HOUSE OF REPRESENTATIVES	H.B. NO.	612
THIRTY-SECOND LEGISLATURE, 2023
STATE OF HAWAII

A BILL FOR AN ACT

relating to taxation.

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

SECTION 1. The legislature finds that increasing local food production for local consumption is an issue of statewide interest. Strengthening the local agricultural industry in a way that revitalizes food systems can provide economic, social, ecological, and public health benefits for the lands, waters, and people of Hawaii.

The legislature further finds that Hawaii farmers, fishers, and ranchers need support to alleviate the high costs associated with agricultural production in the islands. Ensuring the viability of local food producers is critical to the State's progress toward the goals outlined in the Aloha+ challenge.

The purpose of this Act is to establish an income tax credit to alleviate the high costs of production for Hawaii's farmers, ranchers, and fishers and incentivize growth in the agricultural sector.

SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235-    Farming income tax credit. (a) There shall be allowed to each eligible farmer subject to the tax imposed under this chapter, an income tax credit that shall be deductible from the eligible farmer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed.

(b) The amount of the tax credit shall be equal to the qualified expenses of the eligible farmer, up to a maximum of $10,000.

(c) If the tax credit under this section exceeds the eligible farmer's net income tax liability and the eligible farmer's federal gross income is under $250,000, the excess of the credit over liability shall be refunded to the taxpayer; provided that no refunds or payment on account of the tax credits allowed by this section shall be made for amounts less than $1. If the tax credit under this section exceeds the eligible farmer's net income tax liability and the eligible farmer's federal gross income is $250,000 or more, the excess of the credit over liability may be used as a credit against the taxpayer's net income tax liability in subsequent years until exhausted. 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.

(d) 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 under chapter 91 necessary to effectuate the purposes of this section.

(e) All of the provisions relating to assessments and refunds under this chapter and under section 231-23(c)(1) shall apply to the tax credit under this section.

(f) As used in this section:

"Eligible farmer" means a taxpayer that provides proof of at least two-thirds of excess federal gross income from farming or ranching, as shown by federal Form 1040 Schedule F filings, or from fishing, as shown by federal Form 1040 Schedule C filings.

"Excess federal gross income" means the amount of federal gross income from all sources for the tax year."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2022.

INTRODUCED BY:

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Report Title:

Agriculture; Farmers; Ranchers; Fishers; Income Tax Credit

Description:

Creates an income tax credit to alleviate the high costs of production for farmers, ranchers, and fishers and incentivize growth in the agricultural sector in the State.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.