RELATING TO TAXATION.

HB1635

HOUSE OF REPRESENTATIVES

H.B. NO.

1635

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

relating
to taxation
.

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

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SECTION
1
.
�
Section 235-17, Hawaii Revised Statutes, is
amended by amending subsection (o) to read as follows:

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"
(o)
�
For the purposes of this section:

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"Commercial":

����
(1)
�
Means an
advertising message that is filmed using film, videotape, or digital media, for
dissemination via television broadcast or theatrical distribution;
and

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(2)
�
Includes a series
of advertising messages if all parts are produced at the same time over the
course of six consecutive weeks[
; and

����
(3)
�
Does not
include an advertising message with Internet-only distribution
].

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"Digital media" means
production methods and platforms directly related to the creation of cinematic
imagery and content, specifically using digital means, including but not
limited to digital cameras, digital sound equipment, and computers, to be
delivered via film, videotape, interactive game platform, or other digital
distribution media.

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"Post-production" means
production activities and services conducted after principal photography is
completed, including but not limited to editing, film and video transfers,
duplication, transcoding, dubbing, subtitling, credits, closed captioning,
audio production, special effects (visual and sound), graphics, and animation.

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"Production" means a
series of activities that are directly related to the creation of visual and
cinematic imagery to be delivered via film, videotape, or digital media and to
be sold, distributed, or displayed as entertainment or the advertisement of
products for mass public consumption, including but not limited to scripting,
casting, set design and construction, transportation, videography, photography,
sound recording, interactive game design, and post-production.

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"Qualified production":

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(1)
�
Means a
production, with expenditures in the State, for the total or partial production
of a feature-length motion picture, short film, made-for-television movie,
commercial, music video, interactive game, television
(including broadcast
and streaming platforms)
series pilot, single season (up to twenty-two
episodes[
)
]
for broadcast television and up to eight episodes for an
ongoing series for streaming platforms)
of a [
television
] series [
regularly
]
filmed in the State [
(if
]
.
�
If

the number of episodes per single season
for a broadcast television series

exceeds twenty-two,
and if the number of episodes per single season for a
streaming platform series exceeds eight,
additional episodes for the same
season shall constitute a separate qualified production[
),
]
.

�
"Qualified production" also
includes a
television
or streaming platform
special, single [
television
]
episode that is not part of a television
or streaming platform
series
regularly filmed or based in the State, national magazine show, [
or
]
and

national talk show.
�
For the purposes of
subsections (d) and (l), each of the aforementioned qualified production
categories shall constitute separate, individual qualified productions; and

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(2)
�
Does not include:

���������
(A)
�
News;

���������
(B)
�
Public affairs
programs;

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(C)
�
Non-national
magazine or talk shows;

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(D)
�
Televised sporting
events or activities;

���������
(E)
�
Productions that
solicit funds;

���������
(F)
�
Productions
produced primarily for industrial, corporate, institutional, or other private
purposes; and

���������
(G)
�
Productions
that include any material or performance prohibited by chapter 712.

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"Qualified production
costs" means the costs incurred by a qualified production within the State
that are subject to the general excise tax under chapter 237 at the highest
rate of tax or income tax under this chapter if the costs are not subject to
general excise tax and that have not been financed by any investments for which
a credit was or will be claimed pursuant to section 235-110.9.
�
[
Qualified production costs include
]
"Qualified
production costs" includes
but [
are
]
is
not limited to:

����
(1)
�
Costs incurred
during preproduction such as location scouting and related services;

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(2)
�
Costs of set
construction and operations, purchases or rentals of wardrobe, props,
accessories, food, office supplies, transportation, equipment, and related
services;

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(3)
�
Wages or salaries
of cast, crew, and musicians;

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(4)
�
Costs of
photography, sound synchronization, lighting, and related services;

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(5)
�
Costs of editing,
visual effects, music, other post-production, and related services;

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(6)
�
Rentals and fees
for use of local facilities and locations, including rentals and fees for use
of state and county facilities and locations that are not subject to general
excise tax under chapter 237 or income tax under this chapter;

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(7)
�
Rentals of
vehicles and lodging for cast and crew;

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(8)
�
Airfare for
flights to or from Hawaii, and interisland flights;

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(9)
�
Insurance and
bonding;

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(10)
�
Shipping of
equipment and supplies to or from Hawaii, and interisland shipments; and

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(11)
�
Other direct
production costs specified by the department in consultation with the
department of business, economic development, and tourism;

provided that any government-imposed fines,
penalties, or interest that are incurred by a qualified production within the
State shall not be "qualified production costs".
�
"
Qualified
production costs
"
does not include any
costs funded by any grant, forgivable loan, or other amounts not included in
gross income for purposes of this chapter.

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"
Streaming platform
"

means
an online provider of
media content
that delivers the content via
internet
connection to the subscriber's computer,
television
, or

mobile device
.
"

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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, 2025; provided that on January 1,
2033, this Act shall be repealed to coincide with the repeal date of Act 88,
Session Laws of Hawaii 2006, as amended by Act 89, Session Laws of Hawaii 2013,
as amended by Act 143, Session Laws of Hawaii 2017, as amended by Act 217,
Session Laws of Hawaii 2022, and section 235‑17, Hawaii Revised Statutes,
shall be reenacted in the form in which it read on the day before the effective
date of Act 88, Session Laws of Hawaii 2006.

INTRODUCED BY:

_____________________________

Report Title:

Motion Picture, Digital Media, and Film Production Income Tax
Credit;
Commercial;
Advertisement; Internet-only Distribution; Broadcast and Streaming Platforms

Description:

Makes
broadcast and streaming platform productions and commercial advertisement productions
with Internet-only distribution eligible to receive the
Motion Picture,
Digital Media, and Film Production Income Tax Credit.

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