HB1694 • 2026

RELATING TO SUSTAINABLE AVIATION FUEL TAX CREDIT.

Energy Taxes

Active

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

Sponsor: KILA, CHUN, EVSLIN, HASHEM, ILAGAN, KAHALOA, KEOHOKAPU-LEE LOY, KITAGAWA, KUSCH, LOWEN, MARTEN, MIYAKE, MORIKAWA, TAM
Last action: 2026-02-20
Official status: Report adopted; referred to the committee(s) on FIN as amended in HD 2 with Representative(s) Gedeon, Muraoka voting aye with reservations; Representative(s) Alcos, Garcia, Pierick voting no (3) and Representative(s) Quinlan excused (1).
Effective date: Not listed

Plain English Breakdown

The bill's effective date is listed as July 1, 3000 in the official summary, which seems incorrect and may need clarification.

Sustainable Aviation Fuel Tax Credit

This bill establishes a tax credit for companies distributing sustainable aviation fuel in Hawaii to reduce greenhouse gas emissions, with an annual cap of $20 million and reporting requirements.

What This Bill Does

Creates a tax credit of $1 per gallon for distributing sustainable aviation fuel, increasing by 2 cents for each additional 1% reduction in carbon dioxide equivalent emissions up to $2 per gallon.
Caps the total annual tax credits at $20 million and allows unused credits to be carried over for five years.
Requires companies claiming the credit to report details about their sustainable aviation fuel distribution, including greenhouse gas emissions data.
Ensures transparency by making information available for public inspection.

Who It Names or Affects

Companies that distribute sustainable aviation fuel in Hawaii
The Department of Transportation and the Department of Taxation

Terms To Know

Lifecycle greenhouse gas emissions: Total greenhouse gases produced throughout the production, use, and disposal of a product or service.

Limits and Unknowns

The bill does not specify how unused credits will be allocated if they exceed the annual limit.
It is unclear what happens to companies that do not comply with reporting requirements.

Amendments

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

HD1

Hawaii published version HD1

Plain English: This amendment establishes a tax credit for sustainable aviation fuel distributors in Hawaii, aiming to reduce greenhouse gas emissions.

Adds a new section to Chapter 235 of Hawaii Revised Statutes allowing a $1 per gallon tax credit for sustainable aviation fuel sold within the state, with an additional two cents per gallon for each one percent reduction in carbon dioxide equivalent emissions beyond a lifecycle threshold.
Requires taxpayers claiming the credit to file a third-party certified statement detailing their sustainable aviation fuel sales and production details.
Limits the total amount of tax credits allowed under this section to $20 million annually, with any excess allocated proportionally among eligible taxpayers.

The amendment text is extensive and includes many specific requirements that are not summarized here due to complexity.

HD2

Hawaii published version HD2

Plain English: This amendment establishes a tax credit for taxpayers who distribute sustainable aviation fuel, aiming to reduce greenhouse gas emissions and promote cleaner energy alternatives.

Adds a new section to Hawaii Revised Statutes allowing a $1 per gallon tax credit for distributing sustainable aviation fuel, with an additional 2 cents per gallon for each percentage point reduction in carbon dioxide equivalent emissions beyond the lifecycle threshold.
Requires taxpayers claiming the credit to file a third-party certified statement detailing their sustainable aviation fuel distribution and production information.
Limits the total amount of tax credits allowed under this section to $20,000,000 per calendar year, with excess credits allocated proportionally among eligible taxpayers.

The amendment text is complex and includes many details that are not directly relevant to a summary for grade 6-8 readers.
Some technical terms like 'lifecycle greenhouse gas emissions reduction threshold' may require additional explanation beyond the scope of this task.

Bill History

2026-02-20 H
Report adopted; referred to the committee(s) on FIN as amended in HD 2 with Representative(s) Gedeon, Muraoka voting aye with reservations; Representative(s) Alcos, Garcia, Pierick voting no (3) and Representative(s) Quinlan excused (1).
2026-02-20 H
Reported from EEP (Stand. Com. Rep. No. 721-26) as amended in HD 2, recommending referral to FIN.
2026-02-19 H
The committee on EEP recommend that the measure be PASSED, WITH AMENDMENTS. The votes were as follows: 7 Ayes: Representative(s) Lowen, Perruso, Chun, Kahaloa, Kusch, Quinlan, Matsumoto; Ayes with reservations: none; Noes: none; and Excused: none.
2026-02-13 H
Bill scheduled to be heard by EEP on Thursday, 02-19-26 9:45AM in House conference room 325 VIA VIDEOCONFERENCE.
2026-02-10 H
Passed Second Reading as amended in HD 1 and referred to the committee(s) on EEP with Representative(s) Garcia, Gedeon, Muraoka, Shimizu voting aye with reservations; Representative(s) Pierick voting no (1) and none excused (0).
2026-02-09 H
Reported from TRN (Stand. Com. Rep. No. 93-26) as amended in HD 1, recommending passage on Second Reading and referral to EEP.
2026-02-05 H
The committee on TRN recommend that the measure be PASSED, WITH AMENDMENTS. The votes were as follows: 8 Ayes: Representative(s) Kila, Miyake, Cochran, Evslin, Grandinetti, Kitagawa, La Chica; Ayes with reservations: Representative(s) Muraoka; Noes: none; and 1 Excused: Representative(s) Pierick.
2026-02-03 H
Bill scheduled for decision making on Thursday, 02-05-26 9:30AM in conference room 430 VIA VIDEOCONFERENCE.
2026-02-03 H
The committee(s) on TRN recommend(s) that the measure be deferred until 02-05-26 9:30AM.
2026-01-30 H
Bill scheduled to be heard by TRN on Tuesday, 02-03-26 10:30AM in House conference room 430 VIA VIDEOCONFERENCE.
2026-01-26 H
Referred to TRN, EEP, FIN, referral sheet 1
2026-01-21 H
Introduced and Pass First Reading.
2026-01-20 H
Prefiled.

