be determined
pursuant to section 235-110.7(a).
(d) If a deduction is taken under section
179 (with respect to election to expense depreciable business assets) of the
Internal Revenue Code, no tax credit shall be allowed for that portion of the
renovation cost for which the deduction is taken.
(e) The basis of eligible property for
depreciation or accelerated cost recovery system purposes for state income
taxes shall be reduced by the amount of credit allowable and claimed. In the
alternative, the taxpayer shall treat the amount of the credit allowable and
claimed as a taxable income item for the taxable year in which it is properly
recognized under the method of accounting used to compute taxable income.
(f) The credit allowed under this section
shall be claimed against the net income tax liability for the taxable year.
(g) If the tax credit under this section
exceeds the taxpayer's income tax liability, the excess of credit over
liability may be carried forward until exhausted.
(h) The tax credit allowed under this
section shall not be available for taxable years beginning after December 31,
2010.
(i) As used in this section:
"Net income tax liability" means
income tax liability reduced by all other credits allowed under this chapter.
"Renovation costs" means costs
incurred after December 31, 2000, to plan, design, install, construct, and
purchase technology-enabled infrastructure equipment to provide a commercial
building with technology-enabled infrastructure.
"Technology-enabled
infrastructure" means:
(1) High speed telecommunications systems
that provide Internet access, direct satellite communications access, and
videoconferencing facilities;
(2) Physical security systems that identify
and verify valid entry to secure spaces, detect invalid entry or entry
attempts, and monitor activity in these spaces;
(3) Environmental systems to include
heating, ventilation, air conditioning, fire detection and suppression, and
other life safety systems; and
(4) Backup and emergency electric power
systems.
(j) No taxpayer that claims a credit under
this section shall claim any other credit under this chapter."]
SECTION 7. Act 261, Session Laws of Hawaii 2019, as amended by 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.]
January 1, 2029."
PART III
SECTION 8. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 9. This Act shall take effect upon its approval; provided that:
(1) Section 1 shall apply retroactively to taxable years beginning after December 31, 2025; provided that the amendments to section 235-12.5(a), Hawaii Revised Statutes, shall apply to taxable years beginning after December 31, 2026;
(2) Sections 2, 3, and 4 shall apply to taxable years beginning after December 31, 2026;
(3) Section 6 shall take effect on January 1, 2028; and
Report Title:
Income Tax; Income Tax Brackets; Income Tax Rates; Renewable Energy Technologies Income Tax Credit; Capital Goods Excise Tax Credit; High Technology Business Investment Tax Credit; Renewable Fuels Production Tax Credit; Technology Infrastructure Renovation Tax Credit; Tax Credit for Research Activities; Repeal
Description:
PART I: Repeals certain future adjustments to income tax brackets. Changes income tax rates. Amends the Renewable Energy Technologies Income Tax Credit by adding an aggregate cap amount, setting income thresholds, adding a certification requirement, and adding a sunset date. Adds sunset dates to the Capital Goods Excise Tax Credit and Renewable Fuels Production Tax Credit. PART II: Beginning 1/1/2028, repeals the Technology Infrastructure Renovation Tax Credit. Beginning 1/1/2029, repeals the High Technology Business Investment Tax Credit and Tax Credit for Research Activities. (CD2)
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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THE SENATE |
S.B. NO. |
3125 |
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THIRTY-THIRD LEGISLATURE, 2026 |
S.D. 1 |
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STATE OF HAWAII |
H.D. 1 |
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C.D. 1 |
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A BILL FOR AN ACT
RELATING TO INCOME TAX.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Section 235-12.5, Hawaii Revised Statutes, is repealed.
"§235-12.5 Renewable energy technologies; income tax
credit. (a) Each individual or corporate taxpayer that
files an individual or corporate net income tax return for a taxable year may
claim a tax credit under this section against the Hawaii state individual or
corporate net income tax[.]; provided that the taxpayer's adjusted
gross income does not exceed $175,000 if filing as an individual, or $350,000
if filing jointly. The tax credit
may be claimed for every eligible renewable energy technology system that is
installed and placed in service in the State by a taxpayer during the taxable
year. The tax credit may be claimed as
follows:
(1) For each solar energy system: thirty-five per cent of the actual cost or the cap amount determined in subsection (b); provided that:
(A) For taxable years beginning after December 31, 2019, and except as provided in subparagraphs (B) and (C), no tax credit may be claimed for a solar energy system that is five megawatts in total output capacity or larger and requires a power purchase agreement approved by the public utilities commission;
(B) A solar energy system that is five megawatts in total output capacity or larger, installed and placed in service pursuant to a power purchase agreement approved or pending approval by a decision and order by the public utilities commission prior to December 31, 2019, shall continue to receive a tax credit equal to thirty‑five per cent of the actual cost, or $500,000 per solar energy system that has a total output capacity of at least one thousand kilowatts per system of direct current, whichever is less; and
(C) For each solar energy system integrated with a pumped hydroelectric energy storage system, the tax credit may be claimed for thirty-five per cent of the actual cost or the cap amount determined in subsection (b), whichever is less; provided that applicable project approval filings have been made to the public utilities commission by December 31, 2021; or
(2) For each wind-powered energy system: twenty per cent of the actual cost or the cap amount determined in subsection (b), whichever is less;
provided further that multiple owners of a single system shall be entitled to a single tax credit; and provided further that the tax credit shall be apportioned between the owners in proportion to their contribution to the cost of the system.
In the case of a partnership, S corporation, estate, or trust, the tax credit allowable is for every eligible renewable energy technology system that is installed and placed in service in the State by the entity. The cost upon which the tax credit is computed shall be determined at the entity level. Distribution and share of credit shall be determined pursuant to administrative rule.
(b) The amount of credit allowed for each eligible renewable energy technology system shall not exceed the applicable cap amount, which is determined as follows:
(1) If the primary purpose of the solar energy system is to use energy from the sun to heat water for household use, then the cap amounts shall be:
(A) $2,250 per system for single-family residential property;
(B) $350 per unit per system for multi-family residential property; and
(C) $250,000 per system for commercial property;
(2) For all other solar energy systems, the cap amounts shall be:
(A) $5,000 per system for single-family residential property; provided that if all or a portion of the system is used to fulfill the substitute renewable energy technology requirement pursuant to section 196-6.5(a)(3), the credit shall be reduced by thirty-five per cent of the actual system cost or $2,250, whichever is less;
(B) $350 per unit per system for multi-family residential property; and
(C) $500,000 per system for commercial property; and
(3) For all wind-powered energy systems, the cap amounts shall be:
(A) $1,500 per system for single-family residential property; provided that if all or a portion of the system is used to fulfill the substitute renewable energy technology requirement pursuant to section 196-6.5(a)(3), the credit shall be reduced by twenty per cent of the actual system cost or $1,500, whichever is less;
(B) $200 per unit per system for multi-family residential property; and
(C) $500,000 per system for commercial property.
(c) The total amount of tax credits allowed under this section in any particular year shall be as follows:
(1) For calendar year 2027, $40,000,000;
(2) For calendar year 2028, $40,000,000;
(3) For calendar year 2029, $40,000,000;
(4) For calendar year 2030, $40,000,000; and
(5) Beginning January 1, 2031, $0.
[(c)]
(d) For the purposes of this
section:
"Actual cost" means costs related to the renewable energy technology systems under subsection (a), including accessories and installation, but not including the cost of consumer incentive premiums unrelated to the operation of the system or offered with the sale of the system and costs for which another credit is claimed under this chapter.
"Household use" means any use to which heated water is commonly put in a residential setting, including commercial application of those uses.
"Renewable energy technology system" means a new system that captures and converts a renewable source of energy, such as solar or wind energy, into:
(1) A usable source of thermal or mechanical energy;
(2) Electricity; or
(3) Fuel.
"Solar or wind energy system" means any identifiable facility, equipment, apparatus, or the like that converts solar or wind energy to useful thermal or electrical energy for heating, cooling, or reducing the use of other types of energy that are dependent upon fossil fuel for their generation.
[(d)]
(e) For taxable years beginning
after December 31, 2005, the dollar amount of any utility rebate shall be
deducted from the cost of the qualifying system and its installation before
applying the state tax credit.
(f) Every taxpayer, before March 1 of each year in which a renewable energy technology system was installed and placed in service in the previous taxable year, shall submit a written, certified statement to the Hawaii state energy office of the department of business, economic development, and tourism identifying:
(1) The adjusted gross income of the taxpayer;
(2) The actual cost of each renewable energy technology system installed and placed in service in the previous taxable year; and
(3) The amount of tax credits claimed pursuant to this section, if any, in the previous taxable year.
(g) The Hawaii state energy office of the department of business, economic development, and tourism shall:
(1) Certify the eligibility of each system used to claim a credit under this section;
(2) Certify that each taxpayer claiming a credit under this section meets all requirements; and
(3) Issue a certificate to each taxpayer specifying the amount of credit the taxpayer may claim.
The taxpayer shall file the certificate with the taxpayer's tax return to the department of taxation. Notwithstanding the authority of the Hawaii state energy office, the director of taxation may audit and adjust the tax credit amount to conform to the facts.
(h) If in any calendar year the annual amount of certified credits reaches the amount specified in subsection (c) in the aggregate, the specified amount shall be divided between all taxpayers claiming a credit under this section for that year in proportion to the amount of costs claimed by all taxpayers; provided that:
(1) The Hawaii state energy office of 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 office shall determine the opening date of the application period by rule;
(2) By May 31 of each year the Hawaii state energy office shall notify each applicant of the credit amount certified; and
(3) If the total credits applied for by all taxpayers are no more than the amount specified in subsection (c), each taxpayer shall receive the full amount of the credit applied for, subject to verification of actual costs.
In no instance shall the Hawaii state energy office certify a total amount of credits exceeding the amount specified in subsection (c) per calendar year. The department of taxation shall not allow the aggregate amount of credits claimed to exceed that amount per calendar year.
[(e)]
(i) The director of taxation
shall prepare any forms that may be necessary to claim a tax credit under this
section, including forms identifying the technology type of each tax credit
claimed under this section, whether for solar or wind. The director may also require the taxpayer to
furnish reasonable information to ascertain the validity of the claim for
credit made under this section and may adopt rules necessary to effectuate the
purposes of this section pursuant to chapter 91.
[(f)]
(j) 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, unless otherwise elected by the
taxpayer pursuant to subsection [(g)] (k) or [(h).] (l). 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
subsection shall constitute a waiver of the right to claim the credit.
[(g)]
(k) For solar energy systems, a
taxpayer may elect to reduce the eligible credit amount by thirty per cent and
if this reduced amount exceeds the amount of income tax payment due from the
taxpayer, the excess of the credit amount over payments due shall be refunded
to the taxpayer; provided that tax credit amounts properly claimed by a
taxpayer who has no income tax liability shall be paid to the taxpayer; and
provided further that no refund on account of the tax credit allowed by this
section shall be made for amounts less than $1.
The election required by this subsection shall be made in a manner prescribed by the director on the taxpayer's return for the taxable year in which the system is installed and placed in service. A separate election may be made for each separate system that generates a credit. An election once made is irrevocable.
[(h)]
(l) Notwithstanding subsection [(g),]
(k), for any renewable energy technology system, an individual taxpayer
may elect to have any excess of the credit over payments due refunded to the
taxpayer, if:
(1) All of the taxpayer's income is exempt from taxation under section 235-7(a)(2) or (3); or
(2) The taxpayer's adjusted gross income is $20,000 or less (or $40,000 or less if filing a tax return as married filing jointly);
provided that tax credits properly claimed by a taxpayer who has no income tax liability shall be paid to the taxpayer; and provided further that no refund on account of the tax credit allowed by this section shall be made for amounts less than $1.
A husband and wife who do not file a joint tax return shall only be entitled to make this election to the extent that they would have been entitled to make the election had they filed a joint tax return.
The election required by this subsection shall be made in a manner prescribed by the director on the taxpayer's return for the taxable year in which the system is installed and placed in service. A separate election may be made for each separate system that generates a credit. An election once made is irrevocable.
[(i)]
(m) No taxpayer shall be allowed
a credit under this section for the portion of the renewable energy technology
system required by section 196-6.5 that is installed and placed in service on
any newly constructed single-family residential property authorized by a
building permit issued on or after January 1, 2010.
[(j)]
(n) To the extent feasible, using
existing resources to assist the energy-efficiency policy review and
evaluation, the department shall assist with data collection on the following
for each taxable year:
(1) The number of renewable energy technology systems that have qualified for a tax credit during the calendar year by:
(A) Technology type; and
(B) Taxpayer type (corporate and individual); and
(2) The total cost of the tax credit to the State during the taxable year by:
(A) Technology type; and
(B) Taxpayer type.
[(k)]
(o) This section shall apply to
eligible renewable energy technology systems that are installed and placed in
service on or after July 1, 2009.
(p) This section shall not apply to taxable years beginning after December 31, 2030."
SECTION 2. Section 235-51, Hawaii Revised Statutes, is amended by amending subsection (a), (b), and (c) to read as follows:
"(a) There is hereby imposed on the taxable income of every:
(1) Taxpayer who files a joint return under section 235‑93; and
(2) Surviving spouse,
a tax determined in accordance with the following table:
In the case of any taxable year beginning after December 31, 2017:
If the taxable income is: The tax shall be:
Not over $4,800 1.40% of taxable income
Over $4,800 but $67.00 plus 3.20% of
not over $9,600 excess over $4,800
Over $9,600 but $221.00 plus 5.50% of
not over $19,200 excess over $9,600
Over $19,200 but $749.00 plus 6.40% of
not over $28,800 excess over $19,200
Over $28,800 but $1,363.00 plus 6.80% of
not over $38,400 excess over $28,800
Over $38,400 but $2,016.00 plus 7.20% of
not over $48,000 excess over $38,400
Over $48,000 but $2,707.00 plus 7.60% of
not over $72,000 excess over $48,000
Over $72,000 but $4,531.00 plus 7.90% of
not over $96,000 excess over $72,000
Over $96,000 but $6,427.00 plus 8.25% of
not over $300,000 excess over $96,000
Over $300,000 but $23,257.00 plus 9.00% of
not over $350,000 excess over $300,000
Over $350,000 but $27,757.00 plus 10.00% of
not over $400,000 excess over $350,000
Over $400,000 $32,757.00 plus 11.00% of
excess over $400,000.
In the case of any taxable year beginning after December 31, 2024:
If the taxable income is: The tax shall be:
Not over $19,200 1.40% of taxable income
Over $19,200 but $269.00 plus 3.20% of
not over $28,800 excess over $19,200
Over $28,800 but $576.00 plus 5.50% of
not over $38,400 excess over $28,800
Over $38,400 but $1,104.00 plus 6.40% of
not over $48,000 excess over $38,400
Over $48,000 but $1,718.00 plus 6.80% of
not over $72,000 excess over $48,000
Over $72,000 but $3,350.00 plus 7.20% of
not over $96,000 excess over $72,000
Over $96,000 but $5,078.00 plus 7.60% of
not over $250,000 excess over $96,000
Over $250,000 but $16,782.00 plus 7.90% of
not over $350,000 excess over $250,000
Over $350,000 but $24,682.00 plus 8.25% of
not over $450,000 excess over $350,000
Over $450,000 but $32,932.00 plus 9.00% of
not over $550,000 excess over $450,000
Over $550,000 but $41,932.00 plus 10.00% of
not over $650,000 excess over $550,000
Over $650,000 $51,932.00 plus 11.00% of
excess over $650,000.
[In the case of any taxable year
beginning after December 31, 2026:
If the taxable income is: The tax shall be:
Not over $28,800 1.40% of taxable income
Over $28,800 but $403.00 plus 3.20% of
not over $38,400 excess over $28,800
Over $38,400 but $710.00 plus 5.50% of
not over $48,000 excess over $38,400
Over $48,000 but $1,238.00 plus 6.40% of
not over $72,000 excess over $48,000
Over $72,000 but $2,774.00 plus 6.80% of
not over $96,000 excess over $72,000
Over $96,000 but $4,406.00 plus 7.20% of
not over $250,000 excess over $96,000
Over $250,000 but $15,494.00 plus 7.60% of
not over $350,000 excess over $250,000
Over $350,000 but $23,094.00 plus 7.90% of
not over $450,000 excess over $350,000
Over $450,000 but $30,994.00 plus 8.25% of
not over $550,000 excess over $450,000
Over $550,000 but $39,244.00 plus 9.00% of
not over $650,000 excess over $550,000
Over
$650,000 but $48,244.00
plus 10.00% of
not over $800,000 excess over $650,000
Over
$800,000 $63,244.00
plus 11.00% of
excess
over $800,000.
In the case of any taxable year
beginning after December 31, 2028:
If the taxable income is: The tax shall be:
Not over $38,400 1.40% of taxable income
Over $38,400 but $538.00 plus 3.20% of
not over $48,000 excess over $38,400
Over $48,000 but $845.00 plus 5.50% of
not over $72,000 excess over $48,000
Over $72,000 but $2,165.00 plus 6.40% of
not over $96,000 excess over $72,000
Over $96,000 but $3,701.00 plus 6.80% of
not over $250,000 excess over $96,000
Over $250,000 but $14,173.00 plus 7.20% of
not over $350,000 excess over $250,000
Over $350,000 but $21,373.00 plus 7.60% of
not over $450,000 excess over $350,000
Over $450,000 but $28,973.00 plus 7.90% of
not over $550,000 excess over $450,000
Over $550,000 but $36,873.00 plus 8.25% of
not over $650,000 excess over $550,000
Over $650,000 but $45,123.00 plus 9.00% of
not over $800,000 excess over $650,000
Over
$800,000 but $58,623.00
plus 10.00% of
not over $950,000 excess over $800,000
Over $950,000 $73,623.00 plus 11.00% of
excess
over $950,000.]
In the case of any taxable year beginning after December 31, 2026:
If the taxable income is: The tax shall be:
Not over $28,800 1.40% of taxable income
Over $28,800 but $403.00 plus 2.50% of
not over $38,400 excess over $28,800
Over $38,400 but $643.00 plus 5.00% of
not over $48,000 excess over $38,400
Over $48,000 but $1,123.00 plus 6.40% of
not over $72,000 excess over $48,000
Over $72,000 but $2,659.00 plus 6.80% of
not over $96,000 excess over $72,000
Over $96,000 but $4,291.00 plus 7.20% of
not over $250,000 excess over $96,000
Over $250,000 but $15,379.00 plus 7.60% of
not over $350,000 excess over $250,000
Over $350,000 but $22,979.00 plus 8.25% of
not over $450,000 excess over $350,000
Over $450,000 but $31,229.00 plus 9.00% of
not over $550,000 excess over $450,000
Over $550,000 but $40,229.00 plus 10.00% of
not over $650,000 excess over $550,000
Over $650,000 but $50,229.00 plus 11.00% of
not over $1,000,000 excess over $650,000
Over $1,000,000 $88,729.00 plus 13.00% of
excess over $1,000,000.
In the case of any taxable year beginning after December 31, 2028:
If the taxable income is: The tax shall be:
Not over $38,400 1.40% of taxable income
Over $38,400 but $538.00 plus 2.50% of
not over $48,000 excess over $38,400
Over $48,000 but $778.00 plus 5.00% of
not over $72,000 excess over $48,000
Over $72,000 but $1,978.00 plus 6.40% of
not over $96,000 excess over $72,000
Over $96,000 but $3,514.00 plus 6.80% of
not over $250,000 excess over $96,000
Over $250,000 but $13,986.00 plus 7.20% of
not over $350,000 excess over $250,000
Over $350,000 but $21,186.00 plus 8.25% of
not over $450,000 excess over $350,000
Over $450,000 but $29,436.00 plus 9.00% of
not over $550,000 excess over $450,000
Over $550,000 but $38,436.00 plus 10.00% of
not over $650,000 excess over $550,000
Over $650,000 but $48,436.00 plus 11.00% of
not over $1,000,000 excess over $650,000
Over $1,000,000 $86,936.00 plus 13.00% of
excess over $1,000,000.
(b) There is hereby imposed on the taxable income of every head of a household a tax determined in accordance with the following table:
In the case of any taxable year beginning after December 31, 2017:
If the taxable income is: The tax shall be:
Not over $3,600 1.40% of taxable income
Over $3,600 but $50.00 plus 3.20% of
not over $7,200 excess over $3,600
Over $7,200 but $166.00 plus 5.50% of
not over $14,400 excess over $7,200
Over $14,400 but $562.00 plus 6.40% of
not over $21,600 excess over $14,400
Over $21,600 but $1,022.00 plus 6.80% of
not over $28,800 excess over $21,600
Over $28,800 but $1,512.00 plus 7.20% of
not over $36,000 excess over $28,800
Over $36,000 but $2,030.00 plus 7.60% of
not over $54,000 excess over $36,000
Over $54,000 but $3,398.00 plus 7.90% of
not over $72,000 excess over $54,000
Over $72,000 but $4,820.00 plus 8.25% of
not over $225,000 excess over $72,000
Over $225,000 but $17,443.00 plus 9.00% of
not over $262,500 excess over $225,000
Over $262,500 but $20,818.00 plus 10.00% of
not over $300,000 excess over $262,500
Over $300,000 $24,568.00 plus 11.00% of
excess over $300,000.
In the case of any taxable year beginning after December 31, 2024:
If the taxable income is: The tax shall be:
Not over $14,400 1.40% of taxable income
Over $14,400 but $202.00 plus 3.20% of
not over $21,600 excess over $14,400
Over $21,600 but $432.00 plus 5.50% of
not over $28,800 excess over $21,600
Over $28,800 but $828.00 plus 6.40% of
not over $36,000 excess over $28,800
Over $36,000 but $1,289.00 plus 6.80% of
not over $54,000 excess over $36,000
Over $54,000 but $2,513.00 plus 7.20% of
not over $72,000 excess over $54,000
Over $72,000 but $3,809.00 plus 7.60% of
not over $187,500 excess over $72,000
Over $187,500 but $12,587.00 plus 7.90% of
not over $262,500 excess over $187,500
Over $262,500 but $18,512.00 plus 8.25% of
not over $337,500 excess over $262,500
Over $337,500 but $24,699.00 plus 9.00% of
not over $412,500 excess over $337,500
Over $412,500 but $31,449.00 plus 10.00% of
not over $487,500 excess over $412,500
Over $487,500 $38,949.00 plus 11.00% of
excess over $487,500.
[In the case of any taxable year
beginning after December 31, 2026:
If the taxable income is: The tax shall be:
Not over $21,600 1.40% of taxable income
Over $21,600 but $302.00 plus 3.20% of
not over $28,800 excess over $21,600
Over $28,800 but $533.00 plus 5.50% of
not over $36,000 excess over $28,800
Over $36,000 but $929.00 plus 6.40% of
not over $54,000 excess over $36,000
Over $54,000 but $2,081.00 plus 6.80% of
not over $72,000 excess over $54,000
Over $72,000 but $3,305.00 plus 7.20% of
not over $187,500 excess over $72,000
Over $187,500 but $11,621.00 plus 7.60% of
not over $262,500 excess over $187,500
Over $262,500 but $17,321.00 plus 7.90% of
not over $337,500 excess over $262,500
Over $337,500 but $23,246.00 plus 8.25% of
not over $412,500 excess over $337,500
Over $412,500 but $29,433.00 plus 9.00% of
not over $487,500 excess over $412,500
Over
$487,500 but $36,183.00
plus 10.00% of
not over $600,000 excess over $487,500
Over
$600,000 $47,433.00
plus 11.00% of
excess
over $600,000.
In the case of any taxable year
beginning after December 31, 2028:
If the taxable income is: The tax shall be:
Not over $28,800 1.40% of taxable income
Over $28,800 but $403.00 plus 3.20% of
not over $36,000 excess over $28,800
Over $36,000 but $634.00 plus 5.50% of
not over $54,000 excess over $36,000
Over $54,000 but $1,624.00 plus 6.40% of
not over $72,000 excess over $54,000
Over $72,000 but $2,776.00 plus 6.80% of
not over $187,500 excess over $72,000
Over $187,500 but $10,630.00 plus 7.20% of
not over $262,500 excess over $187,500
Over $262,500 but $16,030.00 plus 7.60% of
not over $337,500 excess over $262,500
Over $337,500 but $21,730.00 plus 7.90% of
not over $412,500 excess over $337,500
Over $412,500 but $27,655.00 plus 8.25% of
not over $487,500 excess over $412,500
Over $487,500 but $33,842.00 plus 9.00% of
not over $600,000 excess over $487,500
Over
$600,000 but $43,967.00
plus 10.00% of
not over $712,500 excess over $600,000
Over
$712,500 $55,217.00
plus 11.00% of
excess
over $712,500.]
In the case of any taxable year beginning after December 31, 2026:
If the taxable income is: The tax shall be:
Not over $21,600 1.40% of taxable income
Over $21,600 but $302.00 plus 2.50% of
not over $28,800 excess over $21,600
Over $28,800 but $482.00 plus 5.00% of
not over $36,000 excess over $28,800
Over $36,000 but $842.00 plus 6.40% of
not over $54,000 excess over $36,000
Over $54,000 but $1,994.00 plus 6.80% of
not over $72,000 excess over $54,000
Over $72,000 but $3,218.00 plus 7.20% of
not over $187,500 excess over $72,000
Over $187,500 but $11,534.00 plus 7.60% of
not over $262,500 excess over $187,500
Over $262,500 but $17,234.00 plus 8.25% of
not over $337,500 excess over $262,500
Over $337,500 but $23,422.00 plus 9.00% of
not over $412,500 excess over $337,500
Over $412,500 but $30,172.00 plus 10.00% of
not over $487,500 excess over $412,500
Over $487,500 but $37,672.00 plus 11.00% of
not over $750,000 excess over $487,500
Over $750,000 $66,547.00 plus 13.00% of
excess over $750,000.
In the case of any taxable year beginning after December 31, 2028:
If the taxable income is: The tax shall be:
Not over $28,800 1.40% of taxable income
Over $28,800 but $403.00 plus 2.50% of
not over $36,000 excess over $28,800
Over $36,000 but $583.00 plus 5.00% of
not over $54,000 excess over $36,000
Over $54,000 but $1,483.00 plus 6.40% of
not over $72,000 excess over $54,000
Over $72,000 but $2,635.00 plus 6.80% of
not over $187,500 excess over $72,000
Over $187,500 but $10,489.00 plus 7.20% of
not over $262,500 excess over $187,500
Over $262,500 but $15,889.00 plus 8.25% of
not over $337,500 excess over $262,500
Over $337,500 but $22,077.00 plus 9.00% of
not over $412,500 excess over $337,500
Over $412,500 but $28,827.00 plus 10.00% of
not over $487,500 excess over $412,500
Over $487,500 but $36,327.00 plus 11.00% of
not over $750,000 excess over $487,500
Over $750,000 $65,202.00 plus 13.00% of
excess over $750,000.
(c) There is hereby imposed on the taxable income of (1) every unmarried individual (other than a surviving spouse, or the head of a household) and (2) on the taxable income of every married individual who does not make a single return jointly with the individual's spouse under section 235-93 a tax determined in accordance with the following table:
In the case of any taxable year beginning after December 31, 2017:
If the taxable income is: The tax shall be:
Not over $2,400 1.40% of taxable income
Over $2,400 but $34.00 plus 3.20% of
not over $4,800 excess over $2,400
Over $4,800 but $110.00 plus 5.50% of
not over $9,600 excess over $4,800
Over $9,600 but $374.00 plus 6.40% of
not over $14,400 excess over $9,600
Over $14,400 but $682.00 plus 6.80% of
not over $19,200 excess over $14,400
Over $19,200 but $1,008.00 plus 7.20% of
not over $24,000 excess over $19,200
Over $24,000 but $1,354.00 plus 7.60% of
not over $36,000 excess over $24,000
Over $36,000 but $2,266.00 plus 7.90% of
not over $48,000 excess over $36,000
Over $48,000 but $3,214.00 plus 8.25% of
not over $150,000 excess over $48,000
Over $150,000 but $11,629.00 plus 9.00% of
not over $175,000 excess over $150,000
Over $175,000 but $13,879.00 plus 10.00% of
not over $200,000 excess over $175,000
Over $200,000 $16,379.00 plus 11.00% of
excess over $200,000.
In the case of any taxable year beginning after December 31, 2024:
If the taxable income is: The tax shall be:
Not over $9,600 1.40% of taxable income
Over $9,600 but $134.00 plus 3.20% of
not over $14,400 excess over $9,600
Over $14,400 but $288.00 plus 5.50% of
not over $19,200 excess over $14,400
Over $19,200 but $552.00 plus 6.40% of
not over $24,000 excess over $19,200
Over $24,000 but $859.00 plus 6.80% of
not over $36,000 excess over $24,000
Over $36,000 but $1,675.00 plus 7.20% of
not over $48,000 excess over $36,000
Over $48,000 but $2,539.00 plus 7.60% of
not over $125,000 excess over $48,000
Over $125,000 but $8,391.00 plus 7.90% of
not over $175,000 excess over $125,000
Over $175,000 but $12,341.00 plus 8.25% of
not over $225,000 excess over $175,000
Over $225,000 but $16,466.00 plus 9.00% of
not over $275,000 excess over $225,000
Over $275,000 but $20,966.00 plus 10.00% of
not over $325,000 excess over $275,000
Over $325,000 $25,966.00 plus 11.00% of
excess over $325,000.
[In the case of any taxable year
beginning after December 31, 2026:
If the taxable income is: The tax shall be:
Not over $14,400 1.40% of taxable income
Over $14,400 but $202.00 plus 3.20% of
not over $19,200 excess over $14,400
Over $19,200 but $355.00 plus 5.50% of
not over $24,000 excess over $19,200
Over $24,000 but $619.00 plus 6.40% of
not over $36,000 excess over $24,000
Over $36,000 but $1,387.00 plus 6.80% of
not over $48,000 excess over $36,000
Over $48,000 but $2,203.00 plus 7.20% of
not over $125,000 excess over $48,000
Over $125,000 but $7,747.00 plus 7.60% of
not over $175,000 excess over $125,000
Over $175,000 but $11,547.00 plus 7.90% of
not over $225,000 excess over $175,000
Over $225,000 but $15,497.00 plus 8.25% of
not over $275,000 excess over $225,000
Over $275,000 but $19,622.00 plus 9.00% of
not over $325,000 excess over $275,000
Over
$325,000 but $24,122.00
plus 10.00% of
not over $400,000 excess over $325,000
Over $400,000 $31,622.00 plus 11.00% of
excess
over $400,000.
In the case of any taxable year
beginning after December 31, 2028:
If the taxable income is: The tax shall be:
Not over $19,200 1.40% of taxable income
Over $19,200 but $269.00 plus 3.20% of
not over $24,000 excess over $19,200
Over $24,000 but $422.00 plus 5.50% of
not over $36,000 excess over $24,000
Over $36,000 but $1,082.00 plus 6.40% of
not over $48,000 excess over $36,000
Over $48,000 but $1,850.00 plus 6.80% of
not over $125,000 excess over $48,000
Over $125,000 but $7,086.00 plus 7.20% of
not over $175,000 excess over $125,000
Over $175,000 but $10,686.00 plus 7.60% of
not over $225,000 excess over $175,000
Over $225,000 but $14,486.00 plus 7.90% of
not over $275,000 excess over $225,000
Over $275,000 but $18,436.00 plus 8.25% of
not over $325,000 excess over $275,000
Over $325,000 but $22,561.00 plus 9.00% of
not over $400,000 excess over $325,000
Over
$400,000 but $29,311.00
plus 10.00% of
not over $475,000 excess over $400,000
Over
$475,000 $36,811.00
plus 11.00% of
excess
over $475,000.]
