THE SENATE	S.B. NO.	944
THIRTY-THIRD LEGISLATURE, 2025		S.D. 2
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO THE LOW-INCOME HOUSING TAX CREDIT.

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

SECTION 1. Section 235-110.8, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) Each taxpayer subject to the tax imposed by this chapter, who has filed a net income tax return for a taxable year may claim a low-income housing tax credit against the taxpayer's net income tax liability. The amount of the 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 on a timely basis. A credit under this section may be allocated by a partnership or limited liability company in any manner agreed to by the partners or members regardless of whether the individual or entity to receive the credit is deemed to be a partner or member for federal income tax purposes, so long as the individual or entity is deemed to be a partner or member pursuant to applicable state law. A partner or member that is a partnership or limited liability company that has been allocated a credit may either further allocate the credit or transfer, sell, or assign all or a portion of the credit to any taxpayer, regardless of whether the taxpayer owns a direct or indirect interest in the qualified low-income building; provided that, for any tax year in which the credit is transferred, sold, or assigned pursuant to this subsection, the transferee shall have received the transfer or assignment of the tax credit before the date the tax return, or amended return, claiming the tax credit is filed, and the transferor shall notify the department of taxation of the transfer, sale, or assignment at least thirty days before the transferee claims the tax credits. The notification shall be in the manner prescribed by the department of taxation. The credit may be claimed whether or not the taxpayer is eligible to be allocated a federal low‑income housing tax credit pursuant to section 42 of the Internal Revenue Code."

SECTION 2. Act 129, Session Laws of Hawaii 2016, as amended by section 2 of Act 226, Session Laws of Hawaii 2021, is amended by amending section 4 to read as follows:

"SECTION 4. This Act, upon its approval, shall take effect on January 1, 2017, and shall apply to qualified low-income buildings awarded credits after December 31, 2016; provided that this Act shall be repealed on December 31, [2027,] 2032, and section 235-110.8, Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day prior to the effective date of this Act."

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

SECTION 4. This Act shall take effect on July 1, 2050, and apply to taxable years beginning after December 31, 2025; provided that, on July 1, 2030, section 1 of this Act shall be repealed and section 235-110.8(b), 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:

LIHTC; Partnership; Limited Liability Company; Allocation; Transfer, Sale, or Assignment; Direct or Indirect Interest; Sunset; Extension

Description:

Authorizes a partner or member in a partnership or limited liability company that has been allocated a low-income housing tax credit to further allocate the credit or transfer, sell, or assign up to one hundred per cent of the tax credit, under certain conditions. Extends the sunset date for certain provisions of the Low-Income Housing Tax Credit for low-income buildings. Effective 7/1/2050. Applies to taxable years after 12/31/2025. Amendments to §235-110.8(b), HRS, shall sunset on 7/1/2030. (SD2)

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