SB 328: Income Tax; Dairy Farm Retrofit; Hog Farm Conversion; Tax Credit

A BILL FOR AN ACT

RELATING TO TAXATION.

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

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

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

     (b)  In the case of a partnership, S corporation, estate, or trust, the tax credit allowable is for capital infrastructure costs incurred by the entity for the taxable year.  The costs upon which the tax credit is computed shall be determined at the entity level.  Distribution and share of credit shall be determined by rule.

     (c)  The dairy farm retrofit income tax credit shall be equal to fifty per cent of the capital infrastructure costs incurred by a taxpayer, up to a maximum of $          .

     (d)  The director of taxation:

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

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

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

     (e)  If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of the credit over liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted; provided that no credit shall be used more than five years after the taxable year in which the capital infrastructure costs are incurred.  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 the foregoing provision shall constitute a waiver of the right to claim the credit.

     (f)  For the purposes of this section:

     "Capital infrastructure costs" means capital expenditures, as used in section 263 of the Internal Revenue Code and regulations promulgated thereunder; provided that the capital expenditures for real property and fixtures are paid or incurred in connection with the conversion of a dairy farm to a qualified farm; provided further that the capital infrastructure costs shall not include costs for which another credit is claimed under this chapter.

     "Qualified farm" means a business:

     (1)  That currently owns capital or property or operates a hog farm at former dairy farm facilities; and

     (2)  Whose principal business is animal husbandry."

     SECTION 2.  New statutory material is underscored.

     SECTION 3.  This Act shall take effect on July 1, 3000, and shall apply to taxable years beginning after December 31, 2024.

Report Title:

Income Tax; Dairy Farm Retrofit; Hog Farm Conversion; Tax Credit

Description:

Establishes an income tax credit for capital infrastructure costs incurred in the conversion of a dairy farm to a hog farm.  Effective 7/1/3000.  (HD2)

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

A BILL FOR AN ACT

RELATING TO TAXATION.

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

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

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

     (b)  In the case of a partnership, S corporation, estate, or trust, the tax credit allowable is for capital infrastructure costs incurred by the entity for the taxable year.  The costs upon which the tax credit is computed shall be determined at the entity level.  Distribution and share of credit shall be determined by rule.

     (c)  The dairy farm retrofit income tax credit shall be equal to fifty per cent of the capital infrastructure costs incurred by a taxpayer, up to a maximum of $1,000,000.

     (d)  The director of taxation:

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

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

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

     (e)  If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of the credit over liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted; provided that no credit shall be used more than five years after the taxable year in which the capital infrastructure costs are incurred.  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 the foregoing provision shall constitute a waiver of the right to claim the credit.

     (f)  For the purposes of this section:

     "Capital infrastructure costs" means capital expenditures, as used in section 263 of the Internal Revenue Code and regulations promulgated thereunder; provided that the capital expenditures for real property and fixtures are paid or incurred in connection with the conversion of a dairy farm to a qualified farm; provided further that the capital infrastructure costs shall not include costs for which another credit is claimed under this chapter.

     "Qualified farm" means a business:

     (1)  That currently owns capital or property or operates a hog farm at former dairy farm facilities; and

     (2)  Whose principal business is animal husbandry."

     SECTION 2.  New statutory material is underscored.

     SECTION 3.  This Act shall take effect on July 1, 3000, and shall apply to taxable years beginning after December 31, 2024.

Report Title:

Income Tax; Dairy Farm Retrofit; Hog Farm Conversion; Tax Credit

Description:

Establishes an income tax credit for capital infrastructure costs incurred in the conversion of a dairy farm to a hog farm.  Effective 7/1/3000.  (HD1)

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

A BILL FOR AN ACT

RELATING TO TAXATION.

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

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

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

     (b)  In the case of a partnership, S corporation, estate, or trust, the tax credit allowable is for capital infrastructure costs incurred by the entity for the taxable year.  The costs upon which the tax credit is computed shall be determined at the entity level.  Distribution and share of credit shall be determined by rule.

     (c)  The dairy farm retrofit income tax credit shall be equal to fifty per cent of the capital infrastructure costs incurred by a taxpayer, up to a maximum of $1,000,000.