Official Summary Text

RELATING TO SUSTAINABLE AVIATION FUEL TAX CREDIT.
Sustainable Aviation Fuel Tax Credit
Establishes a tax credit for sustainable aviation fuel distribution in Hawaii to reduce greenhouse gas emissions. Provides $1 per gallon, increasing by 2 cents per additional 1 per cent emissions reduction, up to $2 per gallon. Caps total credits at $20,000,000 annually, with carryover provisions. Requires reporting to ensure transparency and compliance. Applies to taxable years beginning after December 31, 2026, and sunsets on December 31, 2035. Effective 7/1/3000. (HD2)

Current Bill Text

Read the full stored bill text

HB1694

HOUSE OF REPRESENTATIVES

H.B. NO.

1694

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

relating
to SUSTAINABLE AVIATION FUEL TAX CREDIT
.

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

����
SECTION 1.
�
The legislature finds that sustainable
aviation fuel is critical to reducing greenhouse gas emissions in the aviation
sector, which is a significant contributor to the State's carbon footprint.
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By incentivizing the distribution of
sustainable aviation fuel through a tax credit, the State can promote cleaner
energy alternatives, support economic development, and advance Hawaii's climate
goals.

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Therefore, the purpose of this Act
is to establish a sustainable aviation fuel tax credit to encourage the
production and distribution of sustainable aviation fuel within the State.

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SECTION 2.
�
Chapter 235, Hawaii Revised Statutes, is
amended by adding a new section to part VI to be appropriately designated and
to read as follows:

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"
�235-
�
Sustainable
aviation fuel tax credit.

�
(a)
�
There
shall be allowed to each taxpayer subject to the taxes imposed by this chapter,
a sustainable aviation fuel tax credit that shall be deducted from the
taxpayer's net income tax liability, if any, imposed by this chapter for the
taxable year in which the credit is properly claimed.

����
For each taxpayer distributing sustainable
aviation fuel in the State, the amount of the credit shall be $1 per gallon of
sustainable aviation fuel sold for distribution in the State; provided that the
tax credit shall only be claimed for sustainable aviation fuel that meets the
lifecycle greenhouse gas emissions reduction threshold.

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The credit amount under this subsection shall
increase by two cents for each additional one per cent reduction in carbon
dioxide equivalent emissions beyond the lifecycle greenhouse gas emissions
reduction threshold, not to exceed $2 for each gallon of sustainable aviation
fuel.

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(b)
�
In the case of a partnership, S corporation,
estate, or trust, the distribution and share of the sustainable aviation fuel
tax credit shall be determined pursuant to section 704(b) (with respect to a
partner's distributive share) of the Internal Revenue Code of 1986, as amended.

�
For a fiscal year taxpayer, the taxpayer
shall report the credit in the taxable year in which the calendar year end is
included.

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(c)
�
No later than thirty days following the close
of the calendar year, every taxpayer claiming a credit under this section shall
complete and file an independent, third-party certified statement, at the
taxpayer's sole expense, with and in the form prescribed by the department of
transportation, providing the following information:

����
(1)
�
The type and
quantity of sustainable aviation fuel sold in the State during the previous
calendar year;

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(2)
�
The feedstock
used to produce the sustainable aviation fuel;

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(3)
�
The proposed
total amount of credit to which the taxpayer is entitled for each calendar year
and the cumulative amount of the tax credit the taxpayer received during the
previous calendar year;

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(4)
�
The number of
full-time and part-time employees of the facility and those employees' states
of residency, totaled per state;

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(5)
�
The number and
location of its sustainable aviation fuel production facilities within and
outside the State;

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(6)
�
The lifecycle
greenhouse gas emissions in kilograms of carbon dioxide equivalent per million
British thermal units for the sustainable aviation fuel; and

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(7)
�
The lifecycle
greenhouse gas emissions reported to the United States Department of the
Treasury if different from the emissions reported under paragraph (6).

