HB2017

SECTION 1. The legislature finds that article XI, section 3, of the Hawaii State Constitution, sets out the framework for state policies to promote agriculture and the conservation of productive agricultural lands in the State. To address the issue of important agricultural lands, Act 183, Session Laws of Hawaii 2005 (Act 183), established standards, criteria, and mechanisms to identify important agricultural lands and directed the department of agriculture and biosecurity to develop a program of incentives to promote agricultural viability. Act 183 was further amended by Act 233, Session Laws of Hawaii 2008, to provide for the designation of public lands as important agricultural lands by requiring the department of agriculture and biosecurity and department of land and natural resources to jointly identify the state-owned lands that should be designated as important agricultural lands.

The legislature further finds that section 204(a) of the Hawaiian Homes Commission Act, 1920, as amended, provides that Hawaiian home lands shall be under the control of the department of Hawaiian home lands requiring the use of lands in accordance with the Hawaiian Homes Commission Act.

Accordingly, the purpose of this Act is to amend the important agricultural land qualified agricultural cost tax credit to include Hawaiian home lands designated for subsistence agriculture, supplemental agriculture, or pastoral in the definition of "important agricultural lands" and expand the definition of "qualified agricultural costs" to include costs relating to the planting of orchard or fruit-bearing crops, which typically take longer to yield or return and the improvement of former sugar and pineapple plantation lands.

SECTION 2. Section 235-110.93, Hawaii Revised Statutes, is amended by amending subsection (k) to read as follows:

"(k) [~~As used in~~] For the purposes of this section:

"Agricultural business" means any person with a commercial agricultural, silvicultural, or aquacultural facility or operation, including:

(1) The care and production of livestock and livestock products, poultry and poultry products, apiary products, and plant and animal production for nonfood uses;

(2) The planting, cultivating, harvesting, and processing of crops; and

(3) The farming or ranching of any plant or animal species in a controlled salt, brackish, or freshwater environment;

provided that the principal place of the agricultural business is maintained in the State and more than fifty per cent of the land the agricultural business owns or leases, excluding land classified as conservation land, is important agricultural land.

"Important agricultural lands" means lands identified and designated as important agricultural lands pursuant to part III of chapter 205[.], and Hawaiian home lands designated for subsistence agriculture, supplemental agriculture, or pastoral.

"Net income tax liability" means income tax liability reduced by all other credits allowed under this chapter.

"Qualified agricultural costs" means expenditures for:

(1) The plans, design, engineering, construction, renovation, repair, maintenance, and equipment for:

(A) Roads or utilities, primarily for agricultural purposes, where the majority of the lands serviced by the roads or utilities, excluding lands classified as conservation lands, are important agricultural lands;

(B) Agricultural processing facilities in the State, primarily for agricultural purposes, where the majority of the crops or livestock processed, harvested, treated, washed, handled, or packaged are from agricultural businesses;

(C) Water wells, reservoirs, dams, water storage facilities, water pipelines, ditches, or irrigation systems in the State, primarily for agricultural purposes, providing water for lands, the majority of which, excluding lands classified as conservation lands, are important agricultural lands; and

(D) Agricultural housing in the State, exclusively for agricultural purposes; provided that:

(i) The housing units are occupied solely by farmers or employees for agricultural businesses and their immediate family members;

(ii) The housing units are owned by the agricultural business;

(iii) The housing units are in the general vicinity, as determined by the department of agriculture, of agricultural lands owned or leased by the agricultural business; and

(iv) The housing units conform to any other conditions that may be required by the department of agriculture;

(2) Feasibility studies, regulatory processing, and legal and accounting services related to the items under paragraph (1);

(3) Equipment, primarily for agricultural purposes, used to cultivate, grow, harvest, or process agricultural products by an agricultural business; [~~and~~]

(4) Regulatory processing, studies, and legal and other consultant services related to obtaining or retaining sufficient water for agricultural activities and retaining the right to farm on lands identified as important agricultural lands[.];

(5) Planting of orchard or fruit-bearing crops on not less than acres, including:

(A) The purchase of planting materials, including seeds, transplants, cuttings, and grafted plants; and

(B) Tillage, including the preparation of the soil, planting, weed control, fertilizing, irrigation, and pest management; and

(6) The clearing of, removal of trees and debris from, and soil restoration to correct any nutrient deficiency that is present on former sugar and pineapple plantation lands that have been out of agricultural use for more than five years and are to be used primarily for agricultural purposes."

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

SECTION 4. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2026.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	2017
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII