Allows qualified homeowners to claim a tax credit for the installation and purchase of photovoltaic systems.

A BILL FOR AN ACT

SECTION 1. The legislature finds that using the sun as an energy source is a tried and true idea. From hanging clothes on a clothesline to using solar energy to heat water, people in Hawaii are long accustomed to using the sun as an alternate to petroleum-generated electricity.

The legislature also finds that photovoltaic systems are the next generation of technology that uses the energy of the sun. The difference between photovoltaic systems and other uses of solar energy, however, is that photovoltaic systems take sunlight and convert the energy into electricity that can be used to power any home or electrical appliance.

Increased use of alternative energies to provide power to our homes, businesses, and technologies, help to reduce our dependence on fossil fuels, improves the quality of our air and water, and minimizes spikes in energy costs due to petroleum shortages. The purpose of this Act is to provide a tax incentive to increase the use of photovoltaic systems as an alternative energy source and to defray the costs of purchasing and installing such a system based on income levels.

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

"§235- Photovoltaic systems; tax credit. (a) There shall be allowed to each qualified taxpayer subject to the taxes imposed by this chapter, a tax credit that may be claimed for the taxable year in which the credit is properly claimed. The amount of the credit shall be subject to the adjusted gross income brackets shown in the following schedule:

Adjusted Gross Income Tax Credit

$50,000 and below Up to $10,000

$50,001 to $75,000 Up to $7,500

$75,001 to $100,000 Up to $5,000

$100,001 and over Up to $2,500

A husband and wife filing separate returns for a taxable year for which a joint return could have been filed by them shall claim only the tax credit to which they would have been entitled had a joint return been filed.

(b) The tax credit shall be equal to the qualified costs incurred in a taxable year after December 31, 2006, subject to the schedule in subsection (a) and up to a maximum of $10,000,000 of credits in the aggregate for all qualified taxpayers for all years.

(c) The tax credit shall only be available to qualified homeowners.

(d) If the tax credit under this section exceeds the taxpayer's income tax liability for the taxable year in which the credit is claimed, 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.

(e) If any credit is claimed under this section, then no taxpayer shall claim a credit under any chapter for the same qualified costs for which a credit is claimed under this section.

(f) 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 claims for credits made under this section and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.

(g) As used in this section:

"Photovoltaic system" means any device or system that produces free electrons when exposed to light, generating electricity.

"Qualified costs" means the cost of purchasing and installing a photovoltaic system.

"Qualified home owner" means an individual who can claim an exemption from real property taxes under chapter 246 for the property upon which the photovoltaic system is installed."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect on July 1, 2006