Hawaii Tax Incentives
Business Investment Tax Credit
Through December 31, 2010, taxpayers making a high technology business investment are eligible for a tax credit the year in which the investment is made and for the proceeding four years. A "qualified high technology business" is one in which more than 50% of the activities are qualified research (75% of which is conducted in Hawaii) and in which more than 75% of the income (i.e. income from products sold from, manufactured or produced in Hawaii or from services performed in Hawaii) is derived from qualified research. "Qualified research" includes research that is related to non-fossil fuel energy-related technology. The tax credit is equal to a percentage of the investment made, up to the following maximums:
| Year | Tax Credit (percent of investment made) | Maximum Value of Credit |
|---|---|---|
| Year of Investment | $700,000 | |
| 1st Year Following Investment | 25% | $500,000 |
| 2nd Year Following Investment | 20% | $400,000 |
| 3rd Year Following Investment | 10% | $200,000 |
| 4th Year Following Investment | 10% | $200,000 |
If the tax credit exceeds the taxpayer's income tax liability for any of the five years that the credit is taken, the excess of the tax credit may be used as a credit in subsequent years until exhausted. A taxpayer may continue to claim the credits if the five-year period to claim the credits commences in taxable years beginning before January 1, 2010.
(Reference Hawaii Revised Statutes 235-7.3 and 235-110.9)
Point of Contact
Hawaii State Department of Taxation
Phone (800) 222-3229
http://www.state.hi.us/tax/tax.html
Ethanol Production Incentive
An income tax credit is available for qualifying ethanol production facilities equal to 30% of nameplate capacity between 500,000 and 15 million gallons per year. . The facility must produce at least 75% of its nameplate capacity to be eligible to receive the tax credit in that year, and the tax credit may be taken for up to eight years. The credit is only available to the first 40 million gallons of ethanol produced per year. Qualifying ethanol production facilities must be in operation prior to January 1, 2017. (Reference Hawaii Revised Statutes 235-110.3)
Alcohol Fuel Tax Exemption
Alcohol fuel sold for consumption or use by the purchaser is exempt from state excise tax. For the purpose of this exemption, alcohol fuel is defined as neat biomass-derived alcohol liquid fuel or a mixture of petroleum-derived fuel and alcohol fuel consisting of at least 10% denatured biomass-derived alcohol that is used to fuel a motor vehicle. A producer, wholesaler, or retailer of alcohol fuels must pass any savings from this exemption on to the consumer. This exemption expires June 30, 2009. (Reference Hawaii Revised Statutes 237-27.1)
