STAND. COM. REP. NO. 2787

Honolulu, Hawaii

RE: S.B. No. 2805

S.D. 2

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 2805, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO AGRICULTURE,"

begs leave to report as follows:

The purpose and intent of this measure is to promote agricultural production in the State.

More specifically, this measure establishes a nonrefundable income tax credit to incentivize significant investment in agricultural production and support the expansion of agricultural crops that take longer to become productive.

Your Committee received written comments in support of this measure from the Agribusiness Development Corporation, Chamber of Commerce Hawaii, Hawaii Farm Bureau, Hawaii Farmers Union, Hawaii Food+ Policy, and an individual.

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

Your Committee finds that agricultural production requires significant capital investment. Irrigation systems, reservoirs, farm roads, processing facilities, equipment, and perennial crop development require substantial upfront investment that often takes years to provide returns. Your Committee believes that the tax credit established by this measure will encourage such investments, strengthen the Hawaii's long-term food security, and help to diversify the State's agricultural economy.

Your Committee has amended this measure by:

(1) Assigning certification authority for claims of the tax credit to the Agribusiness Development Corporation;

(2) Limiting to no more than five years the duration during which taxpayers may carry forward excess tax credits; and

(3) Clarifying that qualified agricultural costs used to claim the tax credit may not be used to claim other tax benefits.

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. 2805, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2805, 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