SB376

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, an 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 credit is properly claimed.

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

(b) Every taxpayer claiming a 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 tax credits claimed pursuant to this section, if any, in the previous taxable year.

(1) Maintain records of the names and addresses of the taxpayers claiming the credit under this section and the total amount of the qualified costs upon which the 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 tax credit for each taxable year and cumulative amount of the 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 credit amount qualified for in each taxable year a 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 tax credit amount to conform to the information filed by the taxpayer.

(d) The insurance commissioner shall provide a certificate of approval for qualified home fire safety improvements implemented by taxpayers. The insurance commissioner shall adopt rules pursuant to chapter 91 to implement the certification requirements under this section.

(e) The insurance commissioner, in consultation with the director of taxation, shall create a form that indicates a taxpayer made qualified home fire safety improvements.

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

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

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

(g) If the tax credit claimed by the taxpayer under this section exceeds the amount of the income tax payments due from the taxpayer, the excess of credit over payments due shall be refunded to the taxpayer; provided that the tax credit properly claimed by a taxpayer who has no income tax liability shall be paid to the taxpayer; provided further that no refunds or payments on account of the tax credit allowed by this section shall be made for amounts less than $1. All claims for the tax credit under this section, including amended claims, 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.

(h) Any credit under this section shall be recaptured following the close of the taxable year for which the credit is claimed if the credit was claimed for qualified costs that are not certified under subsection (d) within one hundred eighty days of the completion of its construction or installation.

The recapture shall be equal to per cent of the amount of the total tax credit claimed under this section in the preceding three taxable years and shall be added to the taxpayer's tax liability for the taxable year in which the recapture occurs pursuant to this subsection.

(i) Every claim, including amended claims, for the 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 tax credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

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

(k) The director of taxation:

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

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

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

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

(m) 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, upon its approval, shall apply to taxable years beginning after December 31, 2025.

INTRODUCED BY:	_____________________________

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