     (d)  The director of taxation:

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

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

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

     (e)  If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of the credit over liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted.  All claims for the tax credit under this section, including amended claims, shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed.  Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

     (f)  For the purposes of this section:

     "Capital infrastructure costs" means capital expenditures, as used in section 263 of the Internal Revenue Code and regulations promulgated thereunder; provided that the capital expenditures for real property and fixtures are paid or incurred in connection with the conversion of a dairy farm to a qualified farm; provided further that the capital infrastructure costs shall not include costs for which another credit is claimed under this chapter.

     "Qualified farm" means a business:

     (1)  That currently owns capital or property or operates a hog farm at former dairy farm facilities; and

     (2)  Whose principal business is animal husbandry."

     SECTION 2.  New statutory material is underscored.

     SECTION 3.  This Act shall take effect on July 1, 2050, and shall apply to taxable years beginning after December 31, 2024.

Report Title:

Income Tax; Dairy Farm Retrofit; Tax Credit

Description:

Establishes an income tax credit for capital infrastructure costs incurred in the conversion of a dairy farm to a hog farm.  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.

A BILL FOR AN ACT

relating to taxation.

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

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

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

     (b)  In the case of a partnership, S corporation, estate, or trust, the tax credit allowable is for capital infrastructure costs incurred by the entity for the taxable year.  The costs upon which the tax credit is computed shall be determined at the entity level.  Distribution and share of credit shall be determined by rule.

     (c)  The dairy farm retrofit income tax credit shall be equal to fifty per cent of the capital infrastructure costs incurred by a taxpayer, up to a maximum of $1,000,000.

     (d)  The director of taxation:

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

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

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

     (e)  If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of the credit over liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted.  All claims for the tax credit under this section, including amended claims, shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed.  Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

     (f)  For the purposes of this section:

     "Capital infrastructure costs" means capital expenditures, as used in section 263 of the Internal Revenue Code and regulations promulgated thereunder; provided that the capital expenditures for real property and fixtures are paid or incurred in connection with the conversion of a dairy farm to a qualified farm; provided further that the capital infrastructure costs shall not include costs for which another credit is claimed under this chapter.

     "Qualified farm" means a business:

     (1)  That currently owns capital or property or operates a hog farm at former dairy farm facilities; and

     (2)  Whose principal business is animal husbandry."

     SECTION 2.  New statutory material is underscored.

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

Report Title:

Income Tax; Dairy Farm Retrofit; Tax Credit

Description:

Establishes an income tax credit for capital infrastructure costs incurred in the conversion of a dairy farm to a hog farm.

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

STAND. COM. REP. NO.  1999

Honolulu, Hawaii

                , 2025

RE:   S.B. No. 328

      S.D. 1

      H.D. 2

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Madame:

     Your Committee on Finance, to which was referred S.B. No. 328, S.D. 1, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

     The purpose of this measure is to establish a dairy farm retrofit income tax credit for capital infrastructure costs incurred in the conversion of a dairy farm to a hog farm.

     Your Committee received testimony in support of this measure from the Agribusiness Development Corporation; Hawai‘i Farm Bureau; Hawai‘i Food+ Policy; and one individual.  Your Committee received comments on this measure from the Department of Taxation and Department of Business, Economic Development, and Tourism.

     Your Committee has amended this measure by blanking the maximum amount of dairy farm retrofit income tax credits that a taxpayer may claim.

     As affirmed by the record of votes of the members of your Committee on Finance that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 328, S.D. 1, H.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 328, S.D. 1, H.D. 2.

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

STAND. COM. REP. NO.  1442

Honolulu, Hawaii

                , 2025

RE:   S.B. No. 328

      S.D. 1

      H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Madame:

     Your Committee on Economic Development & Technology, to which was referred S.B. No. 328, S.D. 1, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

     The purpose of this measure is to establish an income tax credit for capital infrastructure costs incurred in the conversion of a dairy farm to a hog farm.

     Your Committee received testimony in support of this measure from the Department of Agriculture; Department of Business, Economic Development, and Tourism; Hawaiʻi Farm Bureau; and Hawaiʻi Food+ Policy.  Your Committee received comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

     Your Committee finds that revitalizing Hawaii's agricultural sector through strategic investments in farm infrastructure will strengthen the local economy, support food security, and promote sustainable farming practices.  By providing financial incentives for dairy farm retrofits, this measure will encourage the modernization of facilities, enhance operational efficiency, and reduce financial barriers for agricultural businesses to transition to hog farming and increase local pork production.

