STAND. COM. REP. NO. 828

Honolulu, Hawaii

RE: S.B. No. 338

S.D. 2

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. 338, S.D. 1, 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 the modernization of technological infrastructure in the State.

More specifically, this measure:

(1) Temporarily reinstates the Technology Infrastructure Renovation Tax Credit; and

(2) Expands the definition of "technology-enabled infrastructure" to include data servers.

Your Committee received written comments in support of this measure from Hawaiian Telcom and Servpac.

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

Your Committee finds that upgrading and modernizing equipment necessary for data storage will improve resilience against physical damage caused by weather-related events and cybersecurity threats and ensure the continued, uninterrupted provision of services to Hawaii businesses, state government and satellite agencies, and residents.

Your Committee has amended this measure by clarifying that the prohibition against taxpayers who claim the Technology Infrastructure Renovation Tax Credit from claiming any other income tax credit shall apply to taxable years beginning before January 1, 2026.

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. 338, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 338, S.D. 2.

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

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DONOVAN M. DELA CRUZ, Chair