RELATING TO THE EARNED INCOME TAX CREDIT.

Taxes

Active

The official status still shows this bill as active or still awaiting another formal step.

Sponsor: NAKAMURA (Introduced by request of another party)
Last action: 2025-12-08
Official status: Carried over to 2026 Regular Session.
Effective date: Not listed

Plain English Breakdown

The effective date of July 1, 3000, appears to be an error or placeholder and should be corrected.

Clarifying Rules for Earned Income Tax Credit

This bill changes how nonresidents claim the refundable earned income tax credit in Hawaii and limits when unused nonrefundable credits can be carried forward.

What This Bill Does

Requires nonresidents claiming the state refundable earned income tax credit to adjust their claim based on a ratio of their Hawaii adjusted gross income to federal adjusted gross income.
Eliminates the unlimited carryforward for nonrefundable earned income tax credits claimed in tax year 2022 after December 31, 2025.

Who It Names or Affects

Nonresidents who claim the refundable earned income tax credit in Hawaii.
Taxpayers with unused nonrefundable credits from tax year 2022.

Terms To Know

Earned Income Tax Credit: A government program that gives money back to people who earn low or moderate incomes, helping them keep more of what they earn.
Nonresident: Someone who lives in a state but does not have their permanent home there and pays taxes based on income earned while living elsewhere.

Limits and Unknowns

The bill's effective date is set for July 1, 3000, which seems to be an error or placeholder.
It only affects nonresidents claiming the refundable credit and taxpayers with unused credits from tax year 2022.

Amendments

These notes stay tied to the official amendment files and metadata from the legislature.

HD1

Hawaii published version HD1

Plain English: This amendment changes how nonresidents claim the earned income tax credit in Hawaii, requiring them to adjust their credit based on their Hawaii adjusted gross income compared to federal adjusted gross income, and limits the carryforward period for certain nonrefundable credits.

Nonresident taxpayers must now calculate their state refundable earned income tax credit by using a ratio of their Hawaii adjusted gross income to their federal adjusted gross income.
The unlimited carryforward period for nonrefundable earned income tax credits claimed in the year 2022 is eliminated.

The amendment text does not provide specific details on how the credit will be calculated or enforced, which may cause some uncertainty.

Bill History

2025-12-08 D
Carried over to 2026 Regular Session.
2025-04-01 S
The committee on WAM deferred the measure.
2025-03-28 S
The committee(s) on WAM deferred the measure until 04-01-25 10:00AM; Conference Room 211 & Videoconference.
2025-03-25 S
The committee(s) on WAM has scheduled a public hearing on 03-28-25 10:00AM; Conference Room 211 & Videoconference.
2025-03-06 S
Referred to WAM.
2025-03-06 S
Passed First Reading.
2025-03-06 S
Received from House (Hse. Com. No. 335).
2025-03-04 H
Passed Third Reading with none voting aye with reservations; none voting no (0) and Representative(s) Pierick, Ward excused (2). Transmitted to Senate.
2025-02-28 H
Passed Second Reading as amended in HD 1; placed on the calendar for Third Reading with none voting aye with reservations; none voting no (0) and Representative(s) Cochran, Pierick, Templo, Ward excused (4).
2025-02-28 H
Reported from FIN (Stand. Com. Rep. No. 1000) as amended in HD 1, recommending passage on Second Reading and placement on the calendar for Third Reading.
2025-02-19 H
The committee on FIN recommend that the measure be PASSED, WITH AMENDMENTS. The votes were as follows: 12 Ayes: Representative(s) Yamashita, Takenouchi, Holt, Hussey, Kitagawa, Kusch, Lamosao, Lee, M., Miyake, Morikawa, Templo, Reyes Oda; Ayes with reservations: none; Noes: none; and 4 Excused: Representative(s) Grandinetti, Keohokapu-Lee Loy, Alcos, Ward.
2025-02-14 H
Bill scheduled to be heard by FIN on Wednesday, 02-19-25 2:00PM in House conference room 308 VIA VIDEOCONFERENCE.
2025-01-23 H
Referred to FIN, referral sheet 3
2025-01-23 H
Introduced and Pass First Reading.
2025-01-21 H
Pending introduction.

Official Summary Text

RELATING TO THE EARNED INCOME TAX CREDIT.
Income Tax; Earned Income Tax Credit
Clarifies that nonresidents who claim the state refundable earned income tax credit are required to adjust the amount claimed using the ratio of their Hawaii adjusted gross income to federal adjusted gross income. Eliminates the unlimited carryforward on nonrefundable earned income tax credits claimed for tax year 2022. Effective 7/1/3000. (HD1)

Current Bill Text

Read the full stored bill text

HB1147

HOUSE OF REPRESENTATIVES

H.B. NO.

1147

THIRTY-THIRD LEGISLATURE, 2025

STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO THE EARNED INCOME TAX CREDIT.

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

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SECTION 1.
�
Section
235-55.75, Hawaii Revised Statutes, is amended as follows:

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1.
�

By amending subsections (a) to (c) to read as follows:

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"(a)
�

Each qualifying individual taxpayer may claim a refundable earned income
tax credit.
�
[
The
]
Unless
otherwise provided by law, the
tax credit, for the appropriate taxable
year, shall be forty per cent of the federal earned income tax credit allowed
and properly claimed under section 32 of the Internal Revenue Code and reported
as such on the individual
'
s federal income tax return.

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(b)
�
For
a part-year resident[
,
]
or a nonresident,
the tax credit shall
equal the amount of the tax credit calculated in subsection (a) multiplied by
the ratio of Hawaii adjusted gross income to federal adjusted gross income.

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(c)
�
For
purposes of this section, "qualifying individual taxpayer" means a [
taxpayer
]

resident or nonresident individual
that:

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(1)
�
Files
a federal income tax return for the taxable year claiming the earned income tax
credit under section 32 of the Internal Revenue Code; and

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(2)

Files a Hawaii income
tax return using the filing status used on the federal income tax return for
the taxable year and claiming the same dependents claimed on the federal income
tax return for the taxable year."

2.
�
By amending subsection
(g) to read as follows:

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"(g)
�

If nonrefundable credits claimed under this section for any of the four
consecutive taxable years beginning after December 31, 2017, exceed the
taxpayer's income tax liability for the original claim year, the excess of the
tax credits over liability may be used as a credit against the taxpayer's net
income tax liability in subsequent years until exhausted; provided that no
credit carried forward under this subsection shall be used as a credit for a
taxable year beginning after December 31, 2024.
�

No nonrefundable credits claimed for the taxable year beginning after
December 31, 2021, and carried forward under this section, shall be used as a
credit for a taxable year beginning after December 31, 2025.
"

����
SECTION 2.
�

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

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SECTION 3.
�

This Act, upon its approval, shall apply to taxable years beginning
after December 31, 2024; provided that the amendments made to section
235-55.75(a), Hawaii Revised Statutes, by this Act shall not be repealed when
section 235-55.75(a), Hawaii Revised Statutes, is reenacted on December 31,
2027, pursuant to section 5 of Act 163, Session Laws of Hawaii 2023.

INTRODUCED BY:

_____________________________

BY REQUEST

Report Title:

Income Tax; Earned Income Tax Credit

Description:

Clarifies that nonresidents who claim the refundable
earned income tax credit are required to adjust the amount claimed using the
ratio of their Hawaii adjusted gross income to federal adjusted gross
income.
�
Eliminates the unlimited
carryforward on nonrefundable earned income tax credits for tax year 2022.

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