In the case of any taxable year beginning after December 31, 2026:
If the taxable income is: The tax shall be:
Not over $14,400 1.40% of taxable income
Over $14,400 but $202.00 plus 2.50% of
not over $19,200 excess over $14,400
Over $19,200 but $322.00 plus 5.00% of
not over $24,000 excess over $19,200
Over $24,000 but $562.00 plus 6.40% of
not over $36,000 excess over $24,000
Over $36,000 but $1,330.00 plus 6.80% of
not over $48,000 excess over $36,000
Over $48,000 but $2,146.00 plus 7.20% of
not over $125,000 excess over $48,000
Over $125,000 but $7,690.00 plus 7.60% of
not over $175,000 excess over $125,000
Over $175,000 but $11,490.00 plus 8.25% of
not over $225,000 excess over $175,000
Over $225,000 but $15,615.00 plus 9.00% of
not over $275,000 excess over $225,000
Over $275,000 but $20,115.00 plus 10.00% of
not over $325,000 excess over $275,000
Over $325,000 but $25,115.00 plus 11.00% of
not over $500,000 excess over $325,000
Over $500,000 $44,365.00 plus 13.00% of
excess over $500,000.
In the case of any taxable year beginning after December 31, 2028:
If the taxable income is: The tax shall be:
Not over $19,200 1.40% of taxable income
Over $19,200 but $269.00 plus 2.50% of
not over $24,000 excess over $19,200
Over $24,000 but $389.00 plus 5.00% of
not over $36,000 excess over $24,000
Over $36,000 but $989.00 plus 6.40% of
not over $48,000 excess over $36,000
Over $48,000 but $1,757.00 plus 6.80% of
not over $125,000 excess over $48,000
Over $125,000 but $6,993.00 plus 7.20% of
not over $175,000 excess over $125,000
Over $175,000 but $10,593.00 plus 8.25% of
not over $225,000 excess over $175,000
Over $225,000 but $14,718.00 plus 9.00% of
not over $275,000 excess over $225,000
Over $275,000 but $19,218.00 plus 10.00% of
not over $325,000 excess over $275,000
Over $325,000 but $24,218.00 plus 11.00% of
not over $500,000 excess over $325,000
Over $500,000 $43,468.00 plus 13.00% of
excess over $500,000."
SECTION 3. Section 235-110.7, Hawaii Revised Statutes, is amended to read as follows:
"§235-110.7 Capital goods excise tax credit. (a) There shall be allowed to each taxpayer subject to the tax imposed by this chapter a capital goods excise tax credit, which 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.
The amount of the tax credit shall be four per cent of the cost of the eligible depreciable tangible personal property used by the taxpayer in a trade or business and placed in service within Hawaii after December 31, 2009.
In the case of a partnership, S corporation, estate, or trust, the tax credit allowable is for eligible depreciable tangible personal property that is placed in service by the entity. The cost upon which the tax credit is computed shall be determined at the entity level. Distribution and share of credit shall be determined by rules.
In the case of eligible depreciable tangible personal property for which a credit for sales or use taxes paid to another state is allowable under section 238-3(i), the amount of the tax credit allowed under this section shall not exceed the amount of use tax actually paid under chapter 238 relating to the tangible personal property.
If a deduction is taken under section 179 (with respect to election to expense certain depreciable business assets) of the Internal Revenue Code of 1954, as amended, no tax credit shall be allowed for that portion of the cost of property for which the deduction was taken.
(b) If the capital goods excise tax credit allowed under subsection (a) exceeds the taxpayer's net income tax liability, the excess of credit over liability shall be refunded to the taxpayer; provided that no refunds or payment on account of the tax credit allowed by this section shall be made for amounts less than $1.
All claims for tax credits under this section, including any amended claims, must be filed on or before the end of the twelfth month following the close of the taxable year for which the credits may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.
(c) Application for the capital goods excise tax credit shall be upon forms provided by the department of taxation.
(d) Sections 47 (with respect to dispositions of section 38 property and the recapture percentages) of the Internal Revenue Code of 1954, as amended, as of December 31, 1984, and 280F as operative for this chapter (with respect to limitation on investment tax credit and depreciation for luxury automobiles; limitation where certain property used for personal purposes) of the Internal Revenue Code of 1954, as amended, shall be operative for purposes of this section.
(e) As used in this section, the definition of section 38 property (with respect to investment in depreciable tangible personal property) as defined by section 48(a)(1)(A), (a)(1)(B), (a)(3), (a)(4), (a)(7), (a)(8), (a)(10)(A), (b), (c), (f), (l), (m), and (s) of the Internal Revenue Code of 1954, as amended as of December 31, 1984, is operative for the purposes of this section only.
(f) This section shall not apply to taxable years beginning after December 31, 2027.
[(f)] (g) As used in this section:
"Cost" means the:
(1) Actual invoice price of the tangible personal property; or
(2) Basis from which depreciation is taken under section 167 (with respect to depreciation) or from which a deduction may be taken under section 168 (with respect to accelerated cost recovery system) of the Internal Revenue Code of 1954, as amended,
whichever is less.
"Eligible depreciable tangible personal property" is section 38 property as defined by the operative provisions of section 48 and having a depreciable life under section 167 or for which a deduction may be taken under section 168 of the Internal Revenue Code of 1954, as amended.
"Placed in service" means the earliest of the following taxable years:
(1) The taxable year in which, under the:
(A) Taxpayer's depreciation practice, the period for depreciation; or
(B) Accelerated cost recovery system, a claim for recovery allowances,
with respect to the property begins; or
(2) The taxable year in which the property is placed in a condition or state of readiness and availability for a specifically assigned function.
"Purchase" means an acquisition of property.
"Tangible personal property" means tangible personal property that is placed in service within Hawaii after December 31, 1987, and the purchase or importation of which resulted in a transaction that was subject to the imposition and payment of tax at the rate of four per cent under chapter 237 or 238. "Tangible personal property" does not include tangible personal property that is an integral part of a building or structure or tangible personal property used in a foreign-trade zone, as defined under chapter 212."
SECTION 4. Section 235-110.32, Hawaii Revised Statutes, is amended to read as follows:
"[[]§235-110.32[]] Renewable fuels production tax credit. (a) Each year during the credit period, there
shall be allowed to each taxpayer subject to the taxes imposed by this chapter
a renewable fuels production tax credit that shall be applied to the taxpayer's
net income tax liability, if any, imposed by this chapter for the taxable year
in which the credit is properly claimed.
For each taxpayer producing renewable fuels, the annual dollar amount of the renewable fuels production tax credit during the ten-year credit period shall be equal to 20 cents per seventy-six thousand British thermal units of renewable fuels using the lower heating value sold for distribution in the State; provided that the taxpayer's production of renewable fuels is not less than two billion five hundred million British thermal units of renewable fuels per calendar year; provided further that the amount of the tax credit claimed under this section by a taxpayer shall not exceed $3,500,000 per taxable year; provided further that the tax credit shall only be claimed for fuels with lifecycle emissions below that of fossil fuels. No other tax credit may be claimed under this chapter for the costs incurred to produce the renewable fuels that are used to properly claim a tax credit under this section for the taxable year.
Each taxpayer, together with all of its related entities as determined under section 267(b) of the Internal Revenue Code and all business entities under common control, as determined under sections 414(b), 414(c), and 1563(a) of the Internal Revenue Code, shall not be eligible for more than a single ten-year credit period.
(b) In the case of a partnership, S corporation, estate, or trust, distribution and share of the renewable fuels production tax credit shall be determined pursuant to section 704(b) (with respect to a partner's distributive share) of the Internal Revenue Code of 1986, as amended. For a fiscal year taxpayer, the taxpayer shall report the credit in the taxable year in which the calendar year end is included.
(c) No later than thirty days following the close of the calendar year, every taxpayer claiming a credit under this section shall complete and file an independent, third-party certified statement, at the taxpayer's sole expense, with and in the form prescribed by the Hawaii state energy office, providing the following information:
(1) The type, quantity, and British thermal unit value, using the lower heating value, of each qualified fuel, broken down by the type of fuel, produced and sold during the previous calendar year;
(2) The feedstock used for each type of qualified fuel;
(3) The proposed total amount of credit to which the taxpayer is entitled for each calendar year and the cumulative amount of the tax credit the taxpayer received during the credit period;
(4) The number of full-time and number of part-time employees of the facility and those employees' states of residency, totaled per state;
(5) The number and location of all renewable fuel production facilities within and outside of the State; and
(6) The lifecycle greenhouse gas emissions per British thermal units for each type of qualified fuel produced.
(d) Within thirty calendar days after the due date of the statement required under subsection (c), the Hawaii state energy office shall:
(1) Acknowledge, in writing, receipt of the statement;
(2) Issue a certificate to the taxpayer reporting the amount of renewable fuels produced and sold, the amount of credit that the taxpayer is entitled to claim for the previous calendar year, and the cumulative amount of the tax credit during the credit period; and
(3) Provide the taxpayer with a determination of whether the lifecycle greenhouse gas emissions for each type of qualified fuel produced is lower than that of fossil fuels.
(e) The taxpayer shall file the certificate issued under subsection (d) with the taxpayer's tax return with the department of taxation. The director of taxation may audit and adjust the certification to conform to the facts.
(f) The total amount of tax credits allowed under this section shall not exceed $20,000,000 for all eligible taxpayers in any calendar year. In the event that the credit claims under this section exceed $20,000,000 for all eligible taxpayers in any given calendar year, the $20,000,000 shall be divided between all eligible taxpayers for that year in proportion to the total amount of renewable fuels produced by all eligible taxpayers. Upon reaching $20,000,000 in the aggregate, the Hawaii state energy office shall immediately discontinue issuing certificates and notify the department of taxation. In no instance shall the total dollar amount of certificates issued exceed $20,000,000 per calendar year.
(g) Notwithstanding any other law to the contrary, the information collected and compiled by the Hawaii state energy office under subsections (c) and (d) for the purposes of the renewable fuels production tax credit shall be available for public inspection and dissemination, subject to chapter 92F.
(h) If the credit under this section exceeds the taxpayer's net income tax liability, the excess of the credit over liability may be used as a credit against the taxpayer's net income tax liability in subsequent years until exhausted, unless otherwise elected by the taxpayer pursuant to subsections (i) or (j). All claims for a credit under this section shall be properly 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 the foregoing provision or to provide the certified statement required under subsection (c) shall constitute a waiver of the right to claim the credit.
(i) A taxpayer may elect to reduce the eligible credit amount by thirty per cent and if this reduced amount exceeds the amount of income tax payment due from the taxpayer, the excess of the credit amount over payments due shall be refunded to the taxpayer; provided that tax credit amounts properly claimed by a taxpayer who has no income tax liability shall be paid to the taxpayer; provided further that no refund on account of the tax credit allowed by this section shall be made for amounts less than $1.
The election required by this subsection shall be made in a manner prescribed by the director on the taxpayer's return for the taxable year in which the credit is claimed. An election once made is irrevocable.
(j) Notwithstanding subsection (i), an individual taxpayer may elect to have any excess of the credit over payments due refunded to the taxpayer, if:
(1) All of the taxpayer's income is exempt from taxation under section 235-7(a)(2) or (3); or
(2) The taxpayer's adjusted gross income is $20,000 or less (or $40,000 or less if filing a tax return as married filing jointly);
provided that tax credits properly claimed by a taxpayer who has no income tax liability shall be paid to the taxpayer; provided further that no refund on account of the tax credit allowed by this section shall be made for amounts less than $1.
A married couple who does not file a joint tax return shall only be entitled to make this election to the extent that they would have been entitled to make the election had they filed a joint tax return.
The election required by this subsection shall be made in a manner prescribed by the director on the taxpayer's return for the taxable year in which the credit is claimed. An election once made is irrevocable.
(k) Before the production of any renewable fuels for the calendar year, the taxpayer shall provide written notice of the taxpayer's intention to begin production of renewable fuels. The written notice shall be provided to the department of taxation and the Hawaii state energy office and shall include information on the taxpayer, facility location, facility production capacity, anticipated production start date, and the taxpayer's contact information. Notwithstanding any other law to the contrary, the written notice described in this subsection, including taxpayer and facility information, shall be available for public inspection and dissemination, subject to chapter 92F.
(l) The taxpayer shall provide written notice to the director of taxation and the chief energy officer of the Hawaii state energy office within thirty days following the start of production. The notice shall include the production start date and expected renewable fuels production for the next twelve months. Notwithstanding any other law to the contrary, the written notice described in this subsection shall be available for public inspection and dissemination, subject to chapter 92F.
(m) Following each calendar year in which a credit under this section has been claimed, the chief energy officer of the Hawaii state energy office shall submit a written report to the governor and legislature regarding the production and sale of renewable fuels. The report shall include:
(1) The number and location of renewable fuels production facilities in the State and outside the State that have claimed a credit under this section;
(2) The total number of British thermal units of renewable fuels, itemized by type of fuel produced and sold during the previous calendar year; and
(3) The projected number of British thermal units of renewable fuels production for the succeeding year.
(n) 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 pursuant to chapter 91 necessary to effectuate the purposes of this section.
(o) This section shall not apply to taxable years beginning after December 31, 2028.
[(o)] (p) As used in this
section:
"Credit period" means a maximum period of ten consecutive years, beginning from the first taxable year in which a taxpayer begins renewable fuels production at a level of at least two billion five-hundred million British thermal units of renewable fuels per calendar year.
"Net income tax liability" means income tax liability reduced by all other credits allowed under this chapter.
"Renewable feedstocks" means:
(1) Biomass crops and other renewable organic material, including but not limited to logs, wood chips, wood pellets, and wood bark;
(2) Agricultural residue;
(3) Oil crops, including but not limited to algae, canola, jatropha, palm, soybean, and sunflower;
(4) Sugar and starch crops, including but not limited to sugar cane and cassava;
(5) Other agricultural crops;
(6) Grease and waste cooking oil;
(7) Food wastes;
(8) Municipal solid wastes and industrial wastes;
(9) Water, including wastewater; and
(10) Animal residues and wastes,
that can be used to generate energy.
"Renewable fuels" means fuels produced from renewable feedstocks; provided that the fuel:
(1) Is sold as a fuel in the State; and
(2) Meets the relevant ASTM International specifications or other industry specifications for the particular fuel, including but not limited to:
(A) Methanol, ethanol, or other alcohols;
(B) Hydrogen;
(C) Biodiesel or renewable diesel;
(D) Biogas;
(E) Other biofuels;
(F) Renewable jet fuel or renewable gasoline; or
(G) Logs, wood chips, wood pellets, or wood bark."
PART II
SECTION 5. Section 235-110.9, Hawaii Revised Statutes, is repealed.
["§235-110.9 High technology business investment tax
credit. (a) There shall be allowed to each taxpayer
subject to the taxes imposed by this chapter a high technology business
investment 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 investment was made and the following four years provided the credit is properly
claimed. The tax credit shall be as
follows:
(1) In the year the investment was made,
thirty-five per cent;
(2) In the first year following the year
in which the investment was made, twenty-five per cent;
(3) In the second year following the
investment, twenty per cent;
(4) In the third year following the
investment, ten per cent; and
(5) In the fourth year following the
investment, ten per cent;
of the
investment made by the taxpayer in each qualified high technology business, up
to a maximum allowed credit in the year the investment was made, $700,000; in
the first year following the year in which the investment was made, $500,000;
in the second year following the year in which the investment was made,
$400,000; in the third year following the year in which the investment was
made, $200,000; and in the fourth year following the year in which the
investment was made, $200,000.
(b) The credit allowed under this
section shall be claimed against the net income tax liability for the taxable
year. For the purpose of this section,
"net income tax liability" means net income tax liability reduced by
all other credits allowed under this chapter.
(c) If the tax credit under this section exceeds
the taxpayer's income tax liability for any of the five years that the credit
is taken, the excess of the tax credit over liability may be used as a credit
against the taxpayer's income tax liability in subsequent years until
exhausted. Every claim, including
amended claims, for a tax credit under this section 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 the foregoing provision shall constitute a waiver of the right to
claim the credit.
(d) If at the close of any taxable year in the
five-year period in subsection (a):
(1) The business no longer qualifies as
a qualified high technology business;
(2) The business or an interest in the
business has been sold by the taxpayer investing in the qualified high
technology business; or
(3) The taxpayer has withdrawn the
taxpayer's investment wholly or partially from the qualified high technology
business;
the
credit claimed under this section shall be recaptured. The recapture shall be equal to ten per cent
of the amount of the total tax credit claimed under this section in the
preceding two taxable years. The amount
of the credit recaptured shall apply only to the investment in the particular
qualified high technology business that meets the requirements of paragraph
(1), (2), or (3). The recapture
provisions of this subsection shall not apply to a tax credit claimed for a
qualified high technology business that does not fall within the provisions of
paragraph (1), (2), or (3). The amount
of the recaptured tax credit determined under this subsection shall be added to
the taxpayer's tax liability for the taxable year in which the recapture occurs
under this subsection.
(e) Every taxpayer, before March 31 of each year
in which an investment in a qualified high technology business was made in the
previous taxable year, shall submit a written, certified statement to the
director of taxation identifying:
(1) Qualified investments, 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.
(f) The department shall:
(1) Maintain records of the names and
addresses of the taxpayers claiming the credits under this section and the
total amount of the qualified investment costs upon which the tax credit is
based;
(2) Verify the nature and amount of the
qualifying investments;
(3) Total all qualifying and cumulative
investments that the department certifies; and
(4) Certify the amount of the tax credit
for each taxable year and cumulative amount of the tax credit.
Upon
each determination made under this subsection, the department shall issue a
certificate to the taxpayer verifying information submitted to the department,
including qualifying investment amounts, the credit amount certified for each
taxable year, and the cumulative amount of the tax credit during the credit
period. The taxpayer shall file the
certificate with the taxpayer's tax return with the department.
The
director of taxation may assess and collect a fee to offset the costs of
certifying tax credits claims under this section. All fees collected under this section shall
be deposited into the tax administration special fund established under section
235-20.5.
(g) As used in this section:
"Investment
tax credit allocation ratio" means, with respect to a taxpayer that has
made an investment in a qualified high technology business, the ratio of:
(1) The amount of the credit under this
section that is, or is to be, received by or allocated to the taxpayer over the
life of the investment, as a result of the investment; to
(2) The amount of the investment in the
qualified high technology business.
"Qualified
high technology business" means a business, employing or owning capital or
property, or maintaining an office, in this State; provided that:
(1) More than fifty per cent of its
total business activities are qualified research; and provided further that the
business conducts more than seventy‑five per cent of its qualified
research in this State; or
(2) More than seventy-five per cent of
its gross income is derived from qualified research; and provided further that
this income is received from:
(A) Products sold from, manufactured in,
or produced in this State; or
(B) Services performed in this State.
"Qualified
research" means the same as defined in section 235-7.3.
(h) Common law principles, including the doctrine
of economic substance and business purpose, shall apply to any investment. There exists a presumption that a transaction
satisfies the doctrine of economic substance and business purpose to the extent
that the special allocation of the high technology business tax credit has an
investment tax credit ratio of 1.5 or less of credit for every dollar invested.
Transactions
for which an investment tax credit allocation ratio greater than 1.5 but not
more than 2.0 of credit for every dollar invested and claimed may be reviewed
by the department for applicable doctrines of economic substance and business
purpose.
Businesses
claiming a tax credit for transactions with investment tax credit allocation
ratios greater than 2.0 of credit for every dollar invested shall substantiate
economic merit and business purpose consistent with this section.
(i) For investments made on or after May 1, 2009,
notwithstanding any other law to the contrary, no allocations, special or
otherwise, of credits under this section may exceed the amount of the
investment made by the taxpayer ultimately claiming this credit; and investment
tax credit allocation ratios greater than 1.0 of credit for every dollar
invested shall not be allowed. In
addition, the credit shall be allowed only in accordance with subsection (a).
(j) This section shall not apply to taxable years
beginning after December 31, 2010."]
SECTION 6. Section 235-110.51, Hawaii Revised Statutes, is repealed.
["§235-110.51 Technology infrastructure renovation tax
credit. (a) There shall be allowed to each taxpayer
subject to the taxes imposed by this chapter, an income tax credit which 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 credit shall be four per
cent of the renovation costs incurred during the taxable year for each
commercial building located in Hawaii.
(c) In the case of a partnership, S corporation,
estate, trust, or any developer of a commercial building, the tax credit
allowable is for renovation costs incurred by the entity for the taxable year. The cost upon which the tax credit is
computed shall be determined at the entity level. Distribution and share of credit shall be
determined pursuant to section 235-110.7(a).
(d) If a deduction is taken under section 179
(with respect to election to expense depreciable business assets) of the
Internal Revenue Code, no tax credit shall be allowed for that portion of the
renovation cost for which the deduction is taken.
(e) The basis of eligible property for
depreciation or accelerated cost recovery system purposes for state income
taxes shall be reduced by the amount of credit allowable and claimed. In the alternative, the taxpayer shall treat
the amount of the credit allowable and claimed as a taxable income item for the
taxable year in which it is properly recognized under the method of accounting
used to compute taxable income.
(f) The credit allowed under this section shall
be claimed against the net income tax liability for the taxable year.
(g) If the tax credit under this section exceeds
the taxpayer's income tax liability, the excess of credit over liability may be
carried forward until exhausted.
(h) The tax credit allowed under this section
shall not be available for taxable years beginning after December 31, 2010.
(i) As used in this section:
"Net
income tax liability" means income tax liability reduced by all other
credits allowed under this chapter.
"Renovation
costs" means costs incurred after December 31, 2000, to plan, design,
install, construct, and purchase technology-enabled infrastructure equipment to
provide a commercial building with technology-enabled infrastructure.
"Technology-enabled
infrastructure" means:
(1) High speed telecommunications
systems that provide Internet access, direct satellite communications access,
and videoconferencing facilities;
(2) Physical security systems that
identify and verify valid entry to secure spaces, detect invalid entry or entry
attempts, and monitor activity in these spaces;
(3) Environmental systems to include heating,
ventilation, air conditioning, fire detection and suppression, and other life
safety systems; and
(4) Backup and emergency electric power
systems.
(j) No taxpayer that claims a credit under this
section shall claim any other credit under this chapter."]
SECTION 7. Act 261, Session Laws of Hawaii 2019, as amended by 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.] January 1, 2029."
PART III
SECTION 8. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 9. This Act shall take effect upon its approval; provided that:
(1) Part I shall apply to taxable years beginning after December 31, 2026;
(2) Section 6 shall take effect on January 1, 2028; and
(3) Section 5 shall take effect on January 1, 2029.
Report Title:
Income Tax; Income Tax Brackets; Income Tax Rates; Renewable Energy Technologies Income Tax Credit; Capital Goods Excise Tax Credit; High Technology Business Investment Tax Credit; Renewable Fuels Production Tax Credit; Technology Infrastructure Renovation Tax Credit; Tax Credit for Research Activities; Repeal
Description:
PART I: Repeals certain future adjustments to income tax brackets. Changes income tax rates. Amends the Renewable Energy Technologies Income Tax Credit by adding an aggregate cap amount, setting income thresholds, adding a certification requirement, and adding a sunset date. Adds sunset dates to the Capital Goods Excise Tax Credit and Renewable Fuels Production Tax Credit. PART II: Beginning 1/1/2028, repeals the Technology Infrastructure Renovation Tax Credit. Beginning 1/1/2029, repeals the High Technology Business Investment Tax Credit and Tax Credit for Research Activities. (CD1)
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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THE SENATE |
S.B. NO. |
3125 |
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THIRTY-THIRD LEGISLATURE, 2026 |
S.D. 1 |
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STATE OF HAWAII |
H.D. 1 |
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A BILL FOR AN ACT
RELATING TO INCOME TAX.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Section 235-51, Hawaii Revised Statutes, is amended by amending subsections (a), (b), and (c) to read as follows:
"(a) There is hereby imposed on the taxable income of every:
(1) Taxpayer who files a joint return under section 235−93; and
(2) Surviving spouse,
a tax determined in accordance with the following table:
In the case of any taxable year beginning after December 31, 2017:
If the taxable income is: The tax shall be:
Not over $4,800 1.40% of taxable income
Over $4,800 but $67.00 plus 3.20% of
not over $9,600 excess over $4,800
Over $9,600 but $221.00 plus 5.50% of
not over $19,200 excess over $9,600
Over $19,200 but $749.00 plus 6.40% of
not over $28,800 excess over $19,200
Over $28,800 but $1,363.00 plus 6.80% of
not over $38,400 excess over $28,800
Over $38,400 but $2,016.00 plus 7.20% of
not over $48,000 excess over $38,400
Over $48,000 but $2,707.00 plus 7.60% of
not over $72,000 excess over $48,000
Over $72,000 but $4,531.00 plus 7.90% of
not over $96,000 excess over $72,000
Over $96,000 but $6,427.00 plus 8.25% of
not over $300,000 excess over $96,000
Over $300,000 but $23,257.00 plus 9.00% of
not over $350,000 excess over $300,000
Over $350,000 but $27,757.00 plus 10.00% of
not over $400,000 excess over $350,000
Over $400,000 $32,757.00 plus 11.00% of
excess over $400,000.
In the case of any taxable year beginning after December 31, 2024:
If the taxable income is: The tax shall be:
Not over $19,200 1.40% of taxable income
Over $19,200 but $269.00 plus 3.20% of
not over $28,800 excess over $19,200
Over $28,800 but $576.00 plus 5.50% of
not over $38,400 excess over $28,800
Over $38,400 but $1,104.00 plus 6.40% of
not over $48,000 excess over $38,400
Over $48,000 but $1,718.00 plus 6.80% of
not over $72,000 excess over $48,000
Over $72,000 but $3,350.00 plus 7.20% of
not over $96,000 excess over $72,000
Over $96,000 but $5,078.00 plus 7.60% of
not over $250,000 excess over $96,000
Over $250,000 but $16,782.00 plus 7.90% of
not over $350,000 excess over $250,000
Over $350,000 but $24,682.00 plus 8.25% of
not over $450,000 excess over $350,000
Over $450,000 but $32,932.00 plus 9.00% of
not over $550,000 excess over $450,000
Over $550,000 but $41,932.00 plus 10.00% of
not over $650,000 excess over $550,000
Over $650,000 $51,932.00 plus 11.00% of
excess over $650,000.
[In the case of any taxable year
beginning after December 31, 2026:
If the taxable income is: The tax shall be:
Not over $28,800 1.40%
of taxable income
Over $28,800 but $403.00
plus 3.20% of
not over $38,400 excess
over $28,800
Over $38,400 but $710.00
plus 5.50% of
not over $48,000 excess
over $38,400
Over $48,000 but $1,238.00
plus 6.40% of
not over $72,000 excess
over $48,000
Over $72,000 but $2,774.00
plus 6.80% of
not over $96,000 excess
over $72,000
Over $96,000 but $4,406.00
plus 7.20% of
not over $250,000 excess
over $96,000
Over $250,000 but $15,494.00
plus 7.60% of
not over $350,000 excess
over $250,000
Over $350,000 but $23,094.00
plus 7.90% of
not over $450,000 excess
over $350,000
Over $450,000 but $30,994.00
plus 8.25% of
not over $550,000 excess
over $450,000
Over $550,000 but $39,244.00
plus 9.00% of
not over $650,000 excess
over $550,000
Over $650,000 but $48,244.00
plus 10.00% of
not over $800,000 excess
over $650,000
Over $800,000 $63,244.00 plus 11.00% of
excess over $800,000.
In the case of any taxable year
beginning after December 31, 2028:
If the taxable income is: The tax shall be:
Not over $38,400 1.40%
of taxable income
Over $38,400 but $538.00
plus 3.20% of
not over $48,000 excess
over $38,400
Over $48,000 but $845.00
plus 5.50% of
not over $72,000 excess
over $48,000
Over $72,000 but $2,165.00
plus 6.40% of
not over $96,000 excess
over $72,000
Over $96,000 but $3,701.00
plus 6.80% of
not over $250,000 excess
over $96,000
Over $250,000 but $14,173.00
plus 7.20% of
not over $350,000 excess
over $250,000
Over $350,000 but $21,373.00
plus 7.60% of
not over $450,000 excess
over $350,000
Over $450,000 but $28,973.00
plus 7.90% of
not over $550,000 excess
over $450,000
Over $550,000 but $36,873.00
plus 8.25% of
not over $650,000 excess
over $550,000
Over $650,000 but $45,123.00
plus 9.00% of
not over $800,000 excess
over $650,000
Over $800,000 but $58,623.00
plus 10.00% of
not over $950,000 excess
over $800,000
Over $950,000 $73,623.00
plus 11.00% of
excess over $950,000.]
In the case of any taxable year beginning after December 31, 2026:
If the taxable income is: The tax shall be:
Not over $19,200 1.40% of taxable income
Over $19,200 but $269.00 plus 3.20% of
not over $28,800 excess over $19,200
Over $28,800 but $576.00 plus 5.50% of
not over $38,400 excess over $28,800
Over $38,400 but $1,104.00 plus 6.40% of
not over $48,000 excess over $38,400
Over $48,000 but $1,718.00 plus 6.80% of
not over $72,000 excess over $48,000
Over $72,000 but $3,350.00 plus 7.20% of
not over $96,000 excess over $72,000
Over $96,000 but $5,078.00 plus 7.60% of
not over $250,000 excess over $96,000
Over $250,000 but $16,782.00 plus 7.90% of
not over $350,000 excess over $250,000
Over $350,000 but $24,682.00 plus 8.25% of
not over $450,000 excess over $350,000
Over $450,000 but $32,932.00 plus 10.00% of
not over $550,000 excess over $450,000
Over $550,000 but $42,932.00 plus 11.00% of
not over $650,000 excess over $550,000
Over $650,000 $53,932.00 plus 12.00% of
excess over $650,000.
(b) There is hereby imposed on the taxable income of every head of a household a tax determined in accordance with the following table:
In the case of any taxable year beginning after December 31, 2017:
If the taxable income is: The tax shall be:
Not over $3,600 1.40% of taxable income
Over $3,600 but $50.00 plus 3.20% of
not over $7,200 excess over $3,600
Over $7,200 but $166.00 plus 5.50% of
not over $14,400 excess over $7,200
Over $14,400 but $562.00 plus 6.40% of
not over $21,600 excess over $14,400
Over $21,600 but $1,022.00 plus 6.80% of
not over $28,800 excess over $21,600
Over $28,800 but $1,512.00 plus 7.20% of
not over $36,000 excess over $28,800
Over $36,000 but $2,030.00 plus 7.60% of
not over $54,000 excess over $36,000
Over $54,000 but $3,398.00 plus 7.90% of
not over $72,000 excess over $54,000
Over $72,000 but $4,820.00 plus 8.25% of
not over $225,000 excess over $72,000
Over $225,000 but $17,443.00 plus 9.00% of
not over $262,500 excess over $225,000
Over $262,500 but $20,818.00 plus 10.00% of
not over $300,000 excess over $262,500
Over $300,000 $24,568.00 plus 11.00% of
excess over $300,000.