     As affirmed by the record of votes of the members of your Committee on Economic Development & Technology that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 328, S.D. 1, H.D. 1, and recommends that it be referred to your Committee on Finance.

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

STAND. COM. REP. NO.  1222

Honolulu, Hawaii

                , 2025

RE:   S.B. No. 328

      S.D. 1

      H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Madame:

     Your Committee on Agriculture & Food Systems, to which was referred S.B. No. 328, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

     The purpose of this measure is to establish an income tax credit for capital infrastructure costs incurred in the conversion of a dairy farm to a hog farm.

     Your Committee received testimony in support of this measure from the Department of Agriculture; Department of Business, Economic Development, and Tourism; Hawai‘i Farm Bureau; Hawaiʻi Food+ Policy; and one individual.  Your Committee received comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

     Your Committee finds that repurposing underutilized dairy farm infrastructure for hog farming presents a significant opportunity to strengthen Hawaii's pork industry and reduce reliance on imported meat.  However, farmers face substantial financial challenges in converting these facilities, including structural renovations, regulatory compliance, and acquiring specialized equipment.  To support this transition, this measure establishes an income tax credit to offset capital infrastructure costs, making it more feasible for farmers to expand local pork production.

     Your Committee has amended this measure by:

     (1)  Limiting the number of years that the tax credit may be carried forward to five years after the taxable year in which the capital infrastructure costs are incurred;

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

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

     As affirmed by the record of votes of the members of your Committee on Agriculture & Food Systems that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 328, S.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 328, S.D. 1, H.D. 1, and be referred to your Committee on Economic Development & Technology.

Respectfully submitted on behalf of the members of the Committee on Agriculture & Food Systems,

STAND. COM. REP. NO. 756

Honolulu, Hawaii

RE:    S.B. No. 328

       S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Sir:

     Your Committee on Ways and Means, to which was referred S.B. No. 328 entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

     The purpose and intent of this measure is to promote food production in the State.

     More specifically, this measure establishes an income tax credit for capital infrastructure costs incurred in the conversion of a dairy farm to a hog farm.

     Your Committee received written comments in support of this measure from the Department of Business, Economic Development, and Tourism; Hawaii Farm Bureau; and Purple Maia Foundation.

     Your Committee received comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

     Your Committee finds that pork consumption in Hawaii is projected to grow from 92.8 million pounds in 2023 to over 104 million pounds by 2030.  However, local supply currently accounts for only 0.4 per cent of pork consumed, with an additional 2.9 per cent produced in the grey market.  Your Committee further finds that the steep decline in Hawaii's hog inventory and production, from 28,570 hogs in 1992 to just 8,000 in 2023, highlights the urgent need to bolster local pork production capacity.  Your Committee believes this measure is a critical step toward revitalizing Hawaii's hog industry, reducing reliance on imports, and achieving the State's ambitious food security and sustainability goals.

     Your Committee has amended this measure by changing the effective date to July 1, 2050, to facilitate further discussion on the measure.

     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. 328, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 328, S.D. 1.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

STAND. COM. REP. NO. 19

Honolulu, Hawaii

RE:    S.B. No. 328

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Sir:

     Your Committee on Agriculture and Environment, to which was referred S.B. No. 328 entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

     The purpose and intent of this measure is to provide an income tax credit for capital infrastructure costs incurred in the conversion of a dairy farm to a hog farm.

     Your Committee received testimony in support of this measure from the Department of Agriculture; Department of Business, Economic Development, and Tourism; Agribusiness Development Corporation; and Hawaiʻi Farm Bureau.

     Your Committee received comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

     Your Committee finds that the although the consumption of pork in the State continues to rise, due to high production costs, the number of hog farms and volume of hogs sold in the State has significantly declined.  According to testimony received by your Committee, local supply currently accounts for only 0.4 percent of pork consumed, with an additional 2.9 percent produced in the grey market.  This measure seeks to invest in Hawaii's pork industry, thereby promoting greater self-sufficiency in local meat production and reducing dependency on imported pork.

     As affirmed by the record of votes of the members of your Committee on Agriculture and Environment that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 328 and recommends that it pass Second Reading and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Agriculture and Environment,