THE SENATE	S.B. NO.	376
THIRTY-THIRD LEGISLATURE, 2025		S.D. 1
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO TAX CREDITS.

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-   Home fire safety improvement tax credit. (a) There shall be allowed to each taxpayer subject to the taxes imposed by this chapter, a nonrefundable 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 nonrefundable credit is properly claimed.

In the case of a partnership, S corporation, estate, or trust, the nonrefundable tax credit allowable shall be for qualified costs incurred by the entity for the taxable year. The cost upon which the nonrefundable tax credit is computed shall be determined at the entity level. Distribution and share of the nonrefundable credit shall be determined pursuant to section 704(b) of the Internal Revenue Code.

(b) Every taxpayer claiming a nonrefundable tax credit under this section shall submit a written, sworn statement to the department of taxation no later than ninety days following the end of each taxable year in which qualified costs were paid or incurred, identifying:

(1) Qualified costs, if any, paid or incurred in the previous taxable year; and

(2) The amount of nonrefundable tax credits claimed pursuant to this section, if any, in the previous taxable year.

(c) The department of taxation shall:

(1) Maintain records of the names and addresses of the taxpayers claiming the nonrefundable credit under this section and the total amount of the qualified costs upon which the nonrefundable tax credit is based;

(2) Verify the amount of the qualified costs;

(3) Total all qualified costs that the department of taxation certifies; and

(4) Provide a letter to the director of taxation specifying the amount of the nonrefundable tax credit for each taxable year and cumulative amount of the nonrefundable tax credit for all years claimed.

Upon each determination made under this subsection, the department of taxation shall issue a letter to the taxpayer verifying the information submitted to that department, including the amount of qualified costs and the nonrefundable credit amount qualified for in each taxable year a nonrefundable credit is claimed. The taxpayer shall file the letter from the department of taxation with the taxpayer's tax return. The director of taxation may audit and adjust the nonrefundable tax credit amount to conform to the information filed by the taxpayer.

(d) A third party shall provide a certificate of approval for qualified home fire safety improvements implemented by taxpayers.

(e) The nonrefundable tax credit shall be equal to       per cent of the taxpayer's qualified costs subject to the following:

(1) The total nonrefundable credit allowed for a taxpayer in any taxable year shall not exceed $          ; and

(2) The total amount of nonrefundable tax credits allowed under this section shall not exceed $           for all taxpayers in any fiscal year. If the total amount of nonrefundable credits claimed under this section by all taxpayers in any fiscal year exceeds $          , the nonrefundable credit shall be allowed to taxpayers based on the date of certification by the insurance commissioner on a first come, first served basis. Any taxpayer who is certified by a third party in a fiscal year and who is not eligible to claim the nonrefundable credit due to the $           cap having been exceeded for that fiscal year shall be eligible to claim the nonrefundable credit in the subsequent year and shall receive priority for the nonrefundable credit over taxpayers who receive certification in the subsequent fiscal year.

(f) No taxpayer shall claim any other credit under this chapter for the same qualified costs used to properly claim a nonrefundable tax credit under this section for the taxable year.

(g) The director of taxation:

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

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

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

(h) This section shall not apply to any amount paid or incurred before January 1, 2026.

(i) For the purposes of this section:

"Qualified costs" means the expenses incurred in constructing or installing a qualified home fire safety improvement.

"Qualified home fire safety improvement" means an improvement to a taxpayer's residence that increases the residence's fire safety rating as calculated by the taxpayer's homeowner's insurance policy."

SECTION 2. New statutory material is underscored.

SECTION 3. This Act shall take effect on July 1, 2077, and shall apply to taxable years beginning after December 31, 2025.

Report Title:

Home Fire Safety Improvement Nonrefundable Tax Credit; Insurance Commissioner; Fire Safety; Homeowner's Insurance

Description:

Establishes a nonrefundable income tax credit for taxpayers who construct or install improvements to their residence that increase the residence's fire safety rating as calculated by the taxpayer's homeowner's insurance policy. Applies to taxable years beginning after 12/31/2025. Effective 7/1/2077. (SD1)

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