In the case of any taxable year beginning after December 31, 2024:
If the taxable income is: The tax shall be:
Not over $14,400 1.40% of taxable income
Over $14,400 but $202.00 plus 3.20% of
not over $21,600 excess over $14,400
Over $21,600 but $432.00 plus 5.50% of
not over $28,800 excess over $21,600
Over $28,800 but $828.00 plus 6.40% of
not over $36,000 excess over $28,800
Over $36,000 but $1,289.00 plus 6.80% of
not over $54,000 excess over $36,000
Over $54,000 but $2,513.00 plus 7.20% of
not over $72,000 excess over $54,000
Over $72,000 but $3,809.00 plus 7.60% of
not over $187,500 excess over $72,000
Over $187,500 but $12,587.00 plus 7.90% of
not over $262,500 excess over $187,500
Over $262,500 but $18,512.00 plus 8.25% of
not over $337,500 excess over $262,500
Over $337,500 but $24,699.00 plus 9.00% of
not over $412,500 excess over $337,500
Over $412,500 but $31,449.00 plus 10.00% of
not over $487,500 excess over $412,500
Over $487,500 $38,949.00 plus 11.00% of
excess over $487,500.
[In the case of any taxable year
beginning after December 31, 2026:
If the taxable income is: The tax shall be:
Not over $21,600 1.40%
of taxable income
Over $21,600 but $302.00
plus 3.20% of
not over $28,800 excess
over $21,600
Over $28,800 but $533.00
plus 5.50% of
not over $36,000 excess
over $28,800
Over $36,000 but $929.00
plus 6.40% of
not over $54,000 excess
over $36,000
Over $54,000 but $2,081.00
plus 6.80% of
not over $72,000 excess
over $54,000
Over $72,000 but $3,305.00
plus 7.20% of
not over $187,500 excess
over $72,000
Over $187,500 but $11,621.00
plus 7.60% of
not over $262,500 excess
over $187,500
Over $262,500 but $17,321.00
plus 7.90% of
not over $337,500 excess
over $262,500
Over $337,500 but $23,246.00
plus 8.25% of
not over $412,500 excess
over $337,500
Over $412,500 but $29,433.00
plus 9.00% of
not over $487,500 excess
over $412,500
Over $487,500 but $36,183.00
plus 10.00% of
not over $600,000 excess
over $487,500
Over $600,000 $47,433.00
plus 11.00% of
excess over $600,000.
In the case of any taxable year
beginning after December 31, 2028:
If the taxable income is: The tax shall be:
Not over $28,800 1.40%
of taxable income
Over $28,800 but $403.00
plus 3.20% of
not over $36,000 excess
over $28,800
Over $36,000 but $634.00
plus 5.50% of
not over $54,000 excess
over $36,000
Over $54,000 but $1,624.00
plus 6.40% of
not over $72,000 excess
over $54,000
Over $72,000 but $2,776.00
plus 6.80% of
not over $187,500 excess
over $72,000
Over $187,500 but $10,630.00
plus 7.20% of
not over $262,500 excess
over $187,500
Over $262,500 but $16,030.00
plus 7.60% of
not over $337,500 excess
over $262,500
Over $337,500 but $21,730.00
plus 7.90% of
not over $412,500 excess
over $337,500
Over $412,500 but $27,655.00
plus 8.25% of
not over $487,500 excess
over $412,500
Over $487,500 but $33,842.00
plus 9.00% of
not over $600,000 excess
over $487,500
Over $600,000 but $43,967.00
plus 10.00% of
not over $712,500 excess
over $600,000
Over $712,500 $55,217.00
plus 11.00% of
excess over $712,500.]
In the case of any taxable year beginning after December 31, 2026:
If the taxable income is: The tax shall be:
Not over $14,400 1.40% of taxable income
Over $14,400 but $202.00 plus 3.20% of
not over $21,600 excess over $14,400
Over $21,600 but $432.00 plus 5.50% of
not over $28,800 excess over $21,600
Over $28,800 but $828.00 plus 6.40% of
not over $36,000 excess over $28,800
Over $36,000 but $1,289.00 plus 6.80% of
not over $54,000 excess over $36,000
Over $54,000 but $2,513.00 plus 7.20% of
not over $72,000 excess over $54,000
Over $72,000 but $3,809.00 plus 7.60% of
not over $187,500 excess over $72,000
Over $187,500 but $12,587.00 plus 7.90% of
not over $262,500 excess over $187,500
Over $262,500 but $18,512.00 plus 8.25% of
not over $337,500 excess over $262,500
Over $337,500 but $24,699.00 plus 10.00% of
not over $412,500 excess over $337,500
Over $412,500 but $32,199.00 plus 11.00% of
not over $487,500 excess over $412,500
Over $487,500 $40,449.00 plus 12.00% of
excess over $487,500.
(c) There is hereby imposed on the taxable income of (1) every unmarried individual (other than a surviving spouse, or the head of a household) and (2) on the taxable income of every married individual who does not make a single return jointly with the individual's spouse under section 235-93 a tax determined in accordance with the following table:
In the case of any taxable year beginning after December 31, 2017:
If the taxable income is: The tax shall be:
Not over $2,400 1.40% of taxable income
Over $2,400 but $34.00 plus 3.20% of
not over $4,800 excess over $2,400
Over $4,800 but $110.00 plus 5.50% of
not over $9,600 excess over $4,800
Over $9,600 but $374.00 plus 6.40% of
not over $14,400 excess over $9,600
Over $14,400 but $682.00 plus 6.80% of
not over $19,200 excess over $14,400
Over $19,200 but $1,008.00 plus 7.20% of
not over $24,000 excess over $19,200
Over $24,000 but $1,354.00 plus 7.60% of
not over $36,000 excess over $24,000
Over $36,000 but $2,266.00 plus 7.90% of
not over $48,000 excess over $36,000
Over $48,000 but $3,214.00 plus 8.25% of
not over $150,000 excess over $48,000
Over $150,000 but $11,629.00 plus 9.00% of
not over $175,000 excess over $150,000
Over $175,000 but $13,879.00 plus 10.00% of
not over $200,000 excess over $175,000
Over $200,000 $16,379.00 plus 11.00% of
excess over $200,000.
In the case of any taxable year beginning after December 31, 2024:
If the taxable income is The tax shall be:
Not over $9,600 1.40% of taxable income
Over $9,600 but $134.00 plus 3.20% of
not over $14,400 excess over $9,600
Over $14,400 but $288.00 plus 5.50% of
not over $19,200 excess over $14,400
Over $19,200 but $552.00 plus 6.40% of
not over $24,000 excess over $19,200
Over $24,000 but $859.00 plus 6.80% of
not over $36,000 excess over $24,000
Over $36,000 but $1,675.00 plus 7.20% of
not over $48,000 excess over $36,000
Over $48,000 but $2,539.00 plus 7.60% of
not over $125,000 excess over $48,000
Over $125,000 but $8,391.00 plus 7.90% of
not over $175,000 excess over $125,000
Over $175,000 but $12,341.00 plus 8.25% of
not over $225,000 excess over $175,000
Over $225,000 but $16,466.00 plus 9.00% of
not over $275,000 excess over $225,000
Over $275,000 but $20,966.00 plus 10.00% of
not over $325,000 excess over $275,000
Over $325,000 $25,966.00 plus 11.00% of
excess over $325,000.
[In
the case of any taxable year beginning after December 31, 2026:
If the taxable income is: The tax shall be:
Not over $14,400 1.40%
of taxable income
Over $14,400 but $202.00
plus 3.20% of
not over $19,200 excess
over $14,400
Over $19,200 but $355.00
plus 5.50% of
not over $24,000 excess
over $19,200
Over $24,000 but $619.00
plus 6.40% of
not over $36,000 excess
over $24,000
Over $36,000 but $1,387.00
plus 6.80% of
not over $48,000 excess
over $36,000
Over $48,000 but $2,203.00
plus 7.20% of
not over $125,000 excess
over $48,000
Over $125,000 but $7,747.00
plus 7.60% of
not over $175,000 excess
over $125,000
Over $175,000 but $11,547.00
plus 7.90% of
not over $225,000 excess
over $175,000
Over $225,000 but $15,497.00
plus 8.25% of
not over $275,000 excess
over $225,000
Over $275,000 but $19,622.00
plus 9.00% of
not over $325,000 excess
over $275,000
Over $325,000 but $24,122.00
plus 10.00% of
not over $400,000 excess
over $325,000
Over $400,000 $31,622.00
plus 11.00% of
excess over $400,000.
In
the case of any taxable year beginning after December 31, 2028:
If the taxable income is: The tax shall be:
Not over $19,200 1.40%
of taxable income
Over $19,200 but $269.00
plus 3.20% of
not over $24,000 excess
over $19,200
Over $24,000 but $422.00
plus 5.50% of
not over $36,000 excess
over $24,000
Over $36,000 but $1,082.00
plus 6.40% of
not over $48,000 excess
over $36,000
Over $48,000 but $1,850.00
plus 6.80% of
not over $125,000 excess
over $48,000
Over $125,000 but $7,086.00
plus 7.20% of
not over $175,000 excess
over $125,000
Over $175,000 but $10,686.00
plus 7.60% of
not over $225,000 excess
over $175,000
Over $225,000 but $14,486.00
plus 7.90% of
not over $275,000 excess
over $225,000
Over $275,000 but $18,436.00
plus 8.25% of
not over $325,000 excess
over $275,000
Over $325,000 but $22,561.00
plus 9.00% of
not over $400,000 excess
over $325,000
Over $400,000 but $29,311.00
plus 10.00% of
not over $475,000 excess
over $400,000
Over $475,000 $36,811.00
plus 11.00% of
excess over $475,000.]
In the case of any taxable year beginning after December 31, 2026:
If the taxable income is The tax shall be:
Not over $9,600 1.40% of taxable income
Over $9,600 but $134.00 plus 3.20% of
not over $14,400 excess over $9,600
Over $14,400 but $288.00 plus 5.50% of
not over $19,200 excess over $14,400
Over $19,200 but $552.00 plus 6.40% of
not over $24,000 excess over $19,200
Over $24,000 but $859.00 plus 6.80% of
not over $36,000 excess over $24,000
Over $36,000 but $1,675.00 plus 7.20% of
not over $48,000 excess over $36,000
Over $48,000 but $2,539.00 plus 7.60% of
not over $125,000 excess over $48,000
Over $125,000 but $8,391.00 plus 7.90% of
not over $175,000 excess over $125,000
Over $175,000 but $12,341.00 plus 8.25% of
not over $225,000 excess over $175,000
Over $225,000 but $16,466.00 plus 10.00% of
not over $275,000 excess over $225,000
Over $275,000 but $21,466.00 plus 11.00% of
not over $325,000 excess over $275,000
Over $325,000 $26,966.00 plus 12.00% of
excess over $325,000."
SECTION 2. Section 235-55.6, Hawaii Revised Statutes, is amended to read as follows:
"§235-55.6 Expenses for household and dependent care services necessary for gainful employment. (a) Allowance of credit.
(1) In general. For each resident taxpayer, who files an individual income tax return for a taxable year, and who is not claimed or is not otherwise eligible to be claimed as a dependent by another taxpayer for federal or Hawaii state individual income tax purposes, who maintains a household which includes as a member one or more qualifying individuals (as defined in subsection (b)(1)), there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the applicable percentage of the employment-related expenses (as defined in subsection (b)(2)) paid by the individual during the taxable year. If the tax credit claimed by a resident taxpayer exceeds the amount of income tax payment due from the resident taxpayer, the excess of the credit over payments due shall be refunded to the resident taxpayer; provided that tax credit properly claimed by a resident individual who has no income tax liability shall be paid to the resident individual; and provided further that no refunds or payment on account of the tax credit allowed by this section shall be made for amounts less than $1.
(2) Applicable
percentage. For purposes of paragraph
(1), the taxpayer's applicable percentage shall be determined as follows:
Adjusted gross income Applicable percentage
Not over [$25,000] $80,000 [25%] 50%
Over [$25,000] $80,000
but [24%] 45%
not
over [$30,000] $90,000
Over [$30,000] $90,000
but [23%] 40%
not
over [$35,000] $100,000
Over [$35,000] $100,000
but [22%] 35%
not over [$40,000] $110,000
Over [$40,000] $110,000
but [21%] 30%
not over [$45,000] $120,000
Over [$45,000] $120,000
but [20%] 25%
not over [$50,000] $130,000
Over [$50,000] $130,000
but [15%.] 20%
not over $140,000
Over $140,000 but 15%
not over $150,000
Over $150,000 but 10%
not over $160,000
Over $160,000 5%.
(b) Definitions of qualifying individual and employment-related expenses. For purposes of this section:
(1) Qualifying individual. The term "qualifying individual" means:
(A) A
dependent of the taxpayer who is under the age of thirteen and with respect to
whom the taxpayer is entitled to a deduction under section 235-54(a)[,];
(B) A
dependent of the taxpayer who is physically or mentally incapable of caring for
oneself[,]; or
(C) The spouse of the taxpayer, if the spouse is physically or mentally incapable of caring for oneself.
(2) Employment-related expenses.
(A) In general. The term "employment-related expenses" means amounts paid for the following expenses, but only if such expenses are incurred to enable the taxpayer to be gainfully employed for any period for which there are one or more qualifying individuals with respect to the taxpayer:
(i) Expenses for household services[,]; and
(ii) Expenses for the care of a qualifying individual.
Such term shall not include any amount paid for services outside the taxpayer's household at a camp where the qualifying individual stays overnight.
(B) Exception. Employment-related expenses described in subparagraph (A) which are incurred for services outside the taxpayer's household shall be taken into account only if incurred for the care of:
(i) A qualifying individual described in paragraph (1)(A)[,];
or
(ii) A qualifying individual (not described in paragraph (1)(A)) who regularly spends at least eight hours each day in the taxpayer's household.
(C) Dependent care centers. Employment-related expenses described in subparagraph (A) which are incurred for services provided outside the taxpayer's household by a dependent care center (as defined in subparagraph (D)) shall be taken into account only if:
(i) Such center complies with all applicable laws, rules, and regulations of this State, if the center is located within the jurisdiction of this State; or
(ii) Such center complies with all applicable laws, rules, and regulations of the jurisdiction in which the center is located, if the center is located outside the State; and
(iii) The requirements of subparagraph (B) are met.
(D) Dependent
care center defined. For purposes of
this paragraph, the term "dependent care center" means any facility [which:]
that:
(i) Provides care for more than six individuals (other than individuals
who reside at the facility)[,]; and
(ii) Receives a fee, payment, or grant for providing services for any of the individuals (regardless of whether such facility is operated for profit).
(1) $10,000
if there is one qualifying individual with respect to the taxpayer for such
taxable year[,]; or
(2) $20,000 if there are two or more qualifying individuals with respect to the taxpayer for such taxable year.
The amount determined under paragraph (1) or (2) (whichever is applicable) shall be reduced by the aggregate amount excludable from gross income under section 129 (with respect to dependent care assistance programs) of the Internal Revenue Code for the taxable year.
(d) Earned income limitation.
(1) In general. Except as otherwise provided in this subsection, the amount of the employment-related expenses incurred during any taxable year which may be taken into account under subsection (a) shall not exceed:
(A) In
the case of an individual who is not married at the close of such year, such
individual's earned income for such year[,]; or
(B) In the case of an individual who is married at the close of such year, the lesser of such individual's earned income or the earned income of the individual's spouse for such year.
(2) Special rule for spouse who is a student or incapable of caring for oneself. In the case of a spouse who is a student or a qualified individual described in subsection (b)(1)(C), for purposes of paragraph (1), such spouse shall be deemed for each month during which such spouse is a full-time student at an educational institution, or is such a qualifying individual, to be gainfully employed and to have earned income of not less than:
(A) $200
if subsection (c)(1) applies for the taxable year[,]; or
(B) $400 if subsection (c)(2) applies for the taxable year.
In the case of any husband and wife, this paragraph shall apply with respect to only one spouse for any one month.
(e) Special rules. For purposes of this section:
(1) Maintaining household. An individual shall be treated as maintaining a household for any period only if over half the cost of maintaining the household for the period is furnished by the individual (or, if the individual is married during the period, is furnished by the individual and the individual's spouse).
(2) Married couples must file joint return. If the taxpayer is married at the close of the taxable year, the credit shall be allowed under subsection (a) only if the taxpayer and the taxpayer's spouse file a joint return for the taxable year.
(3) Marital status. An individual legally separated from the individual's spouse under a decree of divorce or of separate maintenance shall not be considered as married.
(4) Certain married individuals living apart. If:
(A) An individual who is married and who files a separate return:
(i) Maintains as the individual's home a household that constitutes for
more than one-half of the taxable year the principal place of abode of a
qualifying individual[,]; and
(ii) Furnishes over half of the cost of maintaining the household during
the taxable year[,]; and
(B) During the last six months of the taxable year the individual's spouse is not a member of the household,
the individual shall not be considered as married.
(5) Special dependency test in case of divorced parents, etc. If:
(A) Paragraph
(2) or (4) of section 152(e) of the Internal Revenue Code of 1986, as amended,
applies to any child with respect to any calendar year[,]; and
(B) The child is under age thirteen or is physically or mentally incompetent of caring for the child's self,
in the case of any taxable year beginning in the calendar year, the child shall be treated as a qualifying individual described in subsection (b)(1)(A) or (B) (whichever is appropriate) with respect to the custodial parent (within the meaning of section 152(e)(1) of the Internal Revenue Code of 1986, as amended), and shall not be treated as a qualifying individual with respect to the noncustodial parent.
(6) Payments to related individuals. No credit shall be allowed under subsection (a) for any amount paid by the taxpayer to an individual:
(A) With
respect to whom, for the taxable year, a deduction under section 151(c) of the
Internal Revenue Code of 1986, as amended (relating to deduction for personal
exemptions for dependents) is allowable either to the taxpayer or the
taxpayer's spouse[,]; or
(B) Who
is a child of the taxpayer (within the meaning of section [151(c)(3)] 152(c)(1)
of the Internal Revenue Code of 1986, as amended) who has not attained the age
of nineteen at the close of the taxable year.
For purposes of this paragraph, the term "taxable year" means the taxable year of the taxpayer in which the service is performed.
(7) Student. The term "student" means an individual who, during each of five calendar months during the taxable year, is a full-time student at an educational organization.
(8) Educational organization. The term "educational organization" means a school operated by the department of education under chapter 302A, an educational organization described in section 170(b)(1)(A)(ii) of the Internal Revenue Code of 1986, as amended, or a university, college, or community college.
(9) Identifying information required with respect to service provider. No credit shall be allowed under subsection (a) for any amount paid to any person unless:
(A) The
name, address, taxpayer identification number, and general excise tax license
number of the person are included on the return claiming the credit[,];
(B) If
the person is located outside the State, the name, address, and taxpayer
identification number, if any, of the person and a statement indicating that
the service provider is located outside the State and that the general excise
tax license and, if applicable, the taxpayer identification numbers are not
required[,]; or
(C) If the person is an organization described in section 501(c)(3) of the Internal Revenue Code and exempt from tax under section 501(a) of the Internal Revenue Code, the name and address of the person are included on the return claiming the credit.
In the case of a failure to provide the information required under the preceding sentence, the preceding sentence shall not apply if it is shown that the taxpayer exercised due diligence in attempting to provide the information so required.
(f) No credit shall be allowed under this section for any taxable year in the disallowance period. For purposes of this subsection, the disallowance period is:
(1) The period of ten taxable years after the most recent taxable year for which there was a final administrative or judicial decision that the taxpayer's claim for credit under this section was due to fraud; and
(2) The period of two taxable years after the most recent taxable year for which there was a final administrative or judicial decision disallowing the taxpayer's claim for credit.
[(f)] (g) Rules.
The director of taxation shall prescribe such rules under chapter 91 as
may be necessary to carry out the purposes of this section."
SECTION 3. Act 163, Session Laws of Hawaii 2023, is amended by amending section 5 to read as follows:
"This
Act, upon its approval, shall apply to taxable years beginning after December
31, 2022; provided that on December 31, [2027,] 2032, this Act
shall be repealed and sections 235-55.6(c), 235-55.75(a), and 235-55.85(b), Hawaii
Revised Statutes, shall be reenacted in the form in which they read on the day
prior to the effective date of this Act."
PART II
SECTION 4. The legislature finds that the State's environmental commitments and goals necessitate the swift adoption of renewable energy. Renewable energy systems that capture solar and wind energy and convert it to thermal or mechanical energy, electricity, and fuel will be key in the State's transition away from fossil fuels. The legislature further finds that the renewable energy technologies income tax credit could be adjusted to better support low- and moderate- income families by limiting the credit to taxpayers in those income brackets. The legislature additionally finds that such changes would promote equitable access to clean energy and help offset federal actions taken to limit tax incentives for renewable energy, helping to protect hundreds of jobs in the State's energy industry.
Accordingly, the purpose of this part is to amend the renewable energy technologies income tax credit by:
(1) Limiting claims for certain solar energy systems installed and placed in service on a single-family residential property to taxpayers with an adjusted gross income of $250,000 or less if filing as an individual or $350,000 or less if filing jointly;
(2) Removing certain cap amounts for solar energy systems that are not third-party financed systems; and
(3) Increasing the adjusted gross income requirements for an individual taxpayer to elect to have any excess credits refunded and limiting refundability to systems that are not third-party financed systems.
SECTION 5. Section 235-12.5, Hawaii Revised Statutes, is amended as follows:
1. By amending subsections (a) to (c) to read:
"(a) Each individual or corporate taxpayer that files an individual or corporate net income tax return for a taxable year may claim a tax credit under this section against the Hawaii state individual or corporate net income tax. The tax credit may be claimed for every eligible renewable energy technology system that is installed and placed in service in the State by a taxpayer during the taxable year. No taxpayer may claim a tax credit under this section for a solar energy system with the primary purpose other than using energy from the sun to heat water for household use that is installed and placed in service on a single-family residential property unless the taxpayer's adjusted gross income is $250,000 or less if filing as an individual or $350,000 or less if filing jointly; provided that this income restriction shall only apply to systems that are not third-party financed systems. The tax credit may be claimed as follows:
(1) For each solar energy system: thirty-five per cent of the actual cost or the cap amount determined in subsection (b); provided that:
(A) For taxable years beginning after December 31, 2019, and except as provided in subparagraphs (B) and (C), no tax credit may be claimed for a solar energy system that is five megawatts in total output capacity or larger and requires a power purchase agreement approved by the public utilities commission;
(B) A solar energy system that is five megawatts in total output capacity or larger, installed and placed in service pursuant to a power purchase agreement approved or pending approval by a decision and order by the public utilities commission prior to December 31, 2019, shall continue to receive a tax credit equal to thirty-five per cent of the actual cost, or $500,000 per solar energy system that has a total output capacity of at least one thousand kilowatts per system of direct current, whichever is less; and
(C) For each solar energy system integrated with a pumped hydroelectric energy storage system, the tax credit may be claimed for thirty-five per cent of the actual cost or the cap amount determined in subsection (b), whichever is less; provided that applicable project approval filings have been made to the public utilities commission by December 31, 2021; or
(2) For each wind-powered energy system: twenty per cent of the actual cost or the cap amount determined in subsection (b), whichever is less;
provided further that multiple owners of a single system shall be entitled to a single tax credit; and provided further that the tax credit shall be apportioned between the owners in proportion to their contribution to the cost of the system.
In the case of a partnership, S corporation, estate, or trust, the tax credit allowable is for every eligible renewable energy technology system that is installed and placed in service in the State by the entity. The cost upon which the tax credit is computed shall be determined at the entity level. Distribution and share of credit shall be determined pursuant to administrative rule.
(b) The amount of credit allowed for each eligible renewable energy technology system shall not exceed the applicable cap amount, which is determined as follows:
(1) If the primary purpose of the solar energy system is to use energy from the sun to heat water for household use, then the cap amounts shall be:
(A) $2,250 per system for single-family residential property;
(B) $350 per unit per system for multi-family residential property; and
(C) $250,000 per system for commercial property;
(2) For all other solar energy systems, the cap amounts shall be:
(A) [$5,000 per system for] For
single-family residential property[;]:
(i) $5,000 per third-party financed system; or
(ii) No cap for a system that is not a third-party financed system;
provided that if all or a portion of the system is used to fulfill the substitute renewable energy technology requirement pursuant to section 196-6.5(a)(3), the credit shall be reduced by thirty-five per cent of the actual system cost or $2,250, whichever is less;
(B) $350 per unit per system for multi-family residential property; and
(C) $500,000 per system for commercial property; and
(3) For all wind-powered energy systems, the cap amounts shall be:
(A) $1,500 per system for single-family residential property; provided that if all or a portion of the system is used to fulfill the substitute renewable energy technology requirement pursuant to section 196-6.5(a)(3), the credit shall be reduced by twenty per cent of the actual system cost or $1,500, whichever is less;
(B) $200 per unit per system for multi-family residential property; and
(C) $500,000 per system for commercial property.
(c) For the purposes of this section:
"Actual cost" means costs related to the renewable energy technology systems under subsection (a), including accessories and installation, but not including the cost of consumer incentive premiums unrelated to the operation of the system or offered with the sale of the system and costs for which another credit is claimed under this chapter.
"Household use" means any use to which heated water is commonly put in a residential setting, including commercial application of those uses.
"Renewable energy technology system" means a new system that captures and converts a renewable source of energy, such as solar or wind energy, into:
(1) A usable source of thermal or mechanical energy;
(2) Electricity; or
(3) Fuel.
"Solar or wind energy system" means any identifiable facility, equipment, apparatus, or the like that converts solar or wind energy to useful thermal or electrical energy for heating, cooling, or reducing the use of other types of energy that are dependent upon fossil fuel for their generation.
"Third-party financed system" means a renewable energy technology system for which a tax credit under this section is claimed by a taxpayer who is not the owner of the property on which the system is installed and placed into service."
2. By amending subsection (h) to read:
"(h) Notwithstanding subsection (g), for any renewable energy technology system, an individual taxpayer may elect to have any excess of the credit over payments due refunded to the taxpayer, if:
(1) All of the taxpayer's income is exempt from taxation under section 235-7(a)(2) or (3); or
(2) The system is not a third-party
financed system and the taxpayer's adjusted gross income is [$20,000]
$40,000 or less (or [$40,000] $60,000 or less if filing a
tax return as married filing jointly);
provided
that tax credits properly claimed by a taxpayer who has no income tax liability
shall be paid to the taxpayer; [and] provided further that no refund on
account of the tax credit allowed by this section shall be made for amounts
less than $1.
[A
husband and wife] Spouses who do not file a joint tax return shall
only be entitled to make this election to the extent that they would have been
entitled to make the election had they filed a joint tax return.
The election required by this subsection shall be made in a manner prescribed by the director on the taxpayer's return for the taxable year in which the system is installed and placed in service. A separate election may be made for each separate system that generates a credit. An election once made is irrevocable."
PART III
SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 7. This Act shall take effect on July 1, 3000; provided that:
(1) Section 2 of this Act shall apply to taxable years beginning after December 31, 2026;
(2) On December 31, 2032, section 2 of this Act shall be repealed and section 235-55.6, Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day prior to the effective date of Act 163, Session Laws of Hawaii 2023; and
(3) Part II of this Act shall apply to taxable years beginning after December 31, 2026.
Report Title:
Income Tax; Income Tax Brackets; Household and Dependent Care Services Tax Credit; Disallowance Period; Earned Income Tax Credit; Food/Excise Tax Credit; Renewable Energy Technologies Income Tax Credit; Income Restriction; Solar Energy Systems; Third-party Financed Systems
Description:
PART I: Repeals future adjustments to income tax brackets. For taxable years beginning after 12/31/2026, adds an income tax bracket and increases the income tax rates for the three highest income tax brackets by one percentage point each. Increases a taxpayer's applicable percentage of employment-related expenses that is used to calculate the household and dependent care services tax credit and increases income eligibility thresholds for the credit. Establishes certain disallowance periods following a final decision that a claim for the credit was due to fraud and that the claim was disallowed. Extends the sunset for enhancements made by Act 163, SLH 2023, to the Household and Dependent Care Services Tax Credit, Earned Income Tax Credit, and Food/Excise Tax Credit to 12/31/2032. PART II: Amends the renewable energy technologies income tax credit by: for taxable years beginning after 12/31/26, limiting claims for certain solar energy systems that are not third-party financed systems and installed and placed in service on a single-family residential property to taxpayers with an adjusted gross income of $250,000 or less if filing as an individual or $350,000 or less if filing jointly; removing certain cap amounts for solar energy systems that are not third-party financed systems; and increasing the maximum adjusted gross income an individual taxpayer must be below in order to be eligible to have any excess credits refunded and limiting credit refundability to systems that are not third-party financed systems. 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.
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THE SENATE |
S.B. NO. |
3125 |
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THIRTY-THIRD LEGISLATURE, 2026 |
S.D. 1 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO INCOME TAX.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Section 235-51, Hawaii Revised Statutes, is amended by amending subsections (a), (b), and (c) to read as follows:
"(a) There is hereby imposed on the taxable income of every:
(1) Taxpayer who files a joint return under section 235‑93; and
(2) Surviving spouse,
a tax determined in accordance with the following table:
In the case of any taxable year beginning after December 31, 2017:
If the taxable income is: The tax shall be:
Not over $4,800 1.40% of taxable income
Over $4,800 but $67.00 plus 3.20% of
not over $9,600 excess over $4,800
Over $9,600 but $221.00 plus 5.50% of
not over $19,200 excess over $9,600
Over $19,200 but $749.00 plus 6.40% of
not over $28,800 excess over $19,200
Over $28,800 but $1,363.00 plus 6.80% of
not over $38,400 excess over $28,800
Over $38,400 but $2,016.00 plus 7.20% of
not over $48,000 excess over $38,400
Over $48,000 but $2,707.00 plus 7.60% of
not over $72,000 excess over $48,000
Over $72,000 but $4,531.00 plus 7.90% of
not over $96,000 excess over $72,000
Over $96,000 but $6,427.00 plus 8.25% of
not over $300,000 excess over $96,000
Over $300,000 but $23,257.00 plus 9.00% of
not over $350,000 excess over $300,000
Over $350,000 but $27,757.00 plus 10.00% of
not over $400,000 excess over $350,000
Over $400,000 $32,757.00 plus 11.00% of
excess over $400,000.
In the case of any taxable year beginning after December 31, 2024:
If the taxable income is: The tax shall be:
Not over $19,200 1.40% of taxable income
Over $19,200 but $269.00 plus 3.20% of
not over $28,800 excess over $19,200
Over $28,800 but $576.00 plus 5.50% of
not over $38,400 excess over $28,800
Over $38,400 but $1,104.00 plus 6.40% of
not over $48,000 excess over $38,400
Over $48,000 but $1,718.00 plus 6.80% of
not over $72,000 excess over $48,000
Over $72,000 but $3,350.00 plus 7.20% of
not over $96,000 excess over $72,000
Over $96,000 but $5,078.00 plus 7.60% of
not over $250,000 excess over $96,000
Over $250,000 but $16,782.00 plus 7.90% of
not over $350,000 excess over $250,000
Over $350,000 but $24,682.00 plus 8.25% of
not over $450,000 excess over $350,000
Over $450,000 but $32,932.00 plus 9.00% of
not over $550,000 excess over $450,000
Over $550,000 but $41,932.00 plus 10.00% of
not over $650,000 excess over $550,000
Over $650,000 $51,932.00 plus 11.00% of
excess over $650,000.
