Provides an income tax credit for private school tuition.

A BILL FOR AN ACT

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

"§235- School tuition tax credit. (a) There shall be allowed to each taxpayer subject to the taxes imposed by this chapter, an income tax credit for tuition paid to elementary or secondary educational institutions situated in this State. This credit 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) Only taxpayers who are the parent or guardian of an unemancipated minor-student shall be eligible for this credit.

(c) The amount of the credit shall be the lesser of:

(d) As used in this section, "tuition" means any charges for the expenses of personnel, buildings, equipment and materials other than text books, and other expenses of elementary or secondary schools which relate to the teaching only of those subjects legally and commonly taught in public elementary and secondary schools in this State and which do not relate to the teachings of religious tenets, doctrines, or worship, the purpose of which is to inculcate those tenets, doctrines, or worship. "Tuition" includes those expenses which relate to extracurricular activities including sports events, musical or dramatic performances, speech activities, or programs of a similar nature.

(e) The credit allowed under this section shall be claimed against the net income tax liability for the taxable year.

(f) If the tax credit under this section exceeds the taxpayer's income tax liability, the excess credit over liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted. All 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.

(g) 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 and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.

(h) The tax credit allowed under this section shall be available for taxable years beginning after December 31, 2005."

SECTION 2. New statutory material is underscored.

SECTION 3. This Act shall take effect on July 1, 2005.