THE SENATE	S.B. NO.	2497
THIRTY-SECOND LEGISLATURE, 2024		S.D. 1
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO TAXATION.

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

SECTION 1. Section 235-110.91, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (f) to read:

"(f) If in any taxable year the annual amount of certified credits reaches [$5,000,000] in the aggregate, the department of business, economic development, and tourism shall immediately discontinue certifying credits and notify the department of taxation. In no instance shall the department of business, economic development, and tourism certify a total amount of credits exceeding [$5,000,000] per taxable year. To comply with this restriction, the department of business, economic development, and tourism shall certify credits on a first come, first served basis.

The department of taxation shall not allow the aggregate amount of credits claimed to exceed that amount per taxable year."

2. By amending subsections (n) and (o) to read:

"(n) This section shall not apply to taxable years beginning after December 31, [2024.] 2029.

(o) As used in this section:

"Qualified high technology business" [shall have the same meaning as in section 235-7.3(c).] means a for-profit corporation, limited liability company, partnership, limited partnership, sole proprietorship, or other legal entity that:

(1) Is registered to do business in the State;

(2) Is independently owned and operated;

(3) Employs fewer than five hundred full-time or part-time employees in the State, including affiliates; and

(4) Conducts more than fifty per cent of its activities in qualified research.

"Qualified research" shall have the same meaning as in section 41(d) of the Internal Revenue Code.

"Qualified research expenses" shall have the same meaning as in section 41(b) of the Internal Revenue Code; provided that it shall not include research expenses incurred outside of the State."

SECTION 2. Act 261, Session Laws of Hawaii 2019, 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 [December 31, 2024.] January 1, 2030."

SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 4. This Act shall take effect on January 1, 2060, and shall apply to taxable years beginning after December 31, 2023; provided that, on December 31, 2029, section 1 of this Act shall be repealed and section 235-110.91, Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day prior to the effective date of this Act.

Report Title:

Tax Credit; Research Activities

Description:

Amends the tax credit for research activities by: (1) increasing the total amount of certified credits to an unspecified amount; (2) extending the sunset date of the credit to 12/31/29; and (3) amending the definition of qualified high technology businesses that are eligible to claim the credit. Takes effect 1/1/2060. (SD1)

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