In the case of any taxable year beginning after December 31, 2026:
If the taxable income is: The tax shall be:
Not over $28,800 1.40% of taxable income
Over $28,800 but $403.00 plus 3.20% of
not over $38,400 excess over $28,800
Over $38,400 but $710.00 plus 5.50% of
not over $48,000 excess over $38,400
Over $48,000 but $1,238.00 plus 6.40% of
not over $72,000 excess over $48,000
Over $72,000 but $2,774.00 plus 6.80% of
not over $96,000 excess over $72,000
Over $96,000 but $4,406.00 plus 7.20% of
not over $250,000 excess over $96,000
Over $250,000 but $15,494.00 plus 7.60% of
not over $350,000 excess over $250,000
[Over $350,000 but $23,094.00 plus 7.90% of
not over $450,000 excess over $350,000
Over $450,000 but $30,994.00 plus 8.25% of
not over $550,000 excess over $450,000
Over $550,000 but $39,244.00 plus 9.00% of
not over $650,000 excess over $550,000
Over
$650,000 but $48,244.00
plus 10.00% of
not over $800,000 excess over $650,000
Over
$800,000 $63,244.00
plus 11.00% of
excess
over $800,000.]
Over $350,000 but $23,094.00 plus 8.25% of
not over $450,000 excess over $350,000
Over $450,000 but $31,344.00 plus 9.00% of
not over $550,000 excess over $450,000
Over $550,000 but $40,344.00 plus 10.00% of
not over $650,000 excess over $550,000
Over $650,000 $50,344.00 plus 11.00% of
excess over $650,000.
In the case of any taxable year beginning after December 31, 2028:
If the taxable income is: The tax shall be:
Not over $38,400 1.40% of taxable income
Over $38,400 but $538.00 plus 3.20% of
not over $48,000 excess over $38,400
Over $48,000 but $845.00 plus 5.50% of
not over $72,000 excess over $48,000
Over $72,000 but $2,165.00 plus 6.40% of
not over $96,000 excess over $72,000
Over $96,000 but $3,701.00 plus 6.80% of
not over $250,000 excess over $96,000
Over $250,000 but $14,173.00 plus 7.20% of
not over $350,000 excess over $250,000
[Over $350,000 but $21,373.00 plus 7.60% of
not over $450,000 excess over $350,000
Over $450,000 but $28,973.00 plus 7.90% of
not over $550,000 excess over $450,000
Over $550,000 but $36,873.00 plus 8.25% of
not over $650,000 excess over $550,000
Over $650,000 but $45,123.00 plus 9.00% of
not over $800,000 excess over $650,000
Over
$800,000 but $58,623.00
plus 10.00% of
not over $950,000 excess over $800,000
Over
$950,000 $73,623.00
plus 11.00% of
excess
over $950,000.]
Over $350,000 but $21,373.00 plus 8.25% of
not over $450,000 excess over $350,000
Over $450,000 but $29,623.00 plus 9.00% of
not over $550,000 excess over $450,000
Over $550,000 but $38,623.00 plus 10.00% of
not over $650,000 excess over $550,000
Over $650,000 $48,623.00 plus 11.00% of
excess over $650,000.
(b) There is hereby imposed on the taxable income of every head of a household a tax determined in accordance with the following table:
In the case of any taxable year beginning after December 31, 2017:
If the taxable income is: The tax shall be:
Not over $3,600 1.40% of taxable income
Over $3,600 but $50.00 plus 3.20% of
not over $7,200 excess over $3,600
Over $7,200 but $166.00 plus 5.50% of
not over $14,400 excess over $7,200
Over $14,400 but $562.00 plus 6.40% of
not over $21,600 excess over $14,400
Over $21,600 but $1,022.00 plus 6.80% of
not over $28,800 excess over $21,600
Over $28,800 but $1,512.00 plus 7.20% of
not over $36,000 excess over $28,800
Over $36,000 but $2,030.00 plus 7.60% of
not over $54,000 excess over $36,000
Over $54,000 but $3,398.00 plus 7.90% of
not over $72,000 excess over $54,000
Over $72,000 but $4,820.00 plus 8.25% of
not over $225,000 excess over $72,000
Over $225,000 but $17,443.00 plus 9.00% of
not over $262,500 excess over $225,000
Over $262,500 but $20,818.00 plus 10.00% of
not over $300,000 excess over $262,500
Over $300,000 $24,568.00 plus 11.00% of
excess over $300,000.
In the case of any taxable year beginning after December 31, 2024:
If the taxable income is: The tax shall be:
Not over $14,400 1.40% of taxable income
Over $14,400 but $202.00 plus 3.20% of
not over $21,600 excess over $14,400
Over $21,600 but $432.00 plus 5.50% of
not over $28,800 excess over $21,600
Over $28,800 but $828.00 plus 6.40% of
not over $36,000 excess over $28,800
Over $36,000 but $1,289.00 plus 6.80% of
not over $54,000 excess over $36,000
Over $54,000 but $2,513.00 plus 7.20% of
not over $72,000 excess over $54,000
Over $72,000 but $3,809.00 plus 7.60% of
not over $187,500 excess over $72,000
Over $187,500 but $12,587.00 plus 7.90% of
not over $262,500 excess over $187,500
Over $262,500 but $18,512.00 plus 8.25% of
not over $337,500 excess over $262,500
Over $337,500 but $24,699.00 plus 9.00% of
not over $412,500 excess over $337,500
Over $412,500 but $31,449.00 plus 10.00% of
not over $487,500 excess over $412,500
Over $487,500 $38,949.00 plus 11.00% of
excess over $487,500.
In the case of any taxable year beginning after December 31, 2026:
If the taxable income is: The tax shall be:
Not over $21,600 1.40% of taxable income
Over $21,600 but $302.00 plus 3.20% of
not over $28,800 excess over $21,600
Over $28,800 but $533.00 plus 5.50% of
not over $36,000 excess over $28,800
Over $36,000 but $929.00 plus 6.40% of
not over $54,000 excess over $36,000
Over $54,000 but $2,081.00 plus 6.80% of
not over $72,000 excess over $54,000
Over $72,000 but $3,305.00 plus 7.20% of
not over $187,500 excess over $72,000
Over $187,500 but $11,621.00 plus 7.60% of
not over $262,500 excess over $187,500
[Over $262,500 but $17,321.00 plus 7.90% of
not over $337,500 excess over $262,500
Over $337,500 but $23,246.00 plus 8.25% of
not over $412,500 excess over $337,500
Over $412,500 but $29,433.00 plus 9.00% of
not over $487,500 excess over $412,500
Over
$487,500 but $36,183.00
plus 10.00% of
not over $600,000 excess over $487,500
Over
$600,000 $47,433.00
plus 11.00% of
excess
over $600,000.]
Over $262,500 but $17,321.00 plus 8.25% of
not over $337,500 excess over $262,500
Over $337,500 but $23,508.00 plus 9.00% of
not over $412,500 excess over $337,500
Over $412,500 but $30,258.00 plus 10.00% of
not over $487,500 excess over $412,500
Over $487,500 $37,758.00 plus 11.00% of
excess over $487,500.
In the case of any taxable year beginning after December 31, 2028:
If the taxable income is: The tax shall be:
Not over $28,800 1.40% of taxable income
Over $28,800 but $403.00 plus 3.20% of
not over $36,000 excess over $28,800
Over $36,000 but $634.00 plus 5.50% of
not over $54,000 excess over $36,000
Over $54,000 but $1,624.00 plus 6.40% of
not over $72,000 excess over $54,000
Over $72,000 but $2,776.00 plus 6.80% of
not over $187,500 excess over $72,000
Over $187,500 but $10,630.00 plus 7.20% of
not over $262,500 excess over $187,500
[Over $262,500 but $16,030.00 plus 7.60% of
not over $337,500 excess over $262,500
Over $337,500 but $21,730.00 plus 7.90% of
not over $412,500 excess over $337,500
Over $412,500 but $27,655.00 plus 8.25% of
not over $487,500 excess over $412,500
Over $487,500 but $33,842.00 plus 9.00% of
not over $600,000 excess over $487,500
Over
$600,000 but $43,967.00
plus 10.00% of
not over $712,500 excess over $600,000
Over
$712,500 $55,217.00
plus 11.00% of
excess
over $712,500.]
Over $262,500 but $16,030.00 plus 8.25% of
not over $337,500 excess over $262,500
Over $337,500 but $22,217.00 plus 9.00% of
not over $412,500 excess over $337,500
Over $412,500 but $28,967.00 plus 10.00% of
not over $487,500 excess over $412,500
Over $487,500 $36,467.00 plus 11.00% of
excess over $487,500.
(c) There is hereby imposed on the taxable income of (1) every unmarried individual (other than a surviving spouse, or the head of a household) and (2) on the taxable income of every married individual who does not make a single return jointly with the individual's spouse under section 235-93 a tax determined in accordance with the following table:
In the case of any taxable year beginning after December 31, 2017:
If the taxable income is: The tax shall be:
Not over $2,400 1.40% of taxable income
Over $2,400 but $34.00 plus 3.20% of
not over $4,800 excess over $2,400
Over $4,800 but $110.00 plus 5.50% of
not over $9,600 excess over $4,800
Over $9,600 but $374.00 plus 6.40% of
not over $14,400 excess over $9,600
Over $14,400 but $682.00 plus 6.80% of
not over $19,200 excess over $14,400
Over $19,200 but $1,008.00 plus 7.20% of
not over $24,000 excess over $19,200
Over $24,000 but $1,354.00 plus 7.60% of
not over $36,000 excess over $24,000
Over $36,000 but $2,266.00 plus 7.90% of
not over $48,000 excess over $36,000
Over $48,000 but $3,214.00 plus 8.25% of
not over $150,000 excess over $48,000
Over $150,000 but $11,629.00 plus 9.00% of
not over $175,000 excess over $150,000
Over $175,000 but $13,879.00 plus 10.00% of
not over $200,000 excess over $175,000
Over $200,000 $16,379.00 plus 11.00% of
excess over $200,000.
In the case of any taxable year beginning after December 31, 2024:
If the taxable income is: The tax shall be:
Not over $9,600 1.40% of taxable income
Over $9,600 but $134.00 plus 3.20% of
not over $14,400 excess over $9,600
Over $14,400 but $288.00 plus 5.50% of
not over $19,200 excess over $14,400
Over $19,200 but $552.00 plus 6.40% of
not over $24,000 excess over $19,200
Over $24,000 but $859.00 plus 6.80% of
not over $36,000 excess over $24,000
Over $36,000 but $1,675.00 plus 7.20% of
not over $48,000 excess over $36,000
Over $48,000 but $2,539.00 plus 7.60% of
not over $125,000 excess over $48,000
Over $125,000 but $8,391.00 plus 7.90% of
not over $175,000 excess over $125,000
Over $175,000 but $12,341.00 plus 8.25% of
not over $225,000 excess over $175,000
Over $225,000 but $16,466.00 plus 9.00% of
not over $275,000 excess over $225,000
Over $275,000 but $20,966.00 plus 10.00% of
not over $325,000 excess over $275,000
Over $325,000 $25,966.00 plus 11.00% of
excess over $325,000.
In the case of any taxable year beginning after December 31, 2026:
If the taxable income is: The tax shall be:
Not over $14,400 1.40% of taxable income
Over $14,400 but $202.00 plus 3.20% of
not over $19,200 excess over $14,400
Over $19,200 but $355.00 plus 5.50% of
not over $24,000 excess over $19,200
Over $24,000 but $619.00 plus 6.40% of
not over $36,000 excess over $24,000
Over $36,000 but $1,387.00 plus 6.80% of
not over $48,000 excess over $36,000
Over $48,000 but $2,203.00 plus 7.20% of
not over $125,000 excess over $48,000
Over $125,000 but $7,747.00 plus 7.60% of
not over $175,000 excess over $125,000
[Over $175,000 but $11,547.00 plus 7.90% of
not over $225,000 excess over $175,000
Over $225,000 but $15,497.00 plus 8.25% of
not over $275,000 excess over $225,000
Over $275,000 but $19,622.00 plus 9.00% of
not over $325,000 excess over $275,000
Over
$325,000 but $24,122.00
plus 10.00% of
not over $400,000 excess over $325,000
Over
$400,000 $31,622.00
plus 11.00% of
excess
over $400,000.]
Over $175,000 but $11,547.00 plus 8.25% of
not over $225,000 excess over $175,000
Over $225,000 but $15,672.00 plus 9.00% of
not over $275,000 excess over $225,000
Over $275,000 but $20,172.00 plus 10.00% of
not over $325,000 excess over $275,000
Over $325,000 $25,172.00 plus 11.00% of
excess over $325,000.
In the case of any taxable year beginning after December 31, 2028:
If the taxable income is: The tax shall be:
Not over $19,200 1.40% of taxable income
Over $19,200 but $269.00 plus 3.20% of
not over $24,000 excess over $19,200
Over $24,000 but $422.00 plus 5.50% of
not over $36,000 excess over $24,000
Over $36,000 but $1,082.00 plus 6.40% of
not over $48,000 excess over $36,000
Over $48,000 but $1,850.00 plus 6.80% of
not over $125,000 excess over $48,000
Over $125,000 but $7,086.00 plus 7.20% of
not over $175,000 excess over $125,000
[Over $175,000 but $10,686.00 plus 7.60% of
not over $225,000 excess over $175,000
Over $225,000 but $14,486.00 plus 7.90% of
not over $275,000 excess over $225,000
Over $275,000 but $18,436.00 plus 8.25% of
not over $325,000 excess over $275,000
Over $325,000 but $22,561.00 plus 9.00% of
not over $400,000 excess over $325,000
Over
$400,000 but $29,311.00
plus 10.00% of
not over $475,000 excess over $400,000
Over
$475,000 $36,811.00
plus 11.00% of
excess
over $475,000.]
Over $175,000 but $10,686.00 plus 8.25% of
not over $225,000 excess over $175,000
Over $225,000 but $14,811.00 plus 9.00% of
not over $275,000 excess over $225,000
Over $275,000 but $19,311.00 plus 10.00% of
not over $325,000 excess over $275,000
Over $325,000 $24,311.00 plus 11.00% of
excess over $325,000."
SECTION 2. Section 235-55.6, Hawaii Revised Statutes, is amended to read as follows:
"§235-55.6 Expenses for household and dependent care services necessary for gainful employment. (a) Allowance of credit.
(1) In general. For each resident taxpayer, who files an individual income tax return for a taxable year, and who is not claimed or is not otherwise eligible to be claimed as a dependent by another taxpayer for federal or Hawaii state individual income tax purposes, who maintains a household which includes as a member one or more qualifying individuals (as defined in subsection (b)(1)), there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the applicable percentage of the employment-related expenses (as defined in subsection (b)(2)) paid by the individual during the taxable year. If the tax credit claimed by a resident taxpayer exceeds the amount of income tax payment due from the resident taxpayer, the excess of the credit over payments due shall be refunded to the resident taxpayer; provided that tax credit properly claimed by a resident individual who has no income tax liability shall be paid to the resident individual; and provided further that no refunds or payment on account of the tax credit allowed by this section shall be made for amounts less than $1.
(2) Applicable percentage. For purposes of paragraph (1), the taxpayer's
applicable percentage shall be [determined as follows:
Adjusted gross income Applicable percentage
Not over $25,000 25%
Over $25,000 but 24%
not over $30,000
Over $30,000 but 23%
not over $35,000
Over $35,000 but 22%
not over $40,000
Over $40,000 but 21%
not over $45,000
Over $45,000 but 20%
not over $50,000
Over $50,000 15%.]
equal to per cent reduced by one percentage point for each $3,000, or fraction thereof, by which the taxpayer's adjusted gross income exceeds $ ; provided that the applicable percentage shall not be reduced below fifteen per cent.
(b) Definitions of qualifying individual and employment-related expenses. For purposes of this section:
(1) Qualifying individual. The term "qualifying individual" means:
(A) A dependent of the taxpayer who is under the age of thirteen and with respect to whom the taxpayer is entitled to a deduction under section 235‑54(a),
(B) A dependent of the taxpayer who is physically or mentally incapable of caring for oneself, or
(C) The spouse of the taxpayer, if the spouse is physically or mentally incapable of caring for oneself.
(2) Employment-related expenses.
(A) In general. The term "employment-related expenses" means amounts paid for the following expenses, but only if such expenses are incurred to enable the taxpayer to be gainfully employed for any period for which there are one or more qualifying individuals with respect to the taxpayer:
(i) Expenses for household services, and
(ii) Expenses for the care of a qualifying individual.
Such term shall not include any amount paid for services outside the taxpayer's household at a camp where the qualifying individual stays overnight.
(B) Exception. Employment-related expenses described in subparagraph (A) which are incurred for services outside the taxpayer's household shall be taken into account only if incurred for the care of:
(i) A qualifying individual described in paragraph (1)(A), or
(ii) A qualifying individual (not described in paragraph (1)(A)) who regularly spends at least eight hours each day in the taxpayer's household.
(C) Dependent care centers. Employment-related expenses described in subparagraph (A) which are incurred for services provided outside the taxpayer's household by a dependent care center (as defined in subparagraph (D)) shall be taken into account only if:
(i) Such center complies with all applicable laws, rules, and regulations of this State, if the center is located within the jurisdiction of this State; or
(ii) Such center complies with all applicable laws, rules, and regulations of the jurisdiction in which the center is located, if the center is located outside the State; and
(iii) The requirements of subparagraph (B) are met.
(D) Dependent care center defined. For purposes of this paragraph, the term "dependent care center" means any facility which:
(i) Provides care for more than six individuals (other than individuals who reside at the facility), and
(ii) Receives a fee, payment, or grant for providing services for any of the individuals (regardless of whether such facility is operated for profit).
(c) Dollar limit on amount creditable. The amount of the employment-related expenses incurred during any taxable year which may be taken into account under subsection (a) shall not exceed:
(1) $10,000 if there is one qualifying individual with respect to the taxpayer for such taxable year, or
(2) $20,000 if there are two or more qualifying individuals with respect to the taxpayer for such taxable year.
The amount determined under paragraph (1) or (2) (whichever is applicable) shall be reduced by the aggregate amount excludable from gross income under section 129 (with respect to dependent care assistance programs) of the Internal Revenue Code for the taxable year.
(d) Earned income limitation.
(1) In general. Except as otherwise provided in this subsection, the amount of the employment-related expenses incurred during any taxable year which may be taken into account under subsection (a) shall not exceed:
(A) In the case of an individual who is not married at the close of such year, such individual's earned income for such year, or
(B) In the case of an individual who is married at the close of such year, the lesser of such individual's earned income or the earned income of the individual's spouse for such year.
(2) Special rule for spouse who is a student or incapable of caring for oneself. In the case of a spouse who is a student or a qualified individual described in subsection (b)(1)(C), for purposes of paragraph (1), such spouse shall be deemed for each month during which such spouse is a full-time student at an educational institution, or is such a qualifying individual, to be gainfully employed and to have earned income of not less than:
(A) $200 if subsection (c)(1) applies for the taxable year, or
(B) $400 if subsection (c)(2) applies for the taxable year.
In the case of any husband and wife, this paragraph shall apply with respect to only one spouse for any one month.
(e) Special rules. For purposes of this section:
(1) Maintaining household. An individual shall be treated as maintaining a household for any period only if over half the cost of maintaining the household for the period is furnished by the individual (or, if the individual is married during the period, is furnished by the individual and the individual's spouse).
(2) Married couples must file joint return. If the taxpayer is married at the close of the taxable year, the credit shall be allowed under subsection (a) only if the taxpayer and the taxpayer's spouse file a joint return for the taxable year.
(3) Marital status. An individual legally separated from the individual's spouse under a decree of divorce or of separate maintenance shall not be considered as married.
(4) Certain married individuals living apart. If:
(A) An individual who is married and who files a separate return:
(i) Maintains as the individual's home a household that constitutes for more than one-half of the taxable year the principal place of abode of a qualifying individual, and
(ii) Furnishes over half of the cost of maintaining the household during the taxable year, and
(B) During the last six months of the taxable year the individual's spouse is not a member of the household, the individual shall not be considered as married.
(5) Special dependency test in case of divorced parents, etc. If:
(A) Paragraph (2) or (4) of section 152(e) of the Internal Revenue Code of 1986, as amended, applies to any child with respect to any calendar year, and
(B) The child is under age thirteen or is physically or mentally incompetent of caring for the child's self,
in the case of any taxable year beginning in the calendar year, the child shall be treated as a qualifying individual described in subsection (b)(1)(A) or (B) (whichever is appropriate) with respect to the custodial parent (within the meaning of section 152(e)(1) of the Internal Revenue Code of 1986, as amended), and shall not be treated as a qualifying individual with respect to the noncustodial parent.
(6) Payments to related individuals. No credit shall be allowed under subsection (a) for any amount paid by the taxpayer to an individual:
(A) With respect to whom, for the taxable year, a deduction under section 151(c) of the Internal Revenue Code of 1986, as amended (relating to deduction for personal exemptions for dependents) is allowable either to the taxpayer or the taxpayer's spouse, or
(B) Who is a child of the taxpayer (within the meaning of section 151(c)(3) of the Internal Revenue Code of 1986, as amended) who has not attained the age of nineteen at the close of the taxable year.
For purposes of this paragraph, the term "taxable year" means the taxable year of the taxpayer in which the service is performed.
(7) Student. The term "student" means an individual who, during each of five calendar months during the taxable year, is a full-time student at an educational organization.
(8) Educational organization. The term "educational organization" means a school operated by the department of education under chapter 302A, an educational organization described in section 170(b)(1)(A)(ii) of the Internal Revenue Code of 1986, as amended, or a university, college, or community college.
(9) Identifying information required with respect to service provider. No credit shall be allowed under subsection (a) for any amount paid to any person unless:
(A) The name, address, taxpayer identification number, and general excise tax license number of the person are included on the return claiming the credit,
(B) If the person is located outside the State, the name, address, and taxpayer identification number, if any, of the person and a statement indicating that the service provider is located outside the State and that the general excise tax license and, if applicable, the taxpayer identification numbers are not required, or
(C) If the person is an organization described in section 501(c)(3) of the Internal Revenue Code and exempt from tax under section 501(a) of the Internal Revenue Code, the name and address of the person are included on the return claiming the credit.
In the case of a failure to provide the information required under the preceding sentence, the preceding sentence shall not apply if it is shown that the taxpayer exercised due diligence in attempting to provide the information so required.
(f) No credit shall be allowed under this section for any taxable year in the disallowance period. For purposes of this subsection, the disallowance period is:
(1) The period of ten taxable years after the most recent taxable year for which there was a final administrative or judicial decision that the taxpayer's claim for credit under this section was due to fraud; and
(2) The period of two taxable years after the most recent taxable year for which there was a final administrative or judicial decision disallowing the taxpayer's claim for credit.
[(f)]
(g) Rules. The director of taxation shall prescribe such
rules under chapter 91 as may be necessary to carry out the purposes of this
section.
(h) As used in this section, "adjusted gross income" means adjusted gross income as defined by the Internal Revenue Code of 1986, as amended."
SECTION 3. Act 163, Session Laws of Hawaii 2023, is amended by amending section 5 to read as follows:
"SECTION
5. This Act, upon its approval, shall
apply to taxable years beginning after December 31, 2022; provided that on
December 31, [2027,] , this
Act shall be repealed and sections 235‑55.6(c), 235-55.75(a), and
235-55.85(b), Hawaii Revised Statutes, shall be reenacted in the form in which they
read on the day prior to the effective date of this Act."
PART II
SECTION 4. Section 235-12.5, Hawaii Revised Statutes, is repealed.
["§235-12.5 Renewable energy technologies; income tax
credit. (a) Each individual or corporate taxpayer that
files an individual or corporate net income tax return for a taxable year may
claim a tax credit under this section against the Hawaii state individual or
corporate net income tax. The tax credit
may be claimed for every eligible renewable energy technology system that is
installed and placed in service in the State by a taxpayer during the taxable
year. The tax credit may be claimed as
follows:
(1) For
each solar energy system: thirty-five
per cent of the actual cost or the cap amount determined in subsection (b);
provided that:
(A) For
taxable years beginning after December 31, 2019, and except as provided in
subparagraphs (B) and (C), no tax credit may be claimed for a solar energy
system that is five megawatts in total output capacity or larger and requires a
power purchase agreement approved by the public utilities commission;
(B) A
solar energy system that is five megawatts in total output capacity or larger,
installed and placed in service pursuant to a power purchase agreement approved
or pending approval by a decision and order by the public utilities commission
prior to December 31, 2019, shall continue to receive a tax credit equal to
thirty-five per cent of the actual cost, or $500,000 per solar energy system
that has a total output capacity of at least one thousand kilowatts per system
of direct current, whichever is less; and
(C) For
each solar energy system integrated with a pumped hydroelectric energy storage
system, the tax credit may be claimed for thirty-five per cent of the actual
cost or the cap amount determined in subsection (b), whichever is less;
provided that applicable project approval filings have been made to the public
utilities commission by December 31, 2021; or
(2) For each wind-powered energy
system: twenty per cent of the actual
cost or the cap amount determined in subsection (b), whichever is less;
provided
further that multiple owners of a single system shall be entitled to a single
tax credit; and provided further that the tax credit shall be apportioned
between the owners in proportion to their contribution to the cost of the
system.
In
the case of a partnership, S corporation, estate, or trust, the tax credit
allowable is for every eligible renewable energy technology system that is
installed and placed in service in the State by the entity. The cost upon which the tax credit is
computed shall be determined at the entity level. Distribution and share of credit shall be
determined pursuant to administrative rule.
(b) The amount of credit allowed for each
eligible renewable energy technology system shall not exceed the applicable cap
amount, which is determined as follows:
(1) If the primary purpose of the solar
energy system is to use energy from the sun to heat water for household use,
then the cap amounts shall be:
(A) $2,250 per system for single-family
residential property;
(B) $350 per unit per system for
multi-family residential property; and
(C) $250,000 per system for commercial
property;
(2) For all other solar energy systems,
the cap amounts shall be:
(A) $5,000 per system for single-family
residential property; provided that if all or a portion of
the system is used to fulfill the substitute renewable energy technology
requirement pursuant to section 196-6.5(a)(3), the credit shall be reduced by
thirty-five per cent of the actual system cost or $2,250, whichever is less;
(B) $350 per unit per system for
multi-family residential property; and
(C) $500,000 per system for commercial
property; and
(3) For all wind-powered energy systems,
the cap amounts shall be:
(A) $1,500 per system for single-family
residential property; provided that if all or a portion of
the system is used to fulfill the substitute renewable energy technology
requirement pursuant to section 196-6.5(a)(3), the credit shall be reduced by
twenty per cent of the actual system cost or $1,500, whichever is less;
(B) $200 per unit per system for
multi-family residential property; and
(C) $500,000 per system for commercial
property.
(c) For the purposes of this section:
"Actual
cost" means costs related to the renewable energy technology systems under
subsection (a), including accessories and installation, but not including the
cost of consumer incentive premiums unrelated to the operation of the system or
offered with the sale of the system and costs for which another credit is
claimed under this chapter.
"Household
use" means any use to which heated water is commonly put in a residential
setting, including commercial application of those uses.
"Renewable
energy technology system" means a new system that captures and converts a
renewable source of energy, such as solar or wind energy, into:
(1) A usable source of thermal or mechanical
energy;
(2) Electricity; or
(3) Fuel.
"Solar
or wind energy system" means any identifiable facility, equipment,
apparatus, or the like that converts solar or wind energy to useful thermal or
electrical energy for heating, cooling, or reducing the use of other types of
energy that are dependent upon fossil fuel for their generation.
(d) For taxable years beginning after December
31, 2005, the dollar amount of any utility rebate shall be deducted from the
cost of the qualifying system and its installation before applying the state
tax credit.
(e) The director of taxation shall prepare any
forms that may be necessary to claim a tax credit under this section, including
forms identifying the technology type of each tax credit claimed under this
section, whether for solar or wind. The
director may also require the taxpayer to furnish reasonable information to
ascertain the validity of the claim for credit made under this section and may
adopt rules necessary to effectuate the purposes of this section pursuant to
chapter 91.
(f) 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, unless otherwise elected by the taxpayer
pursuant to subsection (g) or (h). 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 subsection shall
constitute a waiver of the right to claim the credit.
(g) For solar energy systems, a taxpayer may
elect to reduce the eligible credit amount by thirty per cent and if this
reduced amount exceeds the amount of income tax payment due from the taxpayer,
the excess of the credit amount over payments due shall be refunded to the
taxpayer; provided that tax credit amounts properly claimed by a taxpayer who
has no income tax liability shall be paid to the taxpayer; and provided further
that no refund on account of the tax credit allowed by this section shall be
made for amounts less than $1.
The
election required by this subsection shall be made in a manner prescribed by
the director on the taxpayer's return for the taxable year in which the system
is installed and placed in service. A
separate election may be made for each separate system that generates a
credit. An election once made is
irrevocable.
(h) Notwithstanding subsection (g), for any
renewable energy technology system, an individual taxpayer may elect to have
any excess of the credit over payments due refunded to the taxpayer, if:
(1) All of the taxpayer's income is
exempt from taxation under section 235-7(a)(2) or (3); or
(2) The taxpayer's adjusted gross income
is $20,000 or less (or $40,000 or less if filing a tax return as married filing
jointly);
provided
that tax credits properly claimed by a taxpayer who has no income tax liability
shall be paid to the taxpayer; and provided further that no refund on account
of the tax credit allowed by this section shall be made for amounts less than
$1.
A
husband and wife who do not file a joint tax return shall only be entitled to
make this election to the extent that they would have been entitled to make the
election had they filed a joint tax return.
The
election required by this subsection shall be made in a manner prescribed by
the director on the taxpayer's return for the taxable year in which the system
is installed and placed in service. A
separate election may be made for each separate system that generates a
credit. An election once made is
irrevocable.
(i) No taxpayer shall be allowed a credit under
this section for the portion of the renewable energy technology system required
by section 196-6.5 that is installed and placed in service on any newly
constructed single-family residential property authorized by a building permit
issued on or after January 1, 2010.
(j) To the extent feasible, using existing
resources to assist the energy-efficiency policy review and evaluation, the
department shall assist with data collection on the following for each taxable
year:
(1) The number of renewable energy
technology systems that have qualified for a tax credit during the calendar
year by:
(A) Technology type; and
(B) Taxpayer type (corporate and
individual); and
(2) The total cost of the tax credit to
the State during the taxable year by:
(A) Technology type; and
(B) Taxpayer type.
(k) This section shall apply to eligible
renewable energy technology systems that are installed and placed in service on
or after July 1, 2009."]
SECTION 5. Section 235-110.7, Hawaii Revised Statutes, is repealed.
["§235-110.7 Capital goods excise tax credit. (a)
There shall be allowed to each taxpayer subject to the tax imposed by
this chapter a capital goods excise tax credit, which 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.
The amount of the tax credit shall be
four per cent of the cost of the eligible depreciable tangible personal
property used by the taxpayer in a trade or business and placed in service
within Hawaii after December 31, 2009.
In the case of a partnership, S
corporation, estate, or trust, the tax credit allowable is for eligible
depreciable tangible personal property that is placed in service by the
entity. The cost upon which the tax credit
is computed shall be determined at the entity level. Distribution and share of credit shall be
determined by rules.
In the case of eligible depreciable
tangible personal property for which a credit for sales or use taxes paid to
another state is allowable under section 238-3(i), the amount of the tax credit
allowed under this section shall not exceed the amount of use tax actually paid
under chapter 238 relating to the tangible personal property.
If a deduction is taken under section
179 (with respect to election to expense certain depreciable business assets)
of the Internal Revenue Code of 1954, as amended, no tax credit shall be
allowed for that portion of the cost of property for which the deduction was
taken.
(b)
If the capital goods excise tax credit allowed under subsection (a)
exceeds the taxpayer's net income tax liability, the excess of credit over
liability shall be refunded to the taxpayer; provided that no refunds or
payment on account of the tax credit allowed by this section shall be made for
amounts less than $1.
All claims for tax credits under this
section, including any amended claims, must be filed on or before the end of
the twelfth month following the close of the taxable year for which the credits
may be claimed. Failure to comply with
the foregoing provision shall constitute a waiver of the right to claim the
credit.
(c) Application for the capital goods excise tax
credit shall be upon forms provided by the department of taxation.
(d) Sections 47 (with respect to dispositions of
section 38 property and the recapture percentages) of the Internal Revenue Code
of 1954, as amended, as of December 31, 1984, and 280F as operative for this
chapter (with respect to limitation on investment tax credit and depreciation
for luxury automobiles; limitation where certain property used for personal
purposes) of the Internal Revenue Code of 1954, as amended, shall be operative
for purposes of this section.
(e) As used in this section, the definition of
section 38 property (with respect to investment in depreciable tangible
personal property) as defined by section 48(a)(1)(A), (a)(1)(B), (a)(3),
(a)(4), (a)(7), (a)(8), (a)(10)(A), (b), (c), (f), (l), (m), and (s) of the
Internal Revenue Code of 1954, as amended as of December 31, 1984, is operative
for the purposes of this section only.
(f)
As used in this section:
"Cost" means the:
(1) Actual invoice price of the tangible
personal property; or
(2) Basis from which depreciation is
taken under section 167 (with respect to depreciation) or from which a deduction
may be taken under section 168 (with respect to accelerated cost recovery
system) of the Internal Revenue Code of 1954, as amended,
whichever
is less.
"Eligible depreciable tangible
personal property" is section 38 property as defined by the operative
provisions of section 48 and having a depreciable life under section 167 or for
which a deduction may be taken under section 168 of the Internal Revenue Code
of 1954, as amended.
"Placed in service" means the
earliest of the following taxable years:
(1) The
taxable year in which, under the:
(A) Taxpayer's depreciation practice, the period for depreciation;
or
(B) Accelerated cost recovery system, a claim for recovery
allowances,
with
respect to the property begins; or
(2) The
taxable year in which the property is placed in a condition or state of
readiness and availability for a specifically assigned function.
"Purchase" means an
acquisition of property.
"Tangible personal property"
means tangible personal property that is placed in service within Hawaii after
December 31, 1987, and the purchase or importation of which resulted in a
transaction that was subject to the imposition and payment of tax at the rate
of four per cent under chapter 237 or 238.
"Tangible personal property" does not include tangible
personal property that is an integral part of a building or structure or
tangible personal property used in a foreign-trade zone, as defined under
chapter 212."]
SECTION 6. Section 235-110.9, Hawaii Revised Statutes, is repealed.
["§235-110.9 High technology business investment tax
credit. (a) There shall be allowed to each taxpayer
subject to the taxes imposed by this chapter a high technology business
investment 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 investment was made and the following four years provided the credit is
properly claimed. The tax credit shall
be as follows:
(1) In the year the investment was made,
thirty-five per cent;
(2) In the first year following the year
in which the investment was made, twenty-five per cent;
(3) In the second year following the
investment, twenty per cent;
(4) In the third year following the
investment, ten per cent; and
(5) In the fourth year following the
investment, ten per cent;
of the
investment made by the taxpayer in each qualified high technology business, up
to a maximum allowed credit in the year the investment was made, $700,000; in
the first year following the year in which the investment was made, $500,000;
in the second year following the year in which the investment was made,
$400,000; in the third year following the year in which the investment was
made, $200,000; and in the fourth year following the year in which the
investment was made, $200,000.
(b) The credit allowed under this
section shall be claimed against the net income tax liability for the taxable
year. For the purpose of this section,
"net income tax liability" means net income tax liability reduced by
all other credits allowed under this chapter.
(c) If the tax credit under this section exceeds
the taxpayer's income tax liability for any of the five years that the credit
is taken, the excess of the tax credit over liability may be used as a credit
against the taxpayer's income tax liability in subsequent years until
exhausted. Every claim, including
amended claims, for a tax credit under this section 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 the foregoing provision shall constitute a waiver of the right to
claim the credit.
(d) If at the close of any taxable year in the
five-year period in subsection (a):
(1) The business no longer qualifies as
a qualified high technology business;
(2) The business or an interest in the
business has been sold by the taxpayer investing in the qualified high
technology business; or
(3) The taxpayer has withdrawn the
taxpayer's investment wholly or partially from the qualified high technology
business;
the
credit claimed under this section shall be recaptured. The recapture shall be equal to ten per cent
of the amount of the total tax credit claimed under this section in the
preceding two taxable years. The amount
of the credit recaptured shall apply only to the investment in the particular
qualified high technology business that meets the requirements of paragraph
(1), (2), or (3). The recapture
provisions of this subsection shall not apply to a tax credit claimed for a
qualified high technology business that does not fall within the provisions of
paragraph (1), (2), or (3). The amount
of the recaptured tax credit determined under this subsection shall be added to
the taxpayer's tax liability for the taxable year in which the recapture occurs
under this subsection.
(e) Every taxpayer, before March 31 of each year
in which an investment in a qualified high technology business was made in the
previous taxable year, shall submit a written, certified statement to the
director of taxation identifying:
(1) Qualified investments, 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.
(f) The department shall:
(1) Maintain records of the names and
addresses of the taxpayers claiming the credits under this section and the
total amount of the qualified investment costs upon which the tax credit is
based;
(2) Verify the nature and amount of the
qualifying investments;
(3) Total all qualifying and cumulative
investments that the department certifies; and
(4) Certify the amount of the tax credit
for each taxable year and cumulative amount of the tax credit.
Upon
each determination made under this subsection, the department shall issue a
certificate to the taxpayer verifying information submitted to the department,
including qualifying investment amounts, the credit amount certified for each
taxable year, and the cumulative amount of the tax credit during the credit
period. The taxpayer shall file the
certificate with the taxpayer's tax return with the department.
The
director of taxation may assess and collect a fee to offset the costs of
certifying tax credits claims under this section. All fees collected under this section shall
be deposited into the tax administration special fund established under section
235-20.5.
(g) As used in this section:
"Investment
tax credit allocation ratio" means, with respect to a taxpayer that has
made an investment in a qualified high technology business, the ratio of:
(1) The amount of the credit under this
section that is, or is to be, received by or allocated to the taxpayer over the
life of the investment, as a result of the investment; to
(2) The amount of the investment in the
qualified high technology business.
"Qualified
high technology business" means a business, employing or owning capital or
property, or maintaining an office, in this State; provided that:
(1) More than fifty per cent of its
total business activities are qualified research; and provided further that the
business conducts more than seventy-five per cent of its qualified research in
this State; or
(2) More than seventy-five per cent of
its gross income is derived from qualified research; and provided further that
this income is received from:
(A) Products sold from, manufactured in,
or produced in this State; or
(B) Services performed in this State.
"Qualified
research" means the same as defined in section 235-7.3.
(h) Common law principles, including the doctrine
of economic substance and business purpose, shall apply to any investment. There exists a presumption that a transaction
satisfies the doctrine of economic substance and business purpose to the extent
that the special allocation of the high technology business tax credit has an
investment tax credit ratio of 1.5 or less of credit for every dollar invested.
Transactions
for which an investment tax credit allocation ratio greater than 1.5 but not
more than 2.0 of credit for every dollar invested and claimed may be reviewed
by the department for applicable doctrines of economic substance and business
purpose.
Businesses
claiming a tax credit for transactions with investment tax credit allocation
ratios greater than 2.0 of credit for every dollar invested shall substantiate
economic merit and business purpose consistent with this section.
(i) For investments made on or after May 1, 2009,
notwithstanding any other law to the contrary, no allocations, special or
otherwise, of credits under this section may exceed the amount of the
investment made by the taxpayer ultimately claiming this credit; and investment
tax credit allocation ratios greater than 1.0 of credit for every dollar
invested shall not be allowed. In
addition, the credit shall be allowed only in accordance with subsection (a).
(j) This section shall not apply to taxable years
beginning after December 31, 2010."]
SECTION 7. Section 235-110.32, Hawaii Revised Statutes, is repealed.
["[§235-110.32] Renewable fuels production tax credit. (a) Each year during the credit period, there
shall be allowed to each taxpayer subject to the taxes imposed by this chapter
a renewable fuels production tax credit that shall be applied to the taxpayer's
net income tax liability, if any, imposed by this chapter for the taxable year
in which the credit is properly claimed.
For
each taxpayer producing renewable fuels, the annual
dollar amount of the renewable fuels production tax credit during the ten-year
credit period shall be equal to 20 cents per
seventy-six thousand British thermal units of renewable fuels using the
lower heating value sold for distribution in the State; provided that the
taxpayer's production of renewable fuels is not less than two billion five
hundred million British thermal units of renewable fuels per calendar year;
provided further that the amount of the tax credit claimed under this section
by a taxpayer shall not exceed $3,500,000 per taxable year; provided further
that the tax credit shall only be claimed for fuels with lifecycle emissions
below that of fossil fuels. No other tax
credit may be claimed under this chapter for the costs incurred to produce the
renewable fuels that are used to properly claim a tax credit under this section
for the taxable year.
Each
taxpayer, together with all of its related entities as determined under section
267(b) of the Internal Revenue Code and all business entities under common
control, as determined under sections 414(b), 414(c), and 1563(a) of the
Internal Revenue Code, shall not be eligible for more than a single ten-year
credit period.
(b) In the case of a partnership, S corporation,
estate, or trust, distribution and share of the renewable fuels production tax
credit shall be determined pursuant to section 704(b) (with respect to a
partner's distributive share) of the Internal Revenue Code of 1986, as
amended. For a fiscal year taxpayer, the
taxpayer shall report the credit in the taxable year in which the calendar year
end is included.
(c) No later than thirty days following the close
of the calendar year, every taxpayer claiming a credit under this section shall
complete and file an independent, third-party certified statement, at the
taxpayer's sole expense, with and in the form prescribed by the Hawaii state
energy office, providing the following information:
(1) The type, quantity, and British
thermal unit value, using the lower heating value, of each qualified fuel,
broken down by the type of fuel, produced and sold during the previous calendar
year;
(2) The feedstock used for each type of
qualified fuel;
(3) The proposed total amount of credit
to which the taxpayer is entitled for each calendar year and the cumulative
amount of the tax credit the taxpayer received during the credit period;
(4) The number of full-time and number
of part-time employees of the facility and those employees' states of
residency, totaled per state;
(5) The number and location of all
renewable fuel production facilities within and outside of the State; and
(6) The lifecycle greenhouse gas
emissions per British thermal units for each type of qualified fuel produced.
(d) Within thirty calendar days after the due
date of the statement required under subsection (c), the Hawaii state energy
office shall:
(1) Acknowledge, in writing, receipt of
the statement;
(2) Issue a certificate to the taxpayer
reporting the amount of renewable fuels produced and sold, the amount of credit
that the taxpayer is entitled to claim for the previous calendar year, and the
cumulative amount of the tax credit during the credit period; and
(3) Provide the taxpayer with a
determination of whether the lifecycle greenhouse gas emissions for each type
of qualified fuel produced is lower than that of fossil fuels.
(e) The taxpayer shall file the certificate
issued under subsection (d) with the taxpayer's tax return with the department
of taxation. The director of taxation
may audit and adjust the certification to conform to the facts.
(f) The total amount of tax credits allowed under
this section shall not exceed $20,000,000 for all eligible taxpayers in any
calendar year. In the event that the
credit claims under this section exceed $20,000,000 for all eligible taxpayers
in any given calendar year, the $20,000,000 shall be divided between all
eligible taxpayers for that year in proportion to the total amount of renewable
fuels produced by all eligible taxpayers.
Upon reaching $20,000,000 in the aggregate, the Hawaii state energy office
shall immediately discontinue issuing certificates and notify the department of
taxation. In no instance shall the total
dollar amount of certificates issued exceed $20,000,000 per calendar year.
(g) Notwithstanding any other law to the
contrary, the information collected and compiled by the Hawaii state energy
office under subsections (c) and (d) for the purposes of the renewable fuels
production tax credit shall be available for public inspection and
dissemination, subject to chapter 92F.
(h) If the credit under this section exceeds the
taxpayer's net income tax liability, the excess of the credit over liability
may be used as a credit against the taxpayer's net income tax liability in
subsequent years until exhausted, unless otherwise elected by the taxpayer
pursuant to subsections (i) or (j). All
claims for a credit under this section shall be properly 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 the foregoing provision or to provide the certified statement required
under subsection (c) shall constitute a waiver of the right to claim the
credit.
(i) A taxpayer may elect to reduce the eligible
credit amount by thirty per cent and if this reduced amount exceeds the amount
of income tax payment due from the taxpayer, the excess of the credit amount
over payments due shall be refunded to the taxpayer; provided that tax credit
amounts properly claimed by a taxpayer who has no income tax liability shall be
paid to the taxpayer; provided further that no refund on account of the tax
credit allowed by this section shall be made for amounts less than $1.
The
election required by this subsection shall be made in a manner prescribed by
the director on the taxpayer's return for the taxable year in which the credit
is claimed. An election once made is
irrevocable.
(j) Notwithstanding subsection (i), an individual
taxpayer may elect to have any excess of the credit over payments due refunded
to the taxpayer, if:
(1) All of the taxpayer's income is
exempt from taxation under section 235-7(a)(2) or (3); or
(2) The taxpayer's adjusted gross income
is $20,000 or less (or $40,000 or less if filing a tax return as married filing
jointly);
provided
that tax credits properly claimed by a taxpayer who has no income tax liability
shall be paid to the taxpayer; provided further that no refund on account of
the tax credit allowed by this section shall be made for amounts less than $1.
A
married couple who does not file a joint tax return shall only be entitled to
make this election to the extent that they would have been entitled to make the
election had they filed a joint tax return.
The
election required by this subsection shall be made in a manner prescribed by
the director on the taxpayer's return for the taxable year in which the credit
is claimed. An election once made is
irrevocable.
(k) Before the production of any renewable fuels
for the calendar year, the taxpayer shall provide written notice of the
taxpayer's intention to begin production of renewable fuels. The written notice shall be provided to the
department of taxation and the Hawaii state energy office and shall include
information on the taxpayer, facility location, facility production capacity,
anticipated production start date, and the taxpayer's contact information. Notwithstanding any other law to the
contrary, the written notice described in this subsection, including taxpayer
and facility information, shall be available for public inspection and
dissemination, subject to chapter 92F.
(l) The taxpayer shall provide written notice to
the director of taxation and the chief energy officer of the Hawaii state
energy office within thirty days following the start of production. The notice shall include the production start
date and expected renewable fuels production for the next twelve months. Notwithstanding any other law to the
contrary, the written notice described in this subsection shall be available
for public inspection and dissemination, subject to chapter 92F.
(m) Following each calendar year in which a
credit under this section has been claimed, the chief energy officer of the
Hawaii state energy office shall submit a written report to the governor and
legislature regarding the production and sale of renewable fuels. The report shall include:
(1) The number and location of renewable
fuels production facilities in the State and outside the State that have
claimed a credit under this section;
(2) The total number of British thermal
units of renewable fuels, itemized by type of fuel produced and sold during the
previous calendar year; and
(3) The projected number of British
thermal units of renewable fuels production for the succeeding year.
(n) 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 pursuant to chapter
91 necessary to effectuate the purposes of this section.
(o) As
used in this section:
"Credit period" means a maximum period of ten consecutive
years, beginning from the first taxable year in which a taxpayer begins
renewable fuels production at a level of at least two billion five-hundred
million British thermal units of renewable fuels per calendar year.
"Net income tax liability" means income tax liability reduced
by all other credits allowed under this chapter.
"Renewable feedstocks" means:
(1) Biomass crops and other renewable
organic material, including but not limited to logs, wood chips, wood pellets,
and wood bark;
(2) Agricultural residue;
(3) Oil crops, including but not limited
to algae, canola, jatropha, palm, soybean, and sunflower;
(4) Sugar and starch crops, including
but not limited to sugar cane and cassava;
(5) Other agricultural crops;
(6) Grease and waste cooking oil;
(7) Food wastes;
(8) Municipal solid wastes and
industrial wastes;
(9) Water, including wastewater; and
(10) Animal residues and wastes,
that can
be used to generate energy.
"Renewable
fuels" means fuels produced from renewable feedstocks; provided that the
fuel:
(1) Is sold as a fuel in the State; and
(2) Meets the relevant ASTM
International specifications or other industry specifications for the
particular fuel, including but not limited to:
(A) Methanol, ethanol, or other
alcohols;
(B) Hydrogen;
(C) Biodiesel or renewable diesel;
(D) Biogas;
(E) Other biofuels;
(F) Renewable jet fuel or renewable
gasoline; or
(G) Logs, wood chips, wood pellets, or
wood bark."]
SECTION 8. Section 235-110.51, Hawaii Revised Statutes, is repealed.
["§235-110.51 Technology infrastructure renovation tax
credit. (a) There shall be allowed to each taxpayer
subject to the taxes imposed by this chapter, an income tax credit which 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 credit shall be four per
cent of the renovation costs incurred during the taxable year for each
commercial building located in Hawaii.
(c) In the case of a partnership, S corporation,
estate, trust, or any developer of a commercial building, the tax credit
allowable is for renovation costs incurred by the entity for the taxable year. The cost upon which the tax credit is
computed shall be determined at the entity level. Distribution and share of credit shall be
determined pursuant to section 235-110.7(a).
(d) If a deduction is taken under section 179
(with respect to election to expense depreciable business assets) of the
Internal Revenue Code, no tax credit shall be allowed for that portion of the
renovation cost for which the deduction is taken.
(e) The basis of eligible property for
depreciation or accelerated cost recovery system purposes for state income
taxes shall be reduced by the amount of credit allowable and claimed. In the alternative, the taxpayer shall treat
the amount of the credit allowable and claimed as a taxable income item for the
taxable year in which it is properly recognized under the method of accounting
used to compute taxable income.
(f) The credit allowed under this section shall
be claimed against the net income tax liability for the taxable year.
(g) If the tax credit under this section exceeds
the taxpayer's income tax liability, the excess of credit over liability may be
carried forward until exhausted.
(h) The tax credit allowed under this section
shall not be available for taxable years beginning after December 31, 2010.
(i) As used in this section:
"Net
income tax liability" means income tax liability reduced by all other
credits allowed under this chapter.
"Renovation
costs" means costs incurred after December 31, 2000, to plan, design,
install, construct, and purchase technology-enabled infrastructure equipment to
provide a commercial building with technology-enabled infrastructure.
"Technology-enabled
infrastructure" means:
(1) High speed telecommunications
systems that provide Internet access, direct satellite communications access,
and videoconferencing facilities;
(2) Physical security systems that
identify and verify valid entry to secure spaces, detect invalid entry or entry
attempts, and monitor activity in these spaces;
(3) Environmental systems to include
heating, ventilation, air conditioning, fire detection and suppression, and
other life safety systems; and
(4) Backup and emergency electric power
systems.
(j) No taxpayer that claims a credit under this
section shall claim any other credit under this chapter."]
SECTION 9. Section 235-110.65, Hawaii Revised Statutes, is repealed.
["[§235-110.65] Ship repair industry tax credit. (a) There shall be allowed to each taxpayer
subject to the taxes imposed by this chapter a ship repair industry tax credit
that shall be deductible from the taxpayer's net income tax liability, if any,
imposed by this chapter.
(b) The amount of the tax credit shall be equal
to thirty per cent of the ship repair industry costs paid or incurred by the
qualified entity to design and construct the purpose-built floating [drydock]
to be used by the United States Navy in Pearl Harbor; provided that:
(1) A qualified entity may form a
special purpose entity for the purposes of raising investor capital and
claiming the credit on behalf of the qualified entity;
(2) The qualified entity, together with
all of its special purpose entities, including all partners and members of the
qualified entity and its special purpose entities, shall not claim any credit
in any one taxable year that exceeds $6,000,000; however, if the total amount
of credits applied for in any particular year exceeds the aggregate amount of
credits allowed for such year under this section, the excess shall be treated
as having been applied for in the subsequent year and shall be claimed in such
year; provided that no excess shall be allowed to be claimed after December 31,
2026; and
(3) In no event shall a qualified entity
or any of its special purpose entities or any other taxpayer claim a credit
under this section prior to January 1, 2022, or after December 31, 2026.
A
qualified entity shall become eligible to claim a credit under this section
only after construction of the floating drydock has been completed and the
floating drydock has been placed into service.
(c) In the case of an entity taxed as a
partnership, credit shall be determined at the entity level, but distribution
and share of the credit may be determined notwithstanding sections 704 or 706
of the Internal Revenue Code.
(d) The credit allowed under this section shall
be claimed against the net income tax liability for the taxable year. If the tax credit under this section exceeds
the taxpayer's income tax liability, the excess of the tax credit over
liability may be used as a credit against the taxpayer's net income tax
liability in subsequent years until exhausted.
All claims, including amended claims, for a tax credit under this
section 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 the foregoing
provision shall constitute a waiver of the right to claim the credit.
(e) The director of taxation shall prepare any
forms that may be necessary to claim a credit under this section. The director may also require the taxpayer to
furnish information to ascertain the validity of the claim for credit made
under this section. The director of
taxation may adopt rules to effectuate the purposes of this section pursuant to
chapter 91.
(f) Any taxpayer claiming a tax credit under this
section, within ninety days of the end of the calendar year in which the credit
is properly claimable, shall submit the following information to the department
of taxation:
(1) The amount of the eligible costs for
which the tax credit may be claimed; and
(2) The qualified entity that incurred
the costs.
Failure
to timely submit the information shall be subject to a penalty of $5,000 per
month or a fraction thereof, not to exceed $25,000.
(g) This section shall not apply to taxable years
beginning after December 31, 2026.
(h) For the purpose of this section:
"Net
income tax liability" means income tax liability reduced by all other
credits allowed under this chapter.
"Qualified
entity" means an entity with the principal purpose of facilitating and
enhancing the ship repair business in the State and that is involved in the
design and construction of a purpose-built floating drydock to be used by the
United States Navy in Pearl Harbor.
"Ship
repair industry costs" means capital expenditures, as used
in section 263 of the Internal Revenue Code and the regulations promulgated
thereunder, or capital expenditures for real property, fixtures, structures,
machinery, equipment, or capital assets that are paid or incurred in connection
with the construction of a purpose-built floating drydock; provided that the
ship repair industry costs shall not include amounts for which another credit
is claimed or any amounts received in any form from the State."]
SECTION 10. Act 261, Session Laws of Hawaii 2019, as amended by 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.] January 1, 2029."
PART III
SECTION 11. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 12. This Act shall take effect on July 1, 2050; provided that section 2 of this Act shall apply to taxable years beginning after December 31, 2026; provided further that on December 31, 2032, section 2 of this Act shall be repealed and section 235-55.6, Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day prior to the effective date of Act 163, Session Laws of Hawaii 2023; provided further that part II shall take effect on January 1, 2029.
Report Title:
Income Tax; Income Tax Brackets; Income Tax Rates; Child and Dependent Care Tax Credit; Renewable Energy Technologies Income Tax Credit; Capital Goods Excise Tax Credit; High Technology Business Investment Tax Credit; Renewable Fuels Production Tax Credit; Technology Infrastructure Renovation Tax Credit; Ship Repair Industry Tax Credit; Tax Credit for Research Activities; Repeal
Description:
PART I: Repeals certain future adjustments to income tax brackets. Changes income tax rates. Amends the child and dependent care tax credit by: (1) Changing the applicable percentage of the employment-related expenses for which the credit may be claimed to an unspecified percentage; (2) Providing for a disallowance period when there is a final administrative or judicial decision finding that the claim was due to fraud or disallowing the credit; and (3) Defining "adjusted gross income". Extends the repeal date for amendments made by Act 163, SLH 2023 to the child and dependent care tax credit, earned income tax credit, and food/excise tax credit to an unspecified date. PART II: Beginning 1/1/2029, repeals the following tax credits: Renewable Energy Technologies Income Tax Credit, Capital Goods Excise Tax Credit, High Technology Business Investment Tax Credit, Renewable Fuels Production Tax Credit, Technology Infrastructure Renovation Tax Credit, Ship Repair Industry Tax Credit, and Tax Credit for Research Activities. Effective 7/1/2050. (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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THE SENATE |
S.B. NO. |
3125 |
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THIRTY-THIRD LEGISLATURE, 2026 |
S.D. 1 |
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STATE OF HAWAII |
Proposed |
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A BILL FOR AN ACT
RELATING TO INCOME TAX.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Section 235-51, Hawaii Revised Statutes, is amended by amending subsections (a), (b), and (c) to read as follows:
"(a) There is hereby imposed on the taxable income of every:
(1) Taxpayer who files a joint return under section 235−93; and
(2) Surviving spouse,
a tax determined in accordance with the following table:
In the case of any taxable year beginning after December 31, 2017:
If the taxable income is: The tax shall be:
Not over $4,800 1.40% of taxable income
Over $4,800 but $67.00 plus 3.20% of
not over $9,600 excess over $4,800
Over $9,600 but $221.00 plus 5.50% of
not over $19,200 excess over $9,600
Over $19,200 but $749.00 plus 6.40% of
not over $28,800 excess over $19,200
Over $28,800 but $1,363.00 plus 6.80% of
not over $38,400 excess over $28,800
Over $38,400 but $2,016.00 plus 7.20% of
not over $48,000 excess over $38,400
Over $48,000 but $2,707.00 plus 7.60% of
not over $72,000 excess over $48,000
Over $72,000 but $4,531.00 plus 7.90% of
not over $96,000 excess over $72,000
Over $96,000 but $6,427.00 plus 8.25% of
not over $300,000 excess over $96,000
Over $300,000 but $23,257.00 plus 9.00% of
not over $350,000 excess over $300,000
Over $350,000 but $27,757.00 plus 10.00% of
not over $400,000 excess over $350,000
Over $400,000 $32,757.00 plus 11.00% of
excess over $400,000.
In the case of any taxable year beginning after December 31, 2024:
If the taxable income is: The tax shall be:
Not over $19,200 1.40% of taxable income
Over $19,200 but $269.00 plus 3.20% of
not over $28,800 excess over $19,200
Over $28,800 but $576.00 plus 5.50% of
not over $38,400 excess over $28,800
Over $38,400 but $1,104.00 plus 6.40% of
not over $48,000 excess over $38,400
Over $48,000 but $1,718.00 plus 6.80% of
not over $72,000 excess over $48,000
Over $72,000 but $3,350.00 plus 7.20% of
not over $96,000 excess over $72,000
Over $96,000 but $5,078.00 plus 7.60% of
not over $250,000 excess over $96,000
Over $250,000 but $16,782.00 plus 7.90% of
not over $350,000 excess over $250,000
Over $350,000 but $24,682.00 plus 8.25% of
not over $450,000 excess over $350,000
Over $450,000 but $32,932.00 plus 9.00% of
not over $550,000 excess over $450,000
Over $550,000 but $41,932.00 plus 10.00% of
not over $650,000 excess over $550,000
Over $650,000 $51,932.00 plus 11.00% of
excess over $650,000.
In the case of any taxable year beginning after December 31, 2026:
If the taxable income is: The tax shall be:
Not over $28,800 1.40% of taxable income
Over $28,800 but $403.00 plus 3.20% of
not over $38,400 excess over $28,800
Over $38,400 but $710.00 plus 5.50% of
not over $48,000 excess over $38,400
Over $48,000 but $1,238.00 plus 6.40% of
not over $72,000 excess over $48,000
Over $72,000 but $2,774.00 plus 6.80% of
not over $96,000 excess over $72,000
Over $96,000 but $4,406.00 plus 7.20% of
not over $250,000 excess over $96,000
Over $250,000 but $15,494.00 plus 7.60% of
not over $350,000 excess over $250,000
[Over
$350,000 but $23,094.00 plus 7.90% of
not
over $450,000 excess over $350,000
Over
$450,000 but $30,994.00 plus 8.25% of
not
over $550,000 excess over $450,000
Over
$550,000 but $39,244.00 plus 9.00% of
not
over $650,000 excess over $550,000
Over
$650,000 but $48,244.00 plus 10.00% of
not
over $800,000 excess over $650,000
Over
$800,000 $63,244.00 plus 11.00% of
excess over $800,000].
In the case of any taxable year beginning after December 31, 2028:
If the taxable income is: The tax shall be:
Not over $38,400 1.40% of taxable income
Over $38,400 but $538.00 plus 3.20% of
not over $48,000 excess over $38,400
Over $48,000 but $845.00 plus 5.50% of
not over $72,000 excess over $48,000
Over $72,000 but $2,165.00 plus 6.40% of
not over $96,000 excess over $72,000
Over $96,000 but $3,701.00 plus 6.80% of
not over $250,000 excess over $96,000
Over $250,000 but $14,173.00 plus 7.20% of
not over $350,000 excess over $250,000
[Over
$350,000 but $21,373.00 plus 7.60% of
not
over $450,000 excess over $350,000
Over
$450,000 but $28,973.00 plus 7.90% of
not
over $550,000 excess over $450,000
Over
$550,000 but $36,873.00 plus 8.25% of
not
over $650,000 excess over $550,000
Over
$650,000 but $45,123.00 plus 9.00% of
not
over $800,000 excess over $650,000
Over
$800,000 but $58,623.00 plus 10.00% of
not
over $950,000 excess over $800,000
Over
$950,000 $73,623.00 plus 11.00% of
excess
over $950,000].
(b) There is hereby imposed on the taxable income of every head of a household a tax determined in accordance with the following table:
In the case of any taxable year beginning after December 31, 2017:
If the taxable income is: The tax shall be:
Not over $3,600 1.40% of taxable income
Over $3,600 but $50.00 plus 3.20% of
not over $7,200 excess over $3,600
Over $7,200 but $166.00 plus 5.50% of
not over $14,400 excess over $7,200
Over $14,400 but $562.00 plus 6.40% of
not over $21,600 excess over $14,400
Over $21,600 but $1,022.00 plus 6.80% of
not over $28,800 excess over $21,600
Over $28,800 but $1,512.00 plus 7.20% of
not over $36,000 excess over $28,800
Over $36,000 but $2,030.00 plus 7.60% of
not over $54,000 excess over $36,000
Over $54,000 but $3,398.00 plus 7.90% of
not over $72,000 excess over $54,000
Over $72,000 but $4,820.00 plus 8.25% of
not over $225,000 excess over $72,000
Over $225,000 but $17,443.00 plus 9.00% of
not over $262,500 excess over $225,000
Over $262,500 but $20,818.00 plus 10.00% of
not over $300,000 excess over $262,500
Over $300,000 $24,568.00 plus 11.00% of
excess over $300,000.
In the case of any taxable year beginning after December 31, 2024:
If the taxable income is: The tax shall be:
Not over $14,400 1.40% of taxable income
Over $14,400 but $202.00 plus 3.20% of
not over $21,600 excess over $14,400
Over $21,600 but $432.00 plus 5.50% of
not over $28,800 excess over $21,600
Over $28,800 but $828.00 plus 6.40% of
not over $36,000 excess over $28,800
Over $36,000 but $1,289.00 plus 6.80% of
not over $54,000 excess over $36,000
Over $54,000 but $2,513.00 plus 7.20% of
not over $72,000 excess over $54,000
Over $72,000 but $3,809.00 plus 7.60% of
not over $187,500 excess over $72,000
Over $187,500 but $12,587.00 plus 7.90% of
not over $262,500 excess over $187,500
Over $262,500 but $18,512.00 plus 8.25% of
not over $337,500 excess over $262,500
Over $337,500 but $24,699.00 plus 9.00% of
not over $412,500 excess over $337,500
Over $412,500 but $31,449.00 plus 10.00% of
not over $487,500 excess over $412,500
Over $487,500 $38,949.00 plus 11.00% of
excess over $487,500.
In the case of any taxable year beginning after December 31, 2026:
If the taxable income is: The tax shall be:
Not over $21,600 1.40% of taxable income
Over $21,600 but $302.00 plus 3.20% of
not over $28,800 excess over $21,600
Over $28,800 but $533.00 plus 5.50% of
not over $36,000 excess over $28,800
Over $36,000 but $929.00 plus 6.40% of
not over $54,000 excess over $36,000
Over $54,000 but $2,081.00 plus 6.80% of
not over $72,000 excess over $54,000
Over $72,000 but $3,305.00 plus 7.20% of
not over $187,500 excess over $72,000
Over $187,500 but $11,621.00 plus 7.60% of
not over $262,500 excess over $187,500
[Over
$262,500 but $17,321.00 plus 7.90% of
not
over $337,500 excess over $262,500
Over
$337,500 but $23,246.00 plus 8.25% of
not
over $412,500 excess over $337,500
Over
$412,500 but $29,433.00 plus 9.00% of
not
over $487,500 excess over $412,500
Over
$487,500 but $36,183.00 plus 10.00% of
not
over $600,000 excess over $487,500
Over
$600,000 $47,433.00 plus 11.00% of
excess
over $600,000].
In the case of any taxable year beginning after December 31, 2028:
If the taxable income is: The tax shall be:
Not over $28,800 1.40% of taxable income
Over $28,800 but $403.00 plus 3.20% of
not over $36,000 excess over $28,800
Over $36,000 but $634.00 plus 5.50% of
not over $54,000 excess over $36,000
Over $54,000 but $1,624.00 plus 6.40% of
not over $72,000 excess over $54,000
Over $72,000 but $2,776.00 plus 6.80% of
not over $187,500 excess over $72,000
Over $187,500 but $10,630.00 plus 7.20% of
not over $262,500 excess over $187,500
[Over
$262,500 but $16,030.00 plus 7.60% of
not
over $337,500 excess over $262,500
Over
$337,500 but $21,730.00 plus 7.90% of
not
over $412,500 excess over $337,500
Over
$412,500 but $27,655.00 plus 8.25% of
not
over $487,500 excess over $412,500
Over
$487,500 but $33,842.00 plus 9.00% of
not
over $600,000 excess over $487,500
Over
$600,000 but $43,967.00 plus 10.00% of
not
over $712,500 excess over $600,000
Over
$712,500 $55,217.00 plus 11.00% of
excess
over $712,500].
(c) There is hereby imposed on the taxable income of (1) every unmarried individual (other than a surviving spouse, or the head of a household) and (2) on the taxable income of every married individual who does not make a single return jointly with the individual's spouse under section 235-93 a tax determined in accordance with the following table:
In the case of any taxable year beginning after December 31, 2017:
If the taxable income is: The tax shall be:
Not over $2,400 1.40% of taxable income
Over $2,400 but $34.00 plus 3.20% of
not over $4,800 excess over $2,400
Over $4,800 but $110.00 plus 5.50% of
not over $9,600 excess over $4,800
Over $9,600 but $374.00 plus 6.40% of
not over $14,400 excess over $9,600
Over $14,400 but $682.00 plus 6.80% of
not over $19,200 excess over $14,400
Over $19,200 but $1,008.00 plus 7.20% of
not over $24,000 excess over $19,200
Over $24,000 but $1,354.00 plus 7.60% of
not over $36,000 excess over $24,000
Over $36,000 but $2,266.00 plus 7.90% of
not over $48,000 excess over $36,000
Over $48,000 but $3,214.00 plus 8.25% of
not over $150,000 excess over $48,000
Over $150,000 but $11,629.00 plus 9.00% of
not over $175,000 excess over $150,000
Over $175,000 but $13,879.00 plus 10.00% of
not over $200,000 excess over $175,000
Over $200,000 $16,379.00 plus 11.00% of
excess over $200,000.
In the case of any taxable year beginning after December 31, 2024:
If the taxable income is The tax shall be:
Not over $9,600 1.40% of taxable income
Over $9,600 but $134.00 plus 3.20% of
not over $14,400 excess over $9,600
Over $14,400 but $288.00 plus 5.50% of
not over $19,200 excess over $14,400
Over $19,200 but $552.00 plus 6.40% of
not over $24,000 excess over $19,200
Over $24,000 but $859.00 plus 6.80% of
not over $36,000 excess over $24,000
Over $36,000 but $1,675.00 plus 7.20% of
not over $48,000 excess over $36,000
Over $48,000 but $2,539.00 plus 7.60% of
not over $125,000 excess over $48,000
Over $125,000 but $8,391.00 plus 7.90% of
not over $175,000 excess over $125,000
Over $175,000 but $12,341.00 plus 8.25% of
not over $225,000 excess over $175,000
Over $225,000 but $16,466.00 plus 9.00% of
not over $275,000 excess over $225,000
Over $275,000 but $20,966.00 plus 10.00% of
not over $325,000 excess over $275,000
Over $325,000 $25,966.00 plus 11.00% of
excess over $325,000.
In the case of any taxable year beginning after December 31, 2026:
If the taxable income is: The tax shall be:
Not over $14,400 1.40% of taxable income
Over $14,400 but $202.00 plus 3.20% of
not over $19,200 excess over $14,400
Over $19,200 but $355.00 plus 5.50% of
not over $24,000 excess over $19,200
Over $24,000 but $619.00 plus 6.40% of
not over $36,000 excess over $24,000
Over $36,000 but $1,387.00 plus 6.80% of
not over $48,000 excess over $36,000
Over $48,000 but $2,203.00 plus 7.20% of
not over $125,000 excess over $48,000
Over $125,000 but $7,747.00 plus 7.60% of
not over $175,000 excess over $125,000
[Over
$175,000 but $11,547.00 plus 7.90% of
not
over $225,000 excess over $175,000
Over
$225,000 but $15,497.00 plus 8.25% of
not
over $275,000 excess over $225,000
Over
$275,000 but $19,622.00 plus 9.00% of
not
over $325,000 excess over $275,000
Over
$325,000 but $24,122.00 plus 10.00% of
not
over $400,000 excess over $325,000
Over
$400,000 $31,622.00 plus 11.00% of
excess
over $400,000].
In the case of any taxable year beginning after December 31, 2028:
If the taxable income is: The tax shall be:
Not over $19,200 1.40% of taxable income
Over $19,200 but $269.00 plus 3.20% of
not over $24,000 excess over $19,200
Over $24,000 but $422.00 plus 5.50% of
not over $36,000 excess over $24,000
Over $36,000 but $1,082.00 plus 6.40% of
not over $48,000 excess over $36,000
Over $48,000 but $1,850.00 plus 6.80% of
not over $125,000 excess over $48,000
Over $125,000 but $7,086.00 plus 7.20% of
not over $175,000 excess over $125,000
[Over
$175,000 but $10,686.00 plus 7.60% of
not
over $225,000 excess over $175,000
Over
$225,000 but $14,486.00 plus 7.90% of
not
over $275,000 excess over $225,000
Over
$275,000 but $18,436.00 plus 8.25% of
not
over $325,000 excess over $275,000
Over
$325,000 but $22,561.00 plus 9.00% of
not
over $400,000 excess over $325,000
Over
$400,000 but $29,311.00 plus 10.00% of
not
over $475,000 excess over $400,000
Over
$475,000 $36,811.00 plus 11.00% of
excess
over $475,000]."
SECTION 2. Section 235-55.6, Hawaii Revised Statutes, is amended to read as follows:
"§235-55.6 Expenses for household and dependent care services necessary for gainful employment. (a) Allowance of credit.
(1) In general. For each resident taxpayer, who files an individual income tax return for a taxable year, and who is not claimed or is not otherwise eligible to be claimed as a dependent by another taxpayer for federal or Hawaii state individual income tax purposes, who maintains a household which includes as a member one or more qualifying individuals (as defined in subsection (b)(1)), there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the applicable percentage of the employment-related expenses (as defined in subsection (b)(2)) paid by the individual during the taxable year. If the tax credit claimed by a resident taxpayer exceeds the amount of income tax payment due from the resident taxpayer, the excess of the credit over payments due shall be refunded to the resident taxpayer; provided that tax credit properly claimed by a resident individual who has no income tax liability shall be paid to the resident individual; and provided further that no refunds or payment on account of the tax credit allowed by this section shall be made for amounts less than $1.
(2) Applicable percentage. For purposes of paragraph
(1), the taxpayer's applicable percentage shall be [determined as follows:
Adjusted gross income Applicable
percentage
Not over $25,000 25%
Over $25,000 but 24%
not over $30,000
Over $30,000 but 23%
not over $35,000
Over $35,000 but 22%
not over $40,000
Over $40,000 but 21%
not over $45,000
Over $45,000 but 20%
not over $50,000
Over $50,000 15%.]
equal to per cent reduced by one percentage point for each $3,000, or fraction thereof, by which the taxpayer's adjusted gross income exceeds $ ; provided that the applicable percentage shall not be reduced below fifteen per cent.
(b) Definitions of qualifying individual and employment‑related expenses. For purposes of this section:
(1) Qualifying individual. The term "qualifying individual" means:
(A) A dependent of the taxpayer who is under the age of thirteen and with respect to whom the taxpayer is entitled to a deduction under section 235‑54(a),
(B) A dependent of the taxpayer who is physically or mentally incapable of caring for oneself, or
(C) The spouse of the taxpayer, if the spouse is physically or mentally incapable of caring for oneself.
(2) Employment-related expenses.
(A) In general. The term "employment-related expenses" means amounts paid for the following expenses, but only if such expenses are incurred to enable the taxpayer to be gainfully employed for any period for which there are one or more qualifying individuals with respect to the taxpayer:
(i) Expenses for household services, and
(ii) Expenses for the care of a qualifying individual.
Such term shall not include any amount paid for services outside the taxpayer's household at a camp where the qualifying individual stays overnight.
(B) Exception. Employment-related expenses described in subparagraph (A) which are incurred for services outside the taxpayer's household shall be taken into account only if incurred for the care of:
(i) A qualifying individual described in paragraph (1)(A), or
(ii) A qualifying individual (not described in paragraph (1)(A)) who regularly spends at least eight hours each day in the taxpayer's household.
(C) Dependent care centers. Employment-related expenses described in subparagraph (A) which are incurred for services provided outside the taxpayer's household by a dependent care center (as defined in subparagraph (D)) shall be taken into account only if:
(i) Such center complies with all applicable laws, rules, and regulations of this State, if the center is located within the jurisdiction of this State; or
(ii) Such center complies with all applicable laws, rules, and regulations of the jurisdiction in which the center is located, if the center is located outside the State; and
(iii) The requirements of subparagraph (B) are met.
(D) Dependent care center defined. For purposes of this paragraph, the term "dependent care center" means any facility which:
(i) Provides care for more than six individuals (other than individuals who reside at the facility), and
(ii) Receives a fee, payment, or grant for providing services for any of the individuals (regardless of whether such facility is operated for profit).
(c) Dollar limit on amount creditable. The amount of the employment-related expenses incurred during any taxable year which may be taken into account under subsection (a) shall not exceed:
(1) $10,000 if there is one qualifying individual with respect to the taxpayer for such taxable year, or
(2) $20,000 if there are two or more qualifying individuals with respect to the taxpayer for such taxable year.
The amount determined under paragraph (1) or (2) (whichever is applicable) shall be reduced by the aggregate amount excludable from gross income under section 129 (with respect to dependent care assistance programs) of the Internal Revenue Code for the taxable year.
(d) Earned income limitation.
(1) In general. Except as otherwise provided in this subsection, the amount of the employment-related expenses incurred during any taxable year which may be taken into account under subsection (a) shall not exceed:
(A) In the case of an individual who is not married at the close of such year, such individual's earned income for such year, or
(B) In the case of an individual who is married at the close of such year, the lesser of such individual's earned income or the earned income of the individual's spouse for such year.
(2) Special rule for spouse who is a student or incapable of caring for oneself. In the case of a spouse who is a student or a qualified individual described in subsection (b)(1)(C), for purposes of paragraph (1), such spouse shall be deemed for each month during which such spouse is a full-time student at an educational institution, or is such a qualifying individual, to be gainfully employed and to have earned income of not less than:
(A) $200 if subsection (c)(1) applies for the taxable year, or
(B) $400 if subsection (c)(2) applies for the taxable year.
In the case of any husband and wife, this paragraph shall apply with respect to only one spouse for any one month.
(e) Special rules. For purposes of this section:
(1) Maintaining household. An individual shall be treated as maintaining a household for any period only if over half the cost of maintaining the household for the period is furnished by the individual (or, if the individual is married during the period, is furnished by the individual and the individual's spouse).
(2) Married couples must file joint return. If the taxpayer is married at the close of the taxable year, the credit shall be allowed under subsection (a) only if the taxpayer and the taxpayer's spouse file a joint return for the taxable year.
(3) Marital status. An individual legally separated from the individual's spouse under a decree of divorce or of separate maintenance shall not be considered as married.
(4) Certain married individuals living apart. If:
(A) An individual who is married and who files a separate return:
(i) Maintains as the individual's home a household that constitutes for more than one-half of the taxable year the principal place of abode of a qualifying individual, and
(ii) Furnishes over half of the cost of maintaining the household during the taxable year, and
(B) During the last six months of the taxable year the individual's spouse is not a member of the household, the individual shall not be considered as married.
(5) Special dependency test in case of divorced parents, etc. If:
(A) Paragraph (2) or (4) of section 152(e) of the Internal Revenue Code of 1986, as amended, applies to any child with respect to any calendar year, and
(B) The child is under age thirteen or is physically or mentally incompetent of caring for the child's self,
in the case of any taxable year beginning in the calendar year, the child shall be treated as a qualifying individual described in subsection (b)(1)(A) or (B) (whichever is appropriate) with respect to the custodial parent (within the meaning of section 152(e)(1) of the Internal Revenue Code of 1986, as amended), and shall not be treated as a qualifying individual with respect to the noncustodial parent.
(6) Payments to related individuals. No credit shall be allowed under subsection (a) for any amount paid by the taxpayer to an individual:
(A) With respect to whom, for the taxable year, a deduction under section 151(c) of the Internal Revenue Code of 1986, as amended (relating to deduction for personal exemptions for dependents) is allowable either to the taxpayer or the taxpayer's spouse, or
(B) Who is a child of the taxpayer (within the meaning of section 151(c)(3) of the Internal Revenue Code of 1986, as amended) who has not attained the age of nineteen at the close of the taxable year.
For purposes of this paragraph, the term "taxable year" means the taxable year of the taxpayer in which the service is performed.
(7) Student. The term "student" means an individual who, during each of five calendar months during the taxable year, is a full-time student at an educational organization.
(8) Educational organization. The term "educational organization" means a school operated by the department of education under chapter 302A, an educational organization described in section 170(b)(1)(A)(ii) of the Internal Revenue Code of 1986, as amended, or a university, college, or community college.
(9) Identifying information required with respect to service provider. No credit shall be allowed under subsection (a) for any amount paid to any person unless:
(A) The name, address, taxpayer identification number, and general excise tax license number of the person are included on the return claiming the credit,
(B) If the person is located outside the State, the name, address, and taxpayer identification number, if any, of the person and a statement indicating that the service provider is located outside the State and that the general excise tax license and, if applicable, the taxpayer identification numbers are not required, or
(C) If the person is an organization described in section 501(c)(3) of the Internal Revenue Code and exempt from tax under section 501(a) of the Internal Revenue Code, the name and address of the person are included on the return claiming the credit.
In the case of a failure to provide the information required under the preceding sentence, the preceding sentence shall not apply if it is shown that the taxpayer exercised due diligence in attempting to provide the information so required.
(f) No credit shall be allowed under this section for any taxable year in the disallowance period. For purposes of this subsection, the disallowance period is:
(1) The period of ten taxable years after the most recent taxable year for which there was a final administrative or judicial decision that the taxpayer's claim for credit under this section was due to fraud; and
(2) The period of two taxable years after the most recent taxable year for which there was a final administrative or judicial decision disallowing the taxpayer's claim for credit.
[(f)] (g) Rules. The director
of taxation shall prescribe such rules under chapter 91 as may be necessary to
carry out the purposes of this section.
(h) As used in this section, "adjusted gross income" means adjusted gross income as defined by the Internal Revenue Code of 1986, as amended."
SECTION 3. Act 163, Session Laws of Hawaii 2023, is amended by amending section 5 to read as follows:
"This Act, upon its approval, shall apply
to taxable years beginning after December 31, 2022; provided that on
December 31, [2027,] , this Act shall be
repealed and sections 235-55.6(c), 235-55.75(a), and 235‑55.85(b), Hawaii
Revised Statutes, shall be reenacted in the form in which they read on the day
prior to the effective date of this Act."
PART II
SECTION 4. Section 235-12.5, Hawaii Revised Statutes, is repealed.
["§235-12.5 Renewable energy
technologies; income tax credit. (a) Each individual or corporate
taxpayer that files an individual or corporate net income tax return for a
taxable year may claim a tax credit under this section against the Hawaii state
individual or corporate net income tax. The tax credit may be claimed for
every eligible renewable energy technology system that is installed and placed
in service in the State by a taxpayer during the taxable year. The tax credit
may be claimed as follows:
(1) For each
solar energy system: thirty-five per cent of the actual cost or the cap amount
determined in subsection (b); provided that:
(A) For taxable years beginning
after December 31, 2019, and except as provided in subparagraphs (B) and (C),
no tax credit may be claimed for a solar energy system that is five megawatts
in total output capacity or larger and requires a power purchase agreement
approved by the public utilities commission;
(B) A solar energy system that is
five megawatts in total output capacity or larger, installed and placed in
service pursuant to a power purchase agreement approved or pending approval by
a decision and order by the public utilities commission prior to December 31,
2019, shall continue to receive a tax credit equal to thirty-five per cent of
the actual cost, or $500,000 per solar energy system that has a total output
capacity of at least one thousand kilowatts per system of direct current,
whichever is less; and
(C) For each solar energy system
integrated with a pumped hydroelectric energy storage system, the tax credit
may be claimed for thirty-five per cent of the actual cost or the cap amount
determined in subsection (b), whichever is less; provided that applicable
project approval filings have been made to the public utilities commission by
December 31, 2021; or
(2) For each wind-powered energy system:
twenty per cent of the actual cost or the cap amount determined in subsection
(b), whichever is less;
provided further that multiple owners of a single
system shall be entitled to a single tax credit; and provided further that the
tax credit shall be apportioned between the owners in proportion to their
contribution to the cost of the system.
In the case of a partnership, S corporation,
estate, or trust, the tax credit allowable is for every eligible renewable
energy technology system that is installed and placed in service in the State
by the entity. The cost upon which the tax credit is computed shall be
determined at the entity level. Distribution and share of credit shall be
determined pursuant to administrative rule.
(b) The amount of credit allowed for each
eligible renewable energy technology system shall not exceed the applicable cap
amount, which is determined as follows:
(1) If the primary purpose of the solar
energy system is to use energy from the sun to heat water for household use,
then the cap amounts shall be:
(A) $2,250 per system for
single-family residential property;
(B) $350 per unit per system for
multi-family residential property; and
(C) $250,000 per system for
commercial property;
(2) For all other solar energy systems, the
cap amounts shall be:
(A) $5,000 per system for
single-family residential property; provided that if all or a portion of
the system is used to fulfill the substitute renewable energy technology
requirement pursuant to section 196-6.5(a)(3), the credit shall be reduced by
thirty-five per cent of the actual system cost or $2,250, whichever is less;
(B) $350 per unit per system for
multi-family residential property; and
(C) $500,000 per system for
commercial property; and
(3) For all wind-powered energy systems,
the cap amounts shall be:
(A) $1,500 per system for
single-family residential property; provided that if all or a portion of
the system is used to fulfill the substitute renewable energy technology
requirement pursuant to section 196-6.5(a)(3), the credit shall be reduced by
twenty per cent of the actual system cost or $1,500, whichever is less;
(B) $200 per unit per system for
multi-family residential property; and
(C) $500,000 per system for
commercial property.
(c) For the purposes of this section:
"Actual cost" means costs related
to the renewable energy technology systems under subsection (a), including
accessories and installation, but not including the cost of consumer incentive
premiums unrelated to the operation of the system or offered with the sale of
the system and costs for which another credit is claimed under this chapter.
"Household use" means any use to
which heated water is commonly put in a residential setting, including
commercial application of those uses.
"Renewable energy technology
system" means a new system that captures and converts a renewable source
of energy, such as solar or wind energy, into:
(1) A usable source of thermal or
mechanical energy;
(2) Electricity; or
(3) Fuel.
"Solar or wind energy system"
means any identifiable facility, equipment, apparatus, or the like that
converts solar or wind energy to useful thermal or electrical energy for
heating, cooling, or reducing the use of other types of energy that are
dependent upon fossil fuel for their generation.
(d) For taxable years beginning after
December 31, 2005, the dollar amount of any utility rebate shall be deducted
from the cost of the qualifying system and its installation before applying the
state tax credit.
(e) The director of taxation shall prepare
any forms that may be necessary to claim a tax credit under this section,
including forms identifying the technology type of each tax credit claimed
under this section, whether for solar or wind. The director may also require
the taxpayer to furnish reasonable information to ascertain the validity of the
claim for credit made under this section and may adopt rules necessary to
effectuate the purposes of this section pursuant to chapter 91.
(f) 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, unless otherwise elected by the taxpayer
pursuant to subsection (g) or (h). 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 subsection shall constitute a waiver
of the right to claim the credit.
(g) For solar energy systems, a taxpayer
may elect to reduce the eligible credit amount by thirty per cent and if this
reduced amount exceeds the amount of income tax payment due from the taxpayer,
the excess of the credit amount over payments due shall be refunded to the
taxpayer; provided that tax credit amounts properly claimed by a taxpayer who
has no income tax liability shall be paid to the taxpayer; and provided further
that no refund on account of the tax credit allowed by this section shall be
made for amounts less than $1.
The election required by this subsection
shall be made in a manner prescribed by the director on the taxpayer's return
for the taxable year in which the system is installed and placed in service. A
separate election may be made for each separate system that generates a
credit. An election once made is irrevocable.
(h) Notwithstanding subsection (g), for any
renewable energy technology system, an individual taxpayer may elect to have
any excess of the credit over payments due refunded to the taxpayer, if:
(1) All of the taxpayer's income is exempt
from taxation under section 235-7(a)(2) or (3); or
(2) The taxpayer's adjusted gross income is
$20,000 or less (or $40,000 or less if filing a tax return as married filing
jointly);
provided that tax credits properly claimed by a
taxpayer who has no income tax liability shall be paid to the taxpayer; and
provided further that no refund on account of the tax credit allowed by this
section shall be made for amounts less than $1.
A husband and wife who do not file a joint
tax return shall only be entitled to make this election to the extent that they
would have been entitled to make the election had they filed a joint tax
return.
The election required by this subsection
shall be made in a manner prescribed by the director on the taxpayer's return
for the taxable year in which the system is installed and placed in service. A
separate election may be made for each separate system that generates a
credit. An election once made is irrevocable.
(i) No taxpayer shall be allowed a credit
under this section for the portion of the renewable energy technology system
required by section 196-6.5 that is installed and placed in service on any
newly constructed single-family residential property authorized by a building
permit issued on or after January 1, 2010.
(j) To the extent feasible, using existing
resources to assist the energy-efficiency policy review and evaluation, the
department shall assist with data collection on the following for each taxable
year:
(1) The number of renewable energy
technology systems that have qualified for a tax credit during the calendar
year by:
(A) Technology type; and
(B) Taxpayer type (corporate and
individual); and
(2) The total cost of the tax credit to the
State during the taxable year by:
(A) Technology type; and
(B) Taxpayer type.
(k) This section shall apply to eligible
renewable energy technology systems that are installed and placed in service on
or after July 1, 2009."]
SECTION 5. Section 235-110.7, Hawaii Revised Statutes, is repealed.
["§235-110.7 Capital goods
excise tax credit. (a) There shall be allowed to each taxpayer
subject to the tax imposed by this chapter a capital goods excise tax credit,
which 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.
The amount of
the tax credit shall be four per cent of the cost of the eligible depreciable
tangible personal property used by the taxpayer in a trade or business and
placed in service within Hawaii after December 31, 2009.
In the case
of a partnership, S corporation, estate, or trust, the tax credit allowable is
for eligible depreciable tangible personal property that is placed in service
by the entity. The cost upon which the tax credit is computed shall be
determined at the entity level. Distribution and share of credit shall be
determined by rules.
In the case
of eligible depreciable tangible personal property for which a credit for sales
or use taxes paid to another state is allowable under section 238-3(i), the
amount of the tax credit allowed under this section shall not exceed the amount
of use tax actually paid under chapter 238 relating to the tangible personal
property.
If a
deduction is taken under section 179 (with respect to election to expense
certain depreciable business assets) of the Internal Revenue Code of 1954, as
amended, no tax credit shall be allowed for that portion of the cost of
property for which the deduction was taken.
(b) If the
capital goods excise tax credit allowed under subsection (a) exceeds the
taxpayer's net income tax liability, the excess of credit over liability shall
be refunded to the taxpayer; provided that no refunds or payment on account of
the tax credit allowed by this section shall be made for amounts less than $1.
All claims
for tax credits under this section, including any amended claims, must be filed
on or before the end of the twelfth month following the close of the taxable
year for which the credits may be claimed. Failure to comply with the
foregoing provision shall constitute a waiver of the right to claim the credit.
(c) Application for the capital goods
excise tax credit shall be upon forms provided by the department of taxation.
(d) Sections 47 (with respect to
dispositions of section 38 property and the recapture percentages) of the
Internal Revenue Code of 1954, as amended, as of December 31, 1984, and 280F as
operative for this chapter (with respect to limitation on investment tax credit
and depreciation for luxury automobiles; limitation where certain property used
for personal purposes) of the Internal Revenue Code of 1954, as amended, shall
be operative for purposes of this section.
(e) As used
in this section, the definition of section 38 property (with respect to
investment in depreciable tangible personal property) as defined by section
48(a)(1)(A), (a)(1)(B), (a)(3), (a)(4), (a)(7), (a)(8), (a)(10)(A), (b), (c),
(f), (l), (m), and (s) of the Internal Revenue Code of 1954, as amended as of
December 31, 1984, is operative for the purposes of this section only.
(f) As used
in this section:
"Cost"
means the:
(1) Actual invoice price of the tangible
personal property; or
(2) Basis from which depreciation is taken
under section 167 (with respect to depreciation) or from which a deduction may
be taken under section 168 (with respect to accelerated cost recovery system)
of the Internal Revenue Code of 1954, as amended,
whichever is less.
"Eligible
depreciable tangible personal property" is section 38 property as defined
by the operative provisions of section 48 and having a depreciable life under
section 167 or for which a deduction may be taken under section 168 of the
Internal Revenue Code of 1954, as amended.
"Placed
in service" means the earliest of the following taxable years:
(1) The
taxable year in which, under the:
(A) Taxpayer's
depreciation practice, the period for depreciation; or
(B) Accelerated
cost recovery system, a claim for recovery allowances,
with respect to the property begins; or
(2) The
taxable year in which the property is placed in a condition or state of
readiness and availability for a specifically assigned function.
"Purchase"
means an acquisition of property.
"Tangible
personal property" means tangible personal property that is placed in
service within Hawaii after December 31, 1987, and the purchase or importation
of which resulted in a transaction that was subject to the imposition and
payment of tax at the rate of four per cent under chapter 237 or 238.
"Tangible personal property" does not include tangible personal
property that is an integral part of a building or structure or tangible
personal property used in a foreign-trade zone, as defined under chapter 212."]
SECTION 6. Section 235-110.9, Hawaii Revised Statutes, is repealed.
["§235-110.9 High technology
business investment tax credit. (a) There shall be allowed to each
taxpayer subject to the taxes imposed by this chapter a high technology
business investment 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 investment was made and the following four years provided the credit
is properly claimed. The tax credit shall be as follows:
(1) In the year the investment was made,
thirty-five per cent;
(2) In the first year following the year in
which the investment was made, twenty-five per cent;
(3) In the second year following the
investment, twenty per cent;
(4) In the third year following the
investment, ten per cent; and
(5) In the fourth year following the
investment, ten per cent;
of the investment made by the taxpayer in each
qualified high technology business, up to a maximum allowed credit in the year
the investment was made, $700,000; in the first year following the year in
which the investment was made, $500,000; in the second year following the year
in which the investment was made, $400,000; in the third year following the
year in which the investment was made, $200,000; and in the fourth year
following the year in which the investment was made, $200,000.
(b) The credit allowed under this
section shall be claimed against the net income tax liability for the taxable
year. For the purpose of this section, "net income tax liability"
means net income tax liability reduced by all other credits allowed under this
chapter.
(c) If the tax credit under this section
exceeds the taxpayer's income tax liability for any of the five years that the
credit is taken, the excess of the tax credit over liability may be used as a
credit against the taxpayer's income tax liability in subsequent years until
exhausted. Every claim, including amended claims, for a tax credit under this
section 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 the foregoing provision shall constitute a waiver of the right to claim
the credit.
(d) If at the close of any taxable year in
the five-year period in subsection (a):
(1) The business no longer qualifies as a
qualified high technology business;
(2) The business or an interest in the
business has been sold by the taxpayer investing in the qualified high
technology business; or
(3) The taxpayer has withdrawn the
taxpayer's investment wholly or partially from the qualified high technology
business;
the credit claimed under this section shall be
recaptured. The recapture shall be equal to ten per cent of the amount of the
total tax credit claimed under this section in the preceding two taxable
years. The amount of the credit recaptured shall apply only to the investment
in the particular qualified high technology business that meets the
requirements of paragraph (1), (2), or (3). The recapture provisions of this
subsection shall not apply to a tax credit claimed for a qualified high
technology business that does not fall within the provisions of paragraph (1),
(2), or (3). The amount of the recaptured tax credit determined under this
subsection shall be added to the taxpayer's tax liability for the taxable year
in which the recapture occurs under this subsection.
(e) Every taxpayer, before March 31 of each
year in which an investment in a qualified high technology business was made in
the previous taxable year, shall submit a written, certified statement to the
director of taxation identifying:
(1) Qualified investments, 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.
(f) The department shall:
(1) Maintain records of the names and
addresses of the taxpayers claiming the credits under this section and the
total amount of the qualified investment costs upon which the tax credit is
based;
(2) Verify the nature and amount of the
qualifying investments;
(3) Total all qualifying and cumulative
investments that the department certifies; and
(4) Certify the amount of the tax credit
for each taxable year and cumulative amount of the tax credit.
Upon each determination made under this
subsection, the department shall issue a certificate to the taxpayer verifying
information submitted to the department, including qualifying investment
amounts, the credit amount certified for each taxable year, and the cumulative
amount of the tax credit during the credit period. The taxpayer shall file the
certificate with the taxpayer's tax return with the department.
The director of taxation may assess and
collect a fee to offset the costs of certifying tax credits claims under this
section. All fees collected under this section shall be deposited into the tax
administration special fund established under section 235-20.5.
(g) As used in this section:
"Investment tax credit allocation
ratio" means, with respect to a taxpayer that has made an investment in a
qualified high technology business, the ratio of:
(1) The amount of the credit under this
section that is, or is to be, received by or allocated to the taxpayer over the
life of the investment, as a result of the investment; to
(2) The amount of the investment in the
qualified high technology business.
"Qualified high technology
business" means a business, employing or owning capital or property, or
maintaining an office, in this State; provided that:
(1) More than fifty per cent of its total
business activities are qualified research; and provided further that the
business conducts more than seventy-five per cent of its qualified research in
this State; or
(2) More than seventy-five per cent of its
gross income is derived from qualified research; and provided further that this
income is received from:
(A) Products sold from,
manufactured in, or produced in this State; or
(B) Services performed in this
State.
"Qualified research" means the
same as defined in section 235-7.3.
(h) Common law principles, including the
doctrine of economic substance and business purpose, shall apply to any
investment. There exists a presumption that a transaction satisfies the
doctrine of economic substance and business purpose to the extent that the
special allocation of the high technology business tax credit has an investment
tax credit ratio of 1.5 or less of credit for every dollar invested.
Transactions for which an investment tax
credit allocation ratio greater than 1.5 but not more than 2.0 of credit for
every dollar invested and claimed may be reviewed by the department for
applicable doctrines of economic substance and business purpose.
Businesses claiming a tax credit for
transactions with investment tax credit allocation ratios greater than 2.0 of
credit for every dollar invested shall substantiate economic merit and business
purpose consistent with this section.
(i) For investments made on or after May 1,
2009, notwithstanding any other law to the contrary, no allocations, special or
otherwise, of credits under this section may exceed the amount of the
investment made by the taxpayer ultimately claiming this credit; and investment
tax credit allocation ratios greater than 1.0 of credit for every dollar
invested shall not be allowed. In addition, the credit shall be allowed only
in accordance with subsection (a).
(j) This section shall not apply to taxable
years beginning after December 31, 2010."]
SECTION 7. Section 235-110.32, Hawaii Revised Statutes, is repealed.
["[§235-110.32] Renewable fuels
production tax credit. (a) Each year during the credit period,
there shall be allowed to each taxpayer subject to the taxes imposed by this
chapter a renewable fuels production tax credit that shall be applied to the
taxpayer's net income tax liability, if any, imposed by this chapter for the
taxable year in which the credit is properly claimed.
For each taxpayer producing renewable fuels,
the annual dollar amount of the renewable fuels
production tax credit during the ten-year credit period shall be equal to
20 cents per seventy-six thousand British thermal units
of renewable fuels using the lower heating value sold for distribution in
the State; provided that the taxpayer's production of renewable fuels is not
less than two billion five hundred million British thermal units of renewable
fuels per calendar year; provided further that the amount of the tax credit
claimed under this section by a taxpayer shall not exceed $3,500,000 per
taxable year; provided further that the tax credit shall only be claimed for
fuels with lifecycle emissions below that of fossil fuels. No other tax credit
may be claimed under this chapter for the costs incurred to produce the
renewable fuels that are used to properly claim a tax credit under this section
for the taxable year.
Each taxpayer, together with all of its
related entities as determined under section 267(b) of the Internal Revenue
Code and all business entities under common control, as determined under
sections 414(b), 414(c), and 1563(a) of the Internal Revenue Code, shall not be
eligible for more than a single ten-year credit period.
(b) In the case of a partnership, S
corporation, estate, or trust, distribution and share of the renewable fuels
production tax credit shall be determined pursuant to section 704(b) (with
respect to a partner's distributive share) of the Internal Revenue Code of
1986, as amended. For a fiscal year taxpayer, the taxpayer shall report the
credit in the taxable year in which the calendar year end is included.
(c) No later than thirty days following the
close of the calendar year, every taxpayer claiming a credit under this section
shall complete and file an independent, third-party certified statement, at the
taxpayer's sole expense, with and in the form prescribed by the Hawaii state
energy office, providing the following information:
(1) The type, quantity, and British thermal
unit value, using the lower heating value, of each qualified fuel, broken down
by the type of fuel, produced and sold during the previous calendar year;
(2) The feedstock used for each type of
qualified fuel;
(3) The proposed total amount of credit to
which the taxpayer is entitled for each calendar year and the cumulative amount
of the tax credit the taxpayer received during the credit period;
(4) The number of full-time and number of
part-time employees of the facility and those employees' states of residency,
totaled per state;
(5) The number and location of all
renewable fuel production facilities within and outside of the State; and
(6) The lifecycle greenhouse gas emissions
per British thermal units for each type of qualified fuel produced.
(d) Within thirty calendar days after the
due date of the statement required under subsection (c), the Hawaii state
energy office shall:
(1) Acknowledge, in writing, receipt of the
statement;
(2) Issue a certificate to the taxpayer
reporting the amount of renewable fuels produced and sold, the amount of credit
that the taxpayer is entitled to claim for the previous calendar year, and the
cumulative amount of the tax credit during the credit period; and
(3) Provide the taxpayer with a
determination of whether the lifecycle greenhouse gas emissions for each type
of qualified fuel produced is lower than that of fossil fuels.
(e) The taxpayer shall file the certificate
issued under subsection (d) with the taxpayer's tax return with the department
of taxation. The director of taxation may audit and adjust the certification
to conform to the facts.
(f) The total amount of tax credits allowed
under this section shall not exceed $20,000,000 for all eligible taxpayers in
any calendar year. In the event that the credit claims under this section
exceed $20,000,000 for all eligible taxpayers in any given calendar year, the
$20,000,000 shall be divided between all eligible taxpayers for that year in
proportion to the total amount of renewable fuels produced by all eligible
taxpayers. Upon reaching $20,000,000 in the aggregate, the Hawaii state energy
office shall immediately discontinue issuing certificates and notify the
department of taxation. In no instance shall the total dollar amount of
certificates issued exceed $20,000,000 per calendar year.
(g) Notwithstanding any other law to the
contrary, the information collected and compiled by the Hawaii state energy
office under subsections (c) and (d) for the purposes of the renewable fuels
production tax credit shall be available for public inspection and
dissemination, subject to chapter 92F.
(h) If the credit under this section
exceeds the taxpayer's net income tax liability, the excess of the credit over
liability may be used as a credit against the taxpayer's net income tax
liability in subsequent years until exhausted, unless otherwise elected by the
taxpayer pursuant to subsections (i) or (j). All claims for a credit under
this section shall be properly 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 the foregoing provision or to provide the certified
statement required under subsection (c) shall constitute a waiver of the right
to claim the credit.
(i) A taxpayer may elect to reduce the
eligible credit amount by thirty per cent and if this reduced amount exceeds
the amount of income tax payment due from the taxpayer, the excess of the
credit amount over payments due shall be refunded to the taxpayer; provided
that tax credit amounts properly claimed by a taxpayer who has no income tax
liability shall be paid to the taxpayer; provided further that no refund on
account of the tax credit allowed by this section shall be made for amounts
less than $1.
The election required by this subsection
shall be made in a manner prescribed by the director on the taxpayer's return
for the taxable year in which the credit is claimed. An election once made is
irrevocable.
(j) Notwithstanding subsection (i), an
individual taxpayer may elect to have any excess of the credit over payments
due refunded to the taxpayer, if:
(1) All of the taxpayer's income is exempt
from taxation under section 235-7(a)(2) or (3); or
(2) The taxpayer's adjusted gross income is
$20,000 or less (or $40,000 or less if filing a tax return as married filing
jointly);
provided that tax credits properly claimed by a
taxpayer who has no income tax liability shall be paid to the taxpayer;
provided further that no refund on account of the tax credit allowed by this
section shall be made for amounts less than $1.
A married couple who does not file a joint
tax return shall only be entitled to make this election to the extent that they
would have been entitled to make the election had they filed a joint tax
return.
The election required by this subsection
shall be made in a manner prescribed by the director on the taxpayer's return
for the taxable year in which the credit is claimed. An election once made is
irrevocable.
(k) Before the production of any renewable
fuels for the calendar year, the taxpayer shall provide written notice of the
taxpayer's intention to begin production of renewable fuels. The written
notice shall be provided to the department of taxation and the Hawaii state
energy office and shall include information on the taxpayer, facility location,
facility production capacity, anticipated production start date, and the
taxpayer's contact information. Notwithstanding any other law to the contrary,
the written notice described in this subsection, including taxpayer and
facility information, shall be available for public inspection and
dissemination, subject to chapter 92F.
(l) The taxpayer shall provide written
notice to the director of taxation and the chief energy officer of the Hawaii
state energy office within thirty days following the start of production. The
notice shall include the production start date and expected renewable fuels
production for the next twelve months. Notwithstanding any other law to the
contrary, the written notice described in this subsection shall be available
for public inspection and dissemination, subject to chapter 92F.
(m) Following each calendar year in which a
credit under this section has been claimed, the chief energy officer of the
Hawaii state energy office shall submit a written report to the governor and
legislature regarding the production and sale of renewable fuels. The report
shall include:
(1) The number and location of renewable
fuels production facilities in the State and outside the State that have
claimed a credit under this section;
(2) The total number of British thermal
units of renewable fuels, itemized by type of fuel produced and sold during the
previous calendar year; and
(3) The projected number of British thermal
units of renewable fuels production for the succeeding year.
(n) 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 pursuant to chapter 91
necessary to effectuate the purposes of this section.
(o) As used in this section:
"Credit period" means a maximum
period of ten consecutive years, beginning from the first taxable year in which
a taxpayer begins renewable fuels production at a level of at least two billion
five-hundred million British thermal units of renewable fuels per calendar
year.
"Net income tax liability" means
income tax liability reduced by all other credits allowed under this chapter.
"Renewable feedstocks" means:
(1) Biomass crops and other renewable
organic material, including but not limited to logs, wood chips, wood pellets,
and wood bark;
(2) Agricultural residue;
(3) Oil crops, including but not limited to
algae, canola, jatropha, palm, soybean, and sunflower;
(4) Sugar and starch crops, including but
not limited to sugar cane and cassava;
(5) Other agricultural crops;
(6) Grease and waste cooking oil;
(7) Food wastes;
(8) Municipal solid wastes and industrial
wastes;
(9) Water, including wastewater; and
(10) Animal residues and wastes,
that can be used to generate energy.
"Renewable fuels" means fuels
produced from renewable feedstocks; provided that the fuel:
(1) Is sold as a fuel in the State; and
(2) Meets the relevant ASTM International
specifications or other industry specifications for the particular fuel,
including but not limited to:
(A) Methanol, ethanol, or other
alcohols;
(B) Hydrogen;
(C) Biodiesel or renewable diesel;
(D) Biogas;
(E) Other biofuels;
(F) Renewable jet fuel or renewable
gasoline; or
(G) Logs, wood chips, wood pellets,
or wood bark."]
SECTION 8. Section 235-110.51, Hawaii Revised Statutes, is repealed.
["§235-110.51 Technology
infrastructure renovation tax credit. (a) There shall be allowed
to each taxpayer subject to the taxes imposed by this chapter, an income tax
credit which 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 credit shall be four
per cent of the renovation costs incurred during the taxable year for each
commercial building located in Hawaii.
(c) In the case of a partnership, S
corporation, estate, trust, or any developer of a commercial building, the tax
credit allowable is for renovation costs incurred by the entity for the taxable
year. The cost upon which the tax credit is computed shall be determined at
the entity level. Distribution and share of credit shall be determined
pursuant to section 235-110.7(a).
(d) If a deduction is taken under section
179 (with respect to election to expense depreciable business assets) of the
Internal Revenue Code, no tax credit shall be allowed for that portion of the
renovation cost for which the deduction is taken.
(e) The basis of eligible property for
depreciation or accelerated cost recovery system purposes for state income
taxes shall be reduced by the amount of credit allowable and claimed. In the
alternative, the taxpayer shall treat the amount of the credit allowable and
claimed as a taxable income item for the taxable year in which it is properly
recognized under the method of accounting used to compute taxable income.
(f) The credit allowed under this section
shall be claimed against the net income tax liability for the taxable year.
(g) If the tax credit under this section
exceeds the taxpayer's income tax liability, the excess of credit over
liability may be carried forward until exhausted.
(h) The tax credit allowed under this
section shall not be available for taxable years beginning after December 31,
2010.
(i) As used in this section:
"Net income tax liability" means
income tax liability reduced by all other credits allowed under this chapter.
"Renovation costs" means costs
incurred after December 31, 2000, to plan, design, install, construct, and
purchase technology-enabled infrastructure equipment to provide a commercial
building with technology-enabled infrastructure.
"Technology-enabled
infrastructure" means:
(1) High speed telecommunications systems
that provide Internet access, direct satellite communications access, and
videoconferencing facilities;
(2) Physical security systems that identify
and verify valid entry to secure spaces, detect invalid entry or entry
attempts, and monitor activity in these spaces;
(3) Environmental systems to include
heating, ventilation, air conditioning, fire detection and suppression, and
other life safety systems; and
(4) Backup and emergency electric power
systems.
(j) No taxpayer that claims a credit under
this section shall claim any other credit under this chapter."]
SECTION 9. Section 235-110.65, Hawaii Revised Statutes, is repealed.
["[§235-110.65] Ship
repair industry tax credit. (a) There shall be allowed to each
taxpayer subject to the taxes imposed by this chapter a ship repair industry
tax credit that shall be deductible from the taxpayer's net income tax
liability, if any, imposed by this chapter.
(b) The amount of the tax credit shall be
equal to thirty per cent of the ship repair industry costs paid or incurred by
the qualified entity to design and construct the purpose-built floating
[drydock] to be used by the United States Navy in Pearl Harbor; provided that:
(1) A qualified entity may form a special
purpose entity for the purposes of raising investor capital and claiming the
credit on behalf of the qualified entity;
(2) The qualified entity, together with all
of its special purpose entities, including all partners and members of the
qualified entity and its special purpose entities, shall not claim any credit
in any one taxable year that exceeds $6,000,000; however, if the total amount
of credits applied for in any particular year exceeds the aggregate amount of
credits allowed for such year under this section, the excess shall be treated
as having been applied for in the subsequent year and shall be claimed in such
year; provided that no excess shall be allowed to be claimed after December 31,
2026; and
(3) In no event shall a qualified entity or
any of its special purpose entities or any other taxpayer claim a credit under
this section prior to January 1, 2022, or after December 31, 2026.
A qualified entity shall become eligible to claim
a credit under this section only after construction of the floating drydock has
been completed and the floating drydock has been placed into service.
(c) In the case of an entity taxed as a
partnership, credit shall be determined at the entity level, but distribution
and share of the credit may be determined notwithstanding sections 704 or 706
of the Internal Revenue Code.
(d) The credit allowed under this section
shall be claimed against the net income tax liability for the taxable year. If
the tax credit under this section exceeds the taxpayer's income tax liability,
the excess of the tax credit over liability may be used as a credit against the
taxpayer's net income tax liability in subsequent years until exhausted. All
claims, including amended claims, for a tax credit under this section 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 the
foregoing provision shall constitute a waiver of the right to claim the credit.
(e) The director of taxation shall prepare
any forms that may be necessary to claim a credit under this section. The
director may also require the taxpayer to furnish information to ascertain the
validity of the claim for credit made under this section. The director of
taxation may adopt rules to effectuate the purposes of this section pursuant to
chapter 91.
(f) Any taxpayer claiming a tax credit
under this section, within ninety days of the end of the calendar year in which
the credit is properly claimable, shall submit the following information to the
department of taxation:
(1) The amount of the eligible costs for
which the tax credit may be claimed; and
(2) The qualified entity that incurred the
costs.
Failure to timely submit the information shall be
subject to a penalty of $5,000 per month or a fraction thereof, not to exceed
$25,000.
(g) This section shall not apply to taxable
years beginning after December 31, 2026.
(h) For the purpose of this section:
"Net income tax liability" means
income tax liability reduced by all other credits allowed under this chapter.
"Qualified entity" means an entity
with the principal purpose of facilitating and enhancing the ship repair
business in the State and that is involved in the design and construction of a
purpose-built floating drydock to be used by the United States Navy in Pearl
Harbor.
"Ship repair industry costs" means
capital expenditures, as used in section 263 of the Internal Revenue
Code and the regulations promulgated thereunder, or capital expenditures for
real property, fixtures, structures, machinery, equipment, or capital assets
that are paid or incurred in connection with the construction of a
purpose-built floating drydock; provided that the ship repair industry costs
shall not include amounts for which another credit is claimed or any amounts
received in any form from the State."]
SECTION 10. Act 261, Session Laws of Hawaii 2019, as amended by 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.]
January 1, 2029."
PART III
SECTION 11. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 12. This Act shall take effect on July 1, 2050; provided that section 2 of this Act shall apply to taxable years beginning after December 31, 2026; provided further that on December 31, 2032, section 2 of this Act shall be repealed and section 235-55.6, Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day prior to the effective date of Act 163, Session Laws of Hawaii 2023; provided further that part II shall take effect on January 1, 2029.
Report Title:
Income Tax; Income Tax Brackets; Child and Dependent Care Tax Credit; Renewable Energy Technologies Tax Credit; Capital Goods Excise Tax Credit; High Technology Business Investment Tax Credit; Renewable Fuels Production Tax Credit; Technology Infrastructure Renovation Tax Credit; Ship Repair industry Tax Credit; Tax Credit for Research Activities; Repeal
Description:
PART I: Repeals certain future adjustments to income tax brackets. Changes the applicable percentage of the employment-related expenses for which the child and dependent care tax credit may be claimed to an unspecified percentage; provides for a disallowance period when there is a final administrative or judicial decision finding that the claim was due to fraud or disallowing the credit; and defines "adjusted gross income" for purposes of the child and dependent care tax credit as adjusted gross income as defined by the Internal Revenue Code of 1986, as amended. Extends the sunset for amendments made by Act 163, SLH 2023 to the child and dependent care tax credit, earned income tax credit, and food/excise tax credit to an unspecified date. PART II: Beginning 1/1/2029, repeals the following tax credits: Renewable Energy Technologies Tax Credit, Capital Goods Excise Tax Credit, High Technology Business Investment Tax Credit, Renewable Fuels Production Tax Credit, Technology Infrastructure Renovation Tax Credit, Ship Repair Industry Tax Credit, and Tax Credit for Research Activities. Effective 7/1/2050. (Proposed 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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THE SENATE |
S.B. NO. |
3125 |
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THIRTY-THIRD LEGISLATURE, 2026 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO INCOME TAX.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
"(a) Section 63 (with respect to taxable income defined) of the Internal Revenue Code shall be operative for the purposes of this chapter, subject to the following:
(1) Section 63(c)(1)(B) (relating to the additional standard deduction), 63(c)(1)(C) (relating to the real property tax deduction), 63(c)(1)(D) (relating to the disaster loss deduction), 63(c)(1)(E) (relating to the motor vehicle sales tax deduction), 63(c)(4) (relating to inflation adjustments), 63(c)(7) (defining the real property tax deduction), 63(c)(8) (defining the disaster loss deduction), 63(c)(9) (defining the motor vehicle sales tax deduction), and 63(f) (relating to additional amounts for the aged or blind) of the Internal Revenue Code shall not be operative for purposes of this chapter;
(2) Section 63(c)(2) (relating to the basic standard deduction) of the Internal Revenue Code shall be operative, except that the standard deduction amounts provided therein shall instead mean:
(A) $4,400 in the case of:
(i) A joint return as provided by section 235-93; or
(ii) A surviving spouse (as defined in section 2(a) of the Internal Revenue Code);
(B) $3,212 in the case of a head of household (as defined in section 2(b) of the Internal Revenue Code);
(C) $2,200 in the case of an individual who is not married and who is not a surviving spouse or head of household;
(D) $2,200 in the case of a married individual filing a separate return;
(E) For taxable years beginning after December 31, 2023:
(i) $8,800 in the case of a joint return as provided by section 235-93 or a surviving spouse (as defined in section 2(a) of the Internal Revenue Code);
(ii) $6,424 in the case of a head of household (as defined in section 2(b) of the Internal Revenue Code);
(iii) $4,400 in the case of an individual who is not married and who is not a surviving spouse or head of household; or
(iv) $4,400 in the case of a married individual filing a separate return; and
(F) For taxable years beginning after December 31, 2025:
(i) $16,000 in the case of a joint return as provided by section 235-93 or a surviving spouse (as defined in section 2(a) of the Internal Revenue Code);
(ii) $12,000 in the case of a head of household (as defined in section 2(b) of the Internal Revenue Code);
(iii) $8,000 in the case of an individual who is not married and who is not a surviving spouse or head of household; or
(iv) $8,000 in the case of a married individual filing a separate return;
[(G) For taxable years beginning after December 31, 2027:
(i) $18,000 in the case of a joint return as provided by section
235-93 or a surviving spouse (as defined in section 2(a) of the Internal
Revenue Code);
(ii) $13,500 in the case of a head of household (as defined in
section 2(b) of the Internal Revenue Code);
(iii) $9,000 in the case of an individual who is not married and who
is not a surviving spouse or head of household; or
(iv) $9,000 in the case of a married individual filing a separate
return;
(H) For taxable years beginning after December 31, 2029:
(i) $20,000 in the case of a joint return as provided by section
235-93 or a surviving spouse (as defined in section 2(a) of the Internal
Revenue Code);
(ii) $15,000 in the case of a head of household (as defined in
section 2(b) of the Internal Revenue Code);
(iii) $10,000 in the case of an individual who is not married and who
is not a surviving spouse or head of household; or
(iv) $10,000 in the case of a married individual filing a separate
return; and
(I) For taxable years beginning after December 31, 2030:
(i) $24,000 in the case of a joint return as provided by section
235-93 or a surviving spouse (as defined in section 2(a) of the Internal
Revenue Code);
(ii) $18,000 in the case of a head of household (as defined in section
2(b) of the Internal Revenue Code);
(iii) $12,000 in the case of an individual who is not married and who
is not a surviving spouse or head of household; or
(iv) $12,000 in the case of a married individual filing a separate
return;]
(3) Section 63(c)(5) (limiting the basic standard deduction in the case of certain dependents) of the Internal Revenue Code shall be operative, except that the limitation shall be the greater of $500 or the individual's earned income; and
(4) The standard deduction amount for nonresidents shall be calculated pursuant to section 235-5."
SECTION 2. Section 235-51, Hawaii Revised Statutes, is amended by amending subsections (a), (b), and (c) to read as follows:
"(a) There is hereby imposed on the taxable income of every:
(1) Taxpayer who files a joint return under section 235−93; and
(2) Surviving spouse,
a tax determined in accordance with the following table:
In the case of any taxable year beginning after December 31, 2017:
If the taxable income is: The tax shall be:
Not over $4,800 1.40% of taxable income
Over $4,800 but $67.00 plus 3.20% of
not over $9,600 excess over $4,800
Over $9,600 but $221.00 plus 5.50% of
not over $19,200 excess over $9,600
Over $19,200 but $749.00 plus 6.40% of
not over $28,800 excess over $19,200
Over $28,800 but $1,363.00 plus 6.80% of
not over $38,400 excess over $28,800
Over $38,400 but $2,016.00 plus 7.20% of
not over $48,000 excess over $38,400
Over $48,000 but $2,707.00 plus 7.60% of
not over $72,000 excess over $48,000
Over $72,000 but $4,531.00 plus 7.90% of
not over $96,000 excess over $72,000
Over $96,000 but $6,427.00 plus 8.25% of
not over $300,000 excess over $96,000
Over $300,000 but $23,257.00 plus 9.00% of
not over $350,000 excess over $300,000
Over $350,000 but $27,757.00 plus 10.00% of
not over $400,000 excess over $350,000
Over $400,000 $32,757.00 plus 11.00% of
excess over $400,000.
In the case of any taxable year beginning after December 31, 2024:
If the taxable income is: The tax shall be:
Not over $19,200 1.40% of taxable income
Over $19,200 but $269.00 plus 3.20% of
not over $28,800 excess over $19,200
Over $28,800 but $576.00 plus 5.50% of
not over $38,400 excess over $28,800
Over $38,400 but $1,104.00 plus 6.40% of
not over $48,000 excess over $38,400
Over $48,000 but $1,718.00 plus 6.80% of
not over $72,000 excess over $48,000
Over $72,000 but $3,350.00 plus 7.20% of
not over $96,000 excess over $72,000
Over $96,000 but $5,078.00 plus 7.60% of
not over $250,000 excess over $96,000
Over $250,000 but $16,782.00 plus 7.90% of
not over $350,000 excess over $250,000
Over $350,000 but $24,682.00 plus 8.25% of
not over $450,000 excess over $350,000
Over $450,000 but $32,932.00 plus 9.00% of
not over $550,000 excess over $450,000
Over $550,000 but $41,932.00 plus 10.00% of
not over $650,000 excess over $550,000
Over $650,000 $51,932.00 plus 11.00% of
excess over $650,000.
[In the case of any taxable year
beginning after December 31, 2026:
If the taxable income is: The tax shall be:
Not over $28,800 1.40%
of taxable income
Over $28,800 but $403.00
plus 3.20% of
not over $38,400 excess over $28,800
Over $38,400 but $710.00
plus 5.50% of
not over $48,000 excess over $38,400
Over $48,000 but $1,238.00
plus 6.40% of
not over $72,000 excess over $48,000
Over $72,000 but $2,774.00
plus 6.80% of
not over $96,000 excess over $72,000
Over $96,000 but $4,406.00
plus 7.20% of
not over $250,000 excess over $96,000
Over $250,000 but $15,494.00
plus 7.60% of
not over $350,000 excess over $250,000
Over $350,000 but $23,094.00
plus 7.90% of
not over $450,000 excess over $350,000
Over $450,000 but $30,994.00
plus 8.25% of
not over $550,000 excess over $450,000
Over $550,000 but $39,244.00
plus 9.00% of
not over $650,000 excess over $550,000
Over $650,000 but $48,244.00
plus 10.00% of
not over $800,000 excess over $650,000
Over $800,000 $63,244.00
plus 11.00% of
excess over $800,000.
In the case of any taxable year
beginning after December 31, 2028:
If the taxable income is: The tax shall be:
Not over $38,400 1.40%
of taxable income
Over $38,400 but $538.00
plus 3.20% of
not over $48,000 excess over $38,400
Over $48,000 but $845.00
plus 5.50% of
not over $72,000 excess over $48,000
Over $72,000 but $2,165.00
plus 6.40% of
not over $96,000 excess over $72,000
Over $96,000 but $3,701.00
plus 6.80% of
not over $250,000 excess over $96,000
Over $250,000 but $14,173.00
plus 7.20% of
not over $350,000 excess over $250,000
Over $350,000 but $21,373.00
plus 7.60% of
not over $450,000 excess over $350,000
Over $450,000 but $28,973.00
plus 7.90% of
not over $550,000 excess over $450,000
Over $550,000 but $36,873.00
plus 8.25% of
not over $650,000 excess over $550,000
Over $650,000 but $45,123.00
plus 9.00% of
not over $800,000 excess over $650,000
Over $800,000 but $58,623.00
plus 10.00% of
not over $950,000 excess over $800,000
Over $950,000 $73,623.00
plus 11.00% of
excess over $950,000.]
(b) There is hereby imposed on the taxable income of every head of a household a tax determined in accordance with the following table:
In the case of any taxable year beginning after December 31, 2017:
If the taxable income is: The tax shall be:
Not over $3,600 1.40% of taxable income
Over $3,600 but $50.00 plus 3.20% of
not over $7,200 excess over $3,600
Over $7,200 but $166.00 plus 5.50% of
not over $14,400 excess over $7,200
Over $14,400 but $562.00 plus 6.40% of
not over $21,600 excess over $14,400
Over $21,600 but $1,022.00 plus 6.80% of
not over $28,800 excess over $21,600
Over $28,800 but $1,512.00 plus 7.20% of
not over $36,000 excess over $28,800
Over $36,000 but $2,030.00 plus 7.60% of
not over $54,000 excess over $36,000
Over $54,000 but $3,398.00 plus 7.90% of
not over $72,000 excess over $54,000
Over $72,000 but $4,820.00 plus 8.25% of
not over $225,000 excess over $72,000
Over $225,000 but $17,443.00 plus 9.00% of
not over $262,500 excess over $225,000
Over $262,500 but $20,818.00 plus 10.00% of
not over $300,000 excess over $262,500
Over $300,000 $24,568.00 plus 11.00% of
excess
over $300,000.
In the case of any taxable year beginning after December 31, 2024:
If the taxable income is: The tax shall be:
Not over $14,400 1.40% of taxable income
Over $14,400 but $202.00 plus 3.20% of
not over $21,600 excess over $14,400
Over $21,600 but $432.00 plus 5.50% of
not over $28,800 excess over $21,600
Over $28,800 but $828.00 plus 6.40% of
not over $36,000 excess over $28,800
Over $36,000 but $1,289.00 plus 6.80% of
not over $54,000 excess over $36,000
Over $54,000 but $2,513.00 plus 7.20% of
not over $72,000 excess over $54,000
Over $72,000 but $3,809.00 plus 7.60% of
not over $187,500 excess over $72,000
Over $187,500 but $12,587.00 plus 7.90% of
not over $262,500 excess over $187,500
Over $262,500 but $18,512.00 plus 8.25% of
not over $337,500 excess over $262,500
Over $337,500 but $24,699.00 plus 9.00% of
not over $412,500 excess over $337,500
Over $412,500 but $31,449.00 plus 10.00% of
not over $487,500 excess over $412,500
Over $487,500 $38,949.00 plus 11.00% of
excess over $487,500.
[In the case of any taxable year
beginning after December 31, 2026:
If the taxable income is: The tax shall be:
Not over $21,600 1.40%
of taxable income
Over $21,600 but $302.00
plus 3.20% of
not over $28,800 excess over $21,600
Over $28,800 but $533.00
plus 5.50% of
not over $36,000 excess over $28,800
Over $36,000 but $929.00
plus 6.40% of
not over $54,000 excess over $36,000
Over $54,000 but $2,081.00
plus 6.80% of
not over $72,000 excess over $54,000
Over $72,000 but $3,305.00
plus 7.20% of
not over $187,500 excess over $72,000
Over $187,500 but $11,621.00
plus 7.60% of
not over $262,500 excess over $187,500
Over $262,500 but $17,321.00
plus 7.90% of
not over $337,500 excess over $262,500
Over $337,500 but $23,246.00
plus 8.25% of
not over $412,500 excess over $337,500
Over $412,500 but $29,433.00
plus 9.00% of
not over $487,500 excess over $412,500
Over $487,500 but $36,183.00
plus 10.00% of
not over $600,000 excess over $487,500
Over $600,000 $47,433.00
plus 11.00% of
excess
over $600,000.
In the case of any taxable year
beginning after December 31, 2028:
If the taxable income is: The tax shall be:
Not over $28,800 1.40%
of taxable income
Over $28,800 but $403.00
plus 3.20% of
not over $36,000 excess over $28,800
Over $36,000 but $634.00
plus 5.50% of
not over $54,000 excess over $36,000
Over $54,000 but $1,624.00
plus 6.40% of
not over $72,000 excess over $54,000
Over $72,000 but $2,776.00
plus 6.80% of
not over $187,500 excess over $72,000
Over $187,500 but $10,630.00
plus 7.20% of
not over $262,500 excess over $187,500
Over $262,500 but $16,030.00
plus 7.60% of
not over $337,500 excess over $262,500
Over $337,500 but $21,730.00
plus 7.90% of
not over $412,500 excess over $337,500
Over $412,500 but $27,655.00
plus 8.25% of
not over $487,500 excess over $412,500
Over $487,500 but $33,842.00
plus 9.00% of
not over $600,000 excess over $487,500
Over $600,000 but $43,967.00
plus 10.00% of
not over $712,500 excess over $600,000
Over $712,500 $55,217.00
plus 11.00% of
excess over $712,500.]
(c) There is hereby imposed on the taxable income of (1) every unmarried individual (other than a surviving spouse, or the head of a household) and (2) on the taxable income of every married individual who does not make a single return jointly with the individual's spouse under section 235-93 a tax determined in accordance with the following table:
In the case of any taxable year beginning after December 31, 2017:
If the taxable income is: The tax shall be:
Not over $2,400 1.40% of taxable income
Over $2,400 but $34.00 plus 3.20% of
not over $4,800 excess over $2,400
Over $4,800 but $110.00 plus 5.50% of
not over $9,600 excess over $4,800
Over $9,600 but $374.00 plus 6.40% of
not over $14,400 excess over $9,600
Over $14,400 but $682.00 plus 6.80% of
not over $19,200 excess over $14,400
Over $19,200 but $1,008.00 plus 7.20% of
not over $24,000 excess over $19,200
Over $24,000 but $1,354.00 plus 7.60% of
not over $36,000 excess over $24,000
Over $36,000 but $2,266.00 plus 7.90% of
not over $48,000 excess over $36,000
Over $48,000 but $3,214.00 plus 8.25% of
not over $150,000 excess over $48,000
Over $150,000 but $11,629.00 plus 9.00% of
not over $175,000 excess over $150,000
Over $175,000 but $13,879.00 plus 10.00% of
not over $200,000 excess over $175,000
Over $200,000 $16,379.00 plus 11.00% of
excess over $200,000.
In the case of any taxable year beginning after December 31, 2024:
If the taxable income is The tax shall be:
Not over $9,600 1.40% of taxable income
Over $9,600 but $134.00 plus 3.20% of
not over $14,400 excess over $9,600
Over $14,400 but $288.00 plus 5.50% of
not over $19,200 excess over $14,400
Over $19,200 but $552.00 plus 6.40% of
not over $24,000 excess over $19,200
Over $24,000 but $859.00 plus 6.80% of
not over $36,000 excess over $24,000
Over $36,000 but $1,675.00 plus 7.20% of
not over $48,000 excess over $36,000
Over $48,000 but $2,539.00 plus 7.60% of
not over $125,000 excess over $48,000
Over $125,000 but $8,391.00 plus 7.90% of
not over $175,000 excess over $125,000
Over $175,000 but $12,341.00 plus 8.25% of
not over $225,000 excess over $175,000
Over $225,000 but $16,466.00 plus 9.00% of
not over $275,000 excess over $225,000
Over $275,000 but $20,966.00 plus 10.00% of
not over $325,000 excess over $275,000
Over $325,000 $25,966.00 plus 11.00% of
excess over $325,000.
[In the case of any taxable year
beginning after December 31, 2026:
If the taxable income is: The tax shall be:
Not over $14,400 1.40%
of taxable income
Over $14,400 but $202.00
plus 3.20% of
not over $19,200 excess over $14,400
Over $19,200 but $355.00
plus 5.50% of
not over $24,000 excess over $19,200
Over $24,000 but $619.00
plus 6.40% of
not over $36,000 excess over $24,000
Over $36,000 but $1,387.00
plus 6.80% of
not over $48,000 excess over $36,000
Over $48,000 but $2,203.00
plus 7.20% of
not over $125,000 excess over $48,000
Over $125,000 but $7,747.00
plus 7.60% of
not over $175,000 excess over $125,000
Over $175,000 but $11,547.00
plus 7.90% of
not over $225,000 excess over $175,000
Over $225,000 but $15,497.00
plus 8.25% of
not over $275,000 excess over $225,000
Over $275,000 but $19,622.00
plus 9.00% of
not over $325,000 excess over $275,000
Over $325,000 but $24,122.00
plus 10.00% of
not over $400,000 excess over $325,000
Over $400,000 $31,622.00
plus 11.00% of
excess over $400,000.
In the case of any taxable year
beginning after December 31, 2028:
If the taxable income is: The tax shall be:
Not over $19,200 1.40%
of taxable income
Over $19,200 but $269.00
plus 3.20% of
not over $24,000 excess over $19,200
Over $24,000 but $422.00
plus 5.50% of
not over $36,000 excess over $24,000
Over $36,000 but $1,082.00
plus 6.40% of
not over $48,000 excess over $36,000
Over $48,000 but $1,850.00
plus 6.80% of
not over $125,000 excess over $48,000
Over $125,000 but $7,086.00
plus 7.20% of
not over $175,000 excess over $125,000
Over $175,000 but $10,686.00
plus 7.60% of
not over $225,000 excess over $175,000
Over $225,000 but $14,486.00
plus 7.90% of
not over $275,000 excess over $225,000
Over $275,000 but $18,436.00
plus 8.25% of
not over $325,000 excess over $275,000
Over $325,000 but $22,561.00
plus 9.00% of
not over $400,000 excess over $325,000
Over $400,000 but $29,311.00
plus 10.00% of
not over $475,000 excess over $400,000
Over $475,000 $36,811.00
plus 11.00% of
excess
over $475,000.]"
SECTION 3. Section 235-55.6, Hawaii Revised Statutes, is amended to read as follows:
"§235-55.6 Expenses for household and dependent care services necessary for gainful employment. (a) Allowance of credit.
(1) In general. For each resident taxpayer, who files an individual income tax return for a taxable year, and who is not claimed or is not otherwise eligible to be claimed as a dependent by another taxpayer for federal or Hawaii state individual income tax purposes, who maintains a household which includes as a member one or more qualifying individuals (as defined in subsection (b)(1)), there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the applicable percentage of the employment-related expenses (as defined in subsection (b)(2)) paid by the individual during the taxable year. If the tax credit claimed by a resident taxpayer exceeds the amount of income tax payment due from the resident taxpayer, the excess of the credit over payments due shall be refunded to the resident taxpayer; provided that tax credit properly claimed by a resident individual who has no income tax liability shall be paid to the resident individual; and provided further that no refunds or payment on account of the tax credit allowed by this section shall be made for amounts less than $1.
(2) Applicable
percentage. For purposes of paragraph
(1), the taxpayer's applicable percentage shall be [determined as follows:
Adjusted
gross income Applicable
percentage
Not
over $25,000 25%
Over
$25,000 but 24%
not
over $30,000
Over
$30,000 but 23%
not
over $35,000
Over
$35,000 but 22%
not
over $40,000
Over
$40,000 but 21%
not
over $45,000
Over
$45,000 but 20%
not
over $50,000
Over
$50,000 15%.]
equal to fifty per cent reduced by one percentage point for each $3,000, or fraction thereof, by which the taxpayer's adjusted gross income exceeds $150,000; provided that the applicable percentage shall not be reduced below fifteen per cent.
(b) Definitions of qualifying individual and employment-related expenses. For purposes of this section:
(1) Qualifying individual. The term "qualifying individual" means:
(A) A dependent of the taxpayer who is under the age of thirteen and with respect to whom the taxpayer is entitled to a deduction under section 235-54(a),
(B) A dependent of the taxpayer who is physically or mentally incapable of caring for oneself, or
(C) The spouse of the taxpayer, if the spouse is physically or mentally incapable of caring for oneself.
(2) Employment-related expenses.
(A) In general. The term "employment-related expenses" means amounts paid for the following expenses, but only if such expenses are incurred to enable the taxpayer to be gainfully employed for any period for which there are one or more qualifying individuals with respect to the taxpayer:
(i) Expenses for household services, and
(ii) Expenses for the care of a qualifying individual.
Such term shall not include any amount paid for services outside the taxpayer's household at a camp where the qualifying individual stays overnight.
(B) Exception. Employment-related expenses described in subparagraph (A) which are incurred for services outside the taxpayer's household shall be taken into account only if incurred for the care of:
(i) A qualifying individual described in paragraph (1)(A), or
(ii) A qualifying individual (not described in paragraph (1)(A)) who regularly spends at least eight hours each day in the taxpayer's household.
(C) Dependent care centers. Employment-related expenses described in subparagraph (A) which are incurred for services provided outside the taxpayer's household by a dependent care center (as defined in subparagraph (D)) shall be taken into account only if:
(i) Such center complies with all applicable laws, rules, and regulations of this State, if the center is located within the jurisdiction of this State; or
(ii) Such center complies with all applicable laws, rules, and regulations of the jurisdiction in which the center is located, if the center is located outside the State; and
(iii) The requirements of subparagraph (B) are met.
(D) Dependent care center defined. For purposes of this paragraph, the term "dependent care center" means any facility which:
(i) Provides care for more than six individuals (other than individuals who reside at the facility), and
(ii) Receives a fee, payment, or grant for providing services for any of the individuals (regardless of whether such facility is operated for profit).
(c) Dollar limit on amount creditable. The amount of the employment-related expenses incurred during any taxable year which may be taken into account under subsection (a) shall not exceed:
(1) $10,000 if there is one qualifying individual with respect to the taxpayer for such taxable year, or
(2) $20,000 if there are two or more qualifying individuals with respect to the taxpayer for such taxable year.
The amount determined under paragraph (1) or (2) (whichever is applicable) shall be reduced by the aggregate amount excludable from gross income under section 129 (with respect to dependent care assistance programs) of the Internal Revenue Code for the taxable year.
(d) Earned income limitation.
(1) In general. Except as otherwise provided in this subsection, the amount of the employment-related expenses incurred during any taxable year which may be taken into account under subsection (a) shall not exceed:
(A) In the case of an individual who is not married at the close of such year, such individual's earned income for such year, or
(B) In the case of an individual who is married at the close of such year, the lesser of such individual's earned income or the earned income of the individual's spouse for such year.
(2) Special rule for spouse who is a student or incapable of caring for oneself. In the case of a spouse who is a student or a qualified individual described in subsection (b)(1)(C), for purposes of paragraph (1), such spouse shall be deemed for each month during which such spouse is a full-time student at an educational institution, or is such a qualifying individual, to be gainfully employed and to have earned income of not less than:
(A) $200 if subsection (c)(1) applies for the taxable year, or
(B) $400 if subsection (c)(2) applies for the taxable year.
In the case of any husband and wife, this paragraph shall apply with respect to only one spouse for any one month.
(e) Special rules. For purposes of this section:
(1) Maintaining household. An individual shall be treated as maintaining a household for any period only if over half the cost of maintaining the household for the period is furnished by the individual (or, if the individual is married during the period, is furnished by the individual and the individual's spouse).
(2) Married couples must file joint return. If the taxpayer is married at the close of the taxable year, the credit shall be allowed under subsection (a) only if the taxpayer and the taxpayer's spouse file a joint return for the taxable year.
(3) Marital status. An individual legally separated from the individual's spouse under a decree of divorce or of separate maintenance shall not be considered as married.
(4) Certain married individuals living apart. If:
(A) An individual who is married and who files a separate return:
(i) Maintains as the individual's home a household that constitutes for more than one-half of the taxable year the principal place of abode of a qualifying individual, and
(ii) Furnishes over half of the cost of maintaining the household during the taxable year, and
(B) During the last six months of the taxable year the individual's spouse is not a member of the household, the individual shall not be considered as married.
(5) Special dependency test in case of divorced parents, etc. If:
(A) Paragraph (2) or (4) of section 152(e) of the Internal Revenue Code of 1986, as amended, applies to any child with respect to any calendar year, and
(B) The child is under age thirteen or is physically or mentally incompetent of caring for the child's self,
in the case of any taxable year beginning in the calendar year, the child shall be treated as a qualifying individual described in subsection (b)(1)(A) or (B) (whichever is appropriate) with respect to the custodial parent (within the meaning of section 152(e)(1) of the Internal Revenue Code of 1986, as amended), and shall not be treated as a qualifying individual with respect to the noncustodial parent.
(6) Payments to related individuals. No credit shall be allowed under subsection (a) for any amount paid by the taxpayer to an individual:
(A) With respect to whom, for the taxable year, a deduction under section 151(c) of the Internal Revenue Code of 1986, as amended (relating to deduction for personal exemptions for dependents) is allowable either to the taxpayer or the taxpayer's spouse, or
(B) Who is a child of the taxpayer (within the meaning of section 151(c)(3) of the Internal Revenue Code of 1986, as amended) who has not attained the age of nineteen at the close of the taxable year.
For purposes of this paragraph, the term "taxable year" means the taxable year of the taxpayer in which the service is performed.
(7) Student. The term "student" means an individual who, during each of five calendar months during the taxable year, is a full-time student at an educational organization.
(8) Educational organization. The term "educational organization" means a school operated by the department of education under chapter 302A, an educational organization described in section 170(b)(1)(A)(ii) of the Internal Revenue Code of 1986, as amended, or a university, college, or community college.
(9) Identifying information required with respect to service provider. No credit shall be allowed under subsection (a) for any amount paid to any person unless:
(A) The name, address, taxpayer identification number, and general excise tax license number of the person are included on the return claiming the credit,
(B) If the person is located outside the State, the name, address, and taxpayer identification number, if any, of the person and a statement indicating that the service provider is located outside the State and that the general excise tax license and, if applicable, the taxpayer identification numbers are not required, or
(C) If the person is an organization described in section 501(c)(3) of the Internal Revenue Code and exempt from tax under section 501(a) of the Internal Revenue Code, the name and address of the person are included on the return claiming the credit.
In the case of a failure to provide the information required under the preceding sentence, the preceding sentence shall not apply if it is shown that the taxpayer exercised due diligence in attempting to provide the information so required.
(f) No credit shall be allowed under this section for any taxable year in the disallowance period. For purposes of this subsection, the disallowance period is:
(1) The period of ten taxable years after the most recent taxable year for which there was a final administrative or judicial decision that the taxpayer's claim for credit under this section was due to fraud; and
(2) The period of two taxable years after the most recent taxable year for which there was a final administrative or judicial decision disallowing the taxpayer's claim for credit.
[(f)] (g) Rules.
The director of taxation shall prescribe such rules under chapter 91 as
may be necessary to carry out the purposes of this section.
(h) As used in this section, "adjusted gross income" means adjusted gross income as defined by the Internal Revenue Code of 1986, as amended."
SECTION 4. Act 163, Session Laws of Hawaii 2023, is amended by amending section 5 to read as follows:
"This Act, upon its approval, shall
apply to taxable years beginning after December 31, 2022; provided that on
December 31, [2027,] 2032, this Act shall be repealed and sections
235-55.6(c), 235-55.75(a), and 235-55.85(b), Hawaii Revised Statutes, shall be
reenacted in the form in which they read on the day prior to the effective date
of this Act."
SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 6. This Act shall take effect upon its approval; provided that section 3 of this Act shall apply to taxable years beginning after December 31, 2026; provided further that on December 31, 2032, section 3 of this Act shall be repealed and section 235-55.6, Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day prior to the effective date of Act 163, Session Laws of Hawaii 2023.
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INTRODUCED BY: |
_____________________________ |
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BY REQUEST |
Report Title:
Income Tax; Standard Deduction; Income Tax Brackets; Child and Dependent Care Tax Credit
Description:
Repeals future adjustments to the standard deduction and income tax brackets. Increases the applicable percentage of the employment-related expenses for which the child and dependent care tax credit may be claimed; provides for a disallowance period when there is a final administrative or judicial decision finding that the claim was due to fraud or disallowing the credit; and defines "adjusted gross income" for purposes of the child and dependent care tax credit as adjusted gross income as defined by the Internal Revenue Code of 1986, as amended. Extends the sunset for amendments made by Act 163, SLH 2023 to the child and dependent care tax credit, earned income tax credit, and food/excise 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 21, 2026 | Act 024, on 05/21/2026 (Gov. Msg. No. 1124). |
| May 21, 2026 | Act 024, 05/21/2026 (Gov. Msg. No. 1124). |
| May 8, 2026 | Received notice of passage on Final Reading in House (Hse. Com. No. 889). |
| May 8, 2026 | Enrolled to Governor. |
| May 8, 2026 | Received notice of Final Reading (Sen. Com. No. 820). |
| May 8, 2026 | Passed Final Reading, as amended (CD 2). Ayes, 24; Aye(s) with reservations: none. Noes, 0 (none). Excused, 1 (Senator(s) San Buenaventura). |
| May 8, 2026 | Passed Final Reading as amended in CD 2 with Representative(s) Amato, Garcia, Iwamoto, Lowen, Muraoka, Perruso, Shimizu, Souza voting aye with reservations; Representative(s) Alcos, Cochran, Gedeon, Hashem, Lee, M., Pierick voting no (6) and none excused (0). |
| May 6, 2026 | 48 Hrs. Notice 05-08-26 |
| May 6, 2026 | Report filed. |
| May 6, 2026 | Separated Committee Report. |
| May 6, 2026 | Floor amendment adopted as amended (CD 2). |
| May 6, 2026 | Floor Amendment No. 7 offered. |
| May 6, 2026 | Forty-eight (48) hours notice Friday 05-08-26. |
| May 6, 2026 | Floor amendment adopted as amended CD 2 with none voting no and none excused. |
| May 6, 2026 | Floor Amendment No. 8 offered by Rep. Todd. |
| May 1, 2026 | Forty-eight (48) hours notice Wednesday, 05-06-26. |
| May 1, 2026 | Reported from Conference Committee (Conf Com. Rep. No. 114-26) as amended in (CD 1). |
| May 1, 2026 | 48 Hrs. Notice (as amended CD 1) 05-06-26. |
| May 1, 2026 | Reported from Conference Committee as amended CD 1 (Conf. Com. Rep. No. 114-26). |
| Apr 28, 2026 | The Conference Committee recommends that the measure be Passed, with Amendments. The votes were as follows: 2 Ayes: Representative(s) Todd, Takenouchi; Ayes with reservations: none; 1 Noes: Representative(s) Gedeon; and 0 Excused: none. |
| Apr 28, 2026 | The Conference committee recommends that the measure be PASSED, WITH AMENDMENTS. The votes of the Senate Conference Managers were as follows: 3 Aye(s): Senator(s) Dela Cruz, Moriwaki, Fevella; Aye(s) with reservations: none ; 0 No(es): none; and 0 Excused: none. |
| Apr 28, 2026 | Conference committee meeting to reconvene on 04-28-26 9:00 PM; Conference Room 309. |
| Apr 28, 2026 | Conference committee meeting to reconvene on 04-28-26 8:00 PM; Conference Room 309. |
| Apr 28, 2026 | Conference committee meeting to reconvene on 04-28-26 6:45 PM; Conference Room 309. |
| Apr 28, 2026 | Conference committee meeting to reconvene on 04-28-26 4:45 PM; Conference Room 309. |
| Apr 28, 2026 | Conference committee meeting to reconvene on 04-28-26 4:00 PM; Conference Room 309. |
| Apr 27, 2026 | Conference committee meeting scheduled for 04-28-26 2:45PM; Conference Room 309. |
| Apr 21, 2026 | Received notice of Senate conferees (Sen. Com. No. 718). |
| Apr 21, 2026 | Senate Conferees Appointed: Dela Cruz Chair; Moriwaki, Fevella. |
| Apr 20, 2026 | Received notice of appointment of House conferees (Hse. Com. No. 787). |
| Apr 20, 2026 | House Conferees Appointed: Todd Chair; Takenouchi, Gedeon. |
| Apr 16, 2026 | Received notice of disagreement (Sen. Com. No. 710). |
| Apr 16, 2026 | Senate disagrees with House amendments. |
| Apr 16, 2026 | Received from House (Hse. Com. No. 747). |
| Apr 14, 2026 | Passed Third Reading with Representative(s) Reyes Oda voting aye with reservations; Representative(s) Alcos, Cochran, Garcia, Gedeon, Kong, Matsumoto, Muraoka, Pierick, Shimizu, Souza voting no (10) and Representative(s) Quinlan excused (1). Transmitted to Senate. |
| Apr 14, 2026 | Floor amendment failed with Noes, 1 (Representative(s) Todd). Excused, 2 (Representative(s) Perruso, Quinlan). |
| Apr 14, 2026 | Floor Amendment No. 2 offered by Rep. Garcia. |
| Apr 9, 2026 | Passed Second Reading as amended in HD 1; placed on the calendar for Third Reading with Representative(s) Reyes Oda voting aye with reservations; Representative(s) Alcos, Garcia, Gedeon, Kong, Matsumoto, Muraoka, Pierick, Shimizu, Souza voting no (9) and Representative(s) Cochran excused (1). |
| Apr 9, 2026 | Reported from FIN (Stand. Com. Rep. No. 1986-26) as amended in HD 1, recommending passage on Second Reading and placement on the calendar for Third Reading. |
| Apr 7, 2026 | The committee on FIN recommend that the measure be PASSED, WITH AMENDMENTS. The votes were as follows: 14 Ayes: Representative(s) Todd, Takenouchi, Hartsfield, Hussey, Keohokapu-Lee Loy, Kitagawa, Kusch, Lee, M., Miyake, Morikawa, Perruso, Templo, Yamashita; Ayes with reservations: Representative(s) Reyes Oda; 2 Noes: Representative(s) Alcos, Gedeon; and Excused: none. |
| Apr 2, 2026 | Bill scheduled to be heard by FIN on Tuesday, 04-07-26 2:00PM in House conference room 308 VIA VIDEOCONFERENCE. |
| Mar 12, 2026 | Referred to FIN, referral sheet 17 |
| Mar 12, 2026 | Pass First Reading |
| Mar 10, 2026 | Received from Senate (Sen. Com. No. 364) in amended form (SD 1). |
| Mar 10, 2026 | Passed Third Reading, as amended (SD 1). Ayes, 23; Aye(s) with reservations: none. Noes, 2 (Senator(s) Awa, DeCorte). Excused, 0 (none). Transmitted to House. |
| Mar 6, 2026 | 48 Hrs. Notice 03-10-26. |
| Mar 6, 2026 | Report adopted; Passed Second Reading, as amended (SD 1). |
| Mar 6, 2026 | Reported from WAM (Stand. Com. Rep. No. 2965) with recommendation of passage on Second Reading, as amended (SD 1) and placement on the calendar for Third Reading. |
| Mar 5, 2026 | The committee(s) on WAM recommend(s) that the measure be PASSED, WITH AMENDMENTS. The votes in WAM were as follows: 13 Aye(s): Senator(s) Dela Cruz, Moriwaki, DeCoite, Elefante, Hashimoto, Inouye, Kanuha, Kidani, Kim, Lee, C., Richards, Wakai, Fevella; Aye(s) with reservations: none ; 0 No(es): none; and 0 Excused: none. |
| Mar 4, 2026 | The committee(s) on WAM has scheduled a public hearing on 03-05-26 12:00PM; Conference Room 211 & Videoconference (Proposed Draft). |
| Mar 4, 2026 | The committee(s) on WAM deleted the measure from the public hearing scheduled on 03-05-26 10:15AM; CR 211 & Videoconference. |
| Mar 2, 2026 | The committee(s) on WAM has scheduled a public hearing on 03-05-26 10:15AM; Conference Room 211 & Videoconference. |
| Feb 2, 2026 | Referred to WAM. |
| Jan 28, 2026 | Passed First Reading. |
| Jan 28, 2026 | Introduced. |
| Jan 26, 2026 | Pending Introduction. |
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Date
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Description
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Location
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Votes
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|---|---|---|---|---|
| May 8, 2026 | Final Reading | Senate Floor |
Passed |
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| May 8, 2026 | Final Reading | House Floor |
Passed |
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| Apr 14, 2026 | Third Reading | House Floor |
Passed |
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| Apr 7, 2026 | The committee on FIN recommend that the measure be PASSED, WITH AMENDMENTS | House Standing Committee on Finance |
Passed |
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| Mar 10, 2026 | Third Reading | Senate Floor |
Passed |
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| Mar 5, 2026 | The committee(s) on WAM recommend(s) that the measure be PASSED, WITH AMENDMENTS | Senate Standing Committee on Ways and Means |
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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|---|---|---|
| ACLU of Hawaiʻi | *** Support | Apr 7, 2026 |
| Alaska Airlines | *** Against | Mar 5, 2026 |
| Alaska Airlines and Hawaiian Airlines | ** Against | |
| Alternate Energy Inc. | ** Against | |
| Catholic Charities Hawai‘i | *** Support | Apr 7, 2026 |
| Chamber of Commerce Hawaii | *** Against | Apr 7, 2026 |
| Charter Communications | *** Against | Apr 7, 2026 |
| CTIA | *** Against | Apr 7, 2026 |
| Democratic Party of Hawai‘i Education Caucus | *** Support | Apr 7, 2026 |
| Energy Advisors, LLC | ** Against | |
| Grassroot Institute of Hawaii | *** Against | Mar 5, 2026 |
| Grassroot Institute of Hawaii | ** Against | |
| Hawaii Renewable Fuels Coalition | *** Against | Apr 7, 2026 |
| Hawaii Solar Energy Association | *** Against | Apr 7, 2026 |
| Hawaiian Airlines | *** Against | Mar 5, 2026 |
| Hawai‘i Children’s Action Network Speaks! | *** Support | Apr 7, 2026 |
| Hawai‘i Public Health Institute (HIPHI) | *** Support | Apr 7, 2026 |
| Hawai‘i Renewable Fuels Coalition | *** Against | Apr 7, 2026 |
| Imua Alliance | *** Support | Apr 7, 2026 |
| Indivisible Hawaiʻi | *** Support | Apr 7, 2026 |
| Makai Ocean Engineering | *** Against | Mar 5, 2026 |
| Matson Navigation Company, Inc. | *** Against | Apr 7, 2026 |
| Office of the Governor | ** Support | |
| Par Hawaii | *** Against | Apr 7, 2026 |
| Park Hotels & Resorts Inc. | *** Against | Apr 7, 2026 |
| Photonworks Engineering | ** Against | |
| Photonworks Engineering | *** Against | Mar 5, 2026 |
| Pono Pacific Land Management, LLC | *** Against | Apr 7, 2026 |
| Revolusun | *** Against | Mar 5, 2026 |
| Revolusun | ** Against | |
| Sierra Club of Hawaiʻi (member) | *** Support | Apr 7, 2026 |
STAND. COM. REP. NO. 2965
Honolulu, Hawaii
RE: S.B. No. 3125
S.D. 1
Honorable Ronald D. Kouchi
President of the Senate
Thirty-Third State Legislature
Regular Session of 2026
State of Hawaii
Sir:
Your Committee on Ways and Means, to which was referred S.B. No. 3125 entitled:
"A BILL FOR AN ACT RELATING TO INCOME TAX,"
begs leave to report as follows:
The purpose and intent of this measure is to amend the income tax law.
More specifically, this measure:
(1) Repeals future adjustments to the standard deduction and income tax brackets;
(2) Amends the child and dependent care tax credit by:
(A) Increasing the applicable percentage of the employment-related expenses for which the child and dependent care tax credit may be claimed;
(B) Providing for a disallowance period when there is a final administrative or judicial decision finding that the claim was due to fraud or disallowing the credit; and
(C) Defining "adjusted gross income" for purposes of the child and dependent care tax credit as adjusted gross income as defined by the Internal Revenue Code of 1986, as amended; and
(3) Extends the repeal date for amendments made by Act 163, Session Laws of Hawaii 2023 to the child and dependent care tax credit, earned income tax credit, and food/excise tax credit from December 31, 2027, to December 31, 2032.
Prior to a public hearing on this measure, your Committee made available for public review a Proposed S.D. 1 of this measure. The Proposed S.D. 1 amends the measure by:
(1) Deleting the language repealing future adjustments to the standard deduction and income tax brackets;
(2) Adding provisions to repeal income tax rates for certain tax brackets under section 235-51, Hawaii Revised Statutes;
(3) Changing to an unspecified amount the applicable percentage of the employment-related expenses for which the child and dependent care tax credit may be claimed;
(4) Changing the repeal date for amendments made by Act 163, Session Laws of Hawaii 2023, to the child and dependent care tax credit, earned income tax credit, and food/excise tax credit from December 31, 2027, to an unspecified date;
(5) Adding provisions to repeal on January 1, 2029, the Renewable Energy Technologies Income Tax Credit, Capital Goods Excise Tax Credit, High Technology Business Investment Tax Credit, Renewable Fuels Production Tax Credit, Technology Infrastructure Renovation Tax Credit, Ship Repair Industry Tax Credit, and Tax Credit for Research Activities; and
(6) Changing the effective date to July 1, 2050, to facilitate further discussion on the measure.
Your Committee received testimony in support of this measure from the Office of the Governor, Hawaii Children's Action Network Speaks!, Hawaii Public Health Institute, and one individual.
Your Committee received testimony in opposition to this measure from Alaska Airlines and Hawaiian Airlines; Alternate Energy Inc.; Chamber of Commerce Hawaii; Energy Advisors, LLC; Grassroot Institute of Hawaii; Hawaii Solar Energy Association; Indivisible Hawaii; Matson Navigation Company, Inc.; Par Hawaii; Photonworks Engineering; Pono Pacific; RevoluSun; and numerous individuals.
Your Committee received comments on this measure from the Department of Taxation; Creative Industries Division of the Department of Business, Economic Development, and Tourism; Hawaii Green Infrastructure Authority; Hawaii State Energy Office; Hawaii Appleseed Center for Law and Economic Justice; Makai Ocean Engineering; and Tax Foundation of Hawaii.
Your Committee finds that the financial picture of the State has changed drastically from 2024. However, the need for real and immediate tax relief for Hawaii's working families has not diminished, but rather has increased due to federal funding changes, uncertainty in federal policies, and the resulting diminished economic growth. Your Committee further finds that there is a shared responsibility to ensure that the State's financial future is secure, stable, and able to deliver core services to Hawaii's residents and make strategic investments to diversify and grow our economy. Without thoughtful and targeted pivots, the State is at risk of running a deficit by fiscal years 2030 and 2031.
Your Committee believes that preserving the standard deduction increases and tax bracket adjustments for joint filers making less than $350,000, heads of household making less than $262,500, and individual filers making less than $175,000 ensures that Hawaii's working families will see money put directly back into their paychecks through lower withholdings every pay period. Your Committee additionally believes that this immediate infusion of financial resources can further stimulate the economy by providing working families with the funding to support our local small businesses, provide resources for educational opportunities, and provide a financial cushion for unexpected emergencies.
Your Committee further finds that long-standing business tax credits must be reevaluated as part of the State's financial health. Providing tax credits to businesses with no review of efficacy distorts the market and, without reform, risks the tax relief for Hawaii's working families. Your Committee finds that the burden of balancing the State's financial future cannot rest solely on the backs of individual taxpayers, but must be shared across public and private sectors.
Your Committee believes that the approach towards income tax reform within the Proposed S.D. 1 will help stabilize the financial future of both the State and its working families. The Proposed S.D. 1, along with other common-sense actions, such as reducing long-term vacancies within state government, reducing duplicative and overlapping program costs, and making strategic investments to grow Hawaii's economy, provide the roadmap to safely navigating the economic uncertainty the State and its residents face.
Your Committee has amended this measure by adopting the Proposed S.D. 1 and further amending the Proposed S.D. 1 by adding provisions to amend income tax rates for certain tax brackets under section 235-51, Hawaii Revised Statutes, as recommended in testimony from the Department of Taxation.
As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 3125, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 3125, S.D. 1, and be placed on the calendar for Third Reading.
Respectfully submitted on behalf of the members of the Committee on Ways and Means,
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________________________________ DONOVAN M. DELA CRUZ, Chair |
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Date
|
Testimony PDF
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|---|---|
| Apr 7, 2026 | SB3125_SD1_TESTIMONY_FIN_04-07-26_.PDF |
| Mar 5, 2026 | SB3125_TESTIMONY_WAM_03-05-26_.PDF |
Discussed in Hearing
16MIN
House Floor
12MIN
Senate Floor
1MIN
Senate Floor
2H
Conference Committee
27MIN
Senate Standing Committee on Ways and Means
27MIN
Senate Standing Committee on Economic Development and Tourism
27MIN
Senate Standing Committee on Water, Land, Culture and the Arts
Bill Author
Bill Co-Author(s):