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(d)
�
Within thirty calendar days after the due date
of the statement required under subsection (c), the department of transportation
shall:

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(1)
�
Acknowledge, in
writing, receipt of the statement; and

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(2)
�
Issue a
certificate to the taxpayer reporting the:

���������
(A)
�
Amount
of sustainable aviation fuel sold for distribution in the State;

���������
(B)
�
Amount
of credit that the taxpayer is entitled to claim for the previous calendar
year, inclusive of any carryover amount;

���������
(C)
�
Amount
of credit that the taxpayer is entitled to claim for any subsequent calendar
year; and

���������
(D)
�
Cumulative
amount of the tax credit during the previous calendar year.

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(e)
�
The taxpayer shall file the certificate issued
under subsection (d)(2) with the taxpayer's tax return with the department of
taxation.
�
The director of taxation may
audit and adjust the certification to conform to the facts.

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(f)
�
The total amount of tax credits allowed under
this section for all eligible taxpayers shall not exceed $20,000,000 for any
calendar year.
�
In the event that the
credits claimed under this section exceed the total credits allowed for all eligible
taxpayers in any given calendar year, the department of taxation shall allocate
the total credits allowed proportionally to each eligible taxpayer.

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To the extent that the
limitations of this subsection reduce the amount of a taxpayer's credit, the
amount of the reduction shall be available to the taxpayer to be used as a
credit in the subsequent calendar year but shall not be carried over for any calendar
year thereafter except as provided in subsection (h); provided that the
carryover credit shall be subject to the limitations of this subsection.

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(g)
�
Notwithstanding any other law to the contrary,
the information collected and compiled by the department of transportation
under subsections (c) and (d) shall be available for public inspection and
dissemination pursuant to chapter 92F.

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(h)
�
If the credit under this section exceeds the taxpayer's
net income tax liability, the excess of the credit 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 may be carried forward after the fifth
taxable year in which the credit was originally claimed.
�
All claims for a credit under this section
shall be properly filed on or before the end of the twelfth month following the
close of the taxable year for which the credit may be claimed.
�
Failure to comply with the foregoing provision
or to provide the certified statement required under subsection (c) shall constitute
a waiver of the right to claim the credit.

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(i)
�
Before the distribution of any sustainable
aviation fuel for the calendar year, the taxpayer shall provide written notice to
the department of transportation and department of taxation of the taxpayer's
intention to begin distribution of sustainable aviation fuel.
�
The written notice shall include information
on the taxpayer, facility location, facility capacity, anticipated distribution
start date, and the taxpayer's contact information.
�
Notwithstanding any other law to the contrary,
the written notice required under this subsection, including taxpayer and
facility information, shall be made available for public inspection and
dissemination pursuant to chapter 92F.

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(j)
�
The taxpayer shall provide written notice to
the director of transportation and director of taxation within thirty days
following the start of the distribution of sustainable aviation fuel.
�
The notice shall include the distribution
start date and expected volume of sustainable aviation fuel for the next twelve
months.
�
Notwithstanding any other law to
the contrary, the written notice required by this subsection shall be made
available for public inspection and dissemination pursuant to chapter 92F.

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(k)
�
Following each calendar year in which a
credit under this section has been claimed, the director of transportation
shall submit a written report to the governor and legislature regarding the
distribution of sustainable aviation fuel in the State.
�
The report shall include:

����
(1)
�
The number and
location of sustainable aviation fuel facilities in the State and outside the
State that have claimed a credit under this section;

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(2)
�
The total
number of gallons of sustainable aviation fuel sold for distribution in the
State during the previous calendar year; and

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(3)
�
The projected
number of gallons of sustainable aviation fuel for the succeeding year.

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(l)
�
The director of taxation:

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(1)
�
Shall prepare
any forms that may be necessary to claim a tax credit under this section;

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(2)
�
May require the
taxpayer to furnish reasonable information to ascertain the validity of the
claim for the tax credit made under this section; and

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(3)
�
May adopt rules
pursuant to chapter 91 necessary to implement this section.

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(m)
�
This section shall not apply to taxable years beginning
after December 31, 2035.

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(n)
�
As used in this section:

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"Lifecycle greenhouse gas
emissions" means the aggregate attributional core lifecycle greenhouse gas
emissions values using the most recent version of the United States Department
of Energy's Argonne National Laboratory's greenhouse gases, regulated
emissions, and energy use in technologies (GREET) model, including agricultural
practices and carbon capture and sequestration.

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"Lifecycle greenhouse gas
emissions reduction threshold" means a reduction in lifecycle greenhouse
gas emissions of fifty per cent compared to the fossil fuel for which the
renewable fuel is most likely to replace.

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"Sustainable aviation
fuel" means liquid fuel that:

����
(1)
�
Consists of
synthesized hydrocarbons and meets the requirements of the American Society for
Testing and Materials International Standard D7566 or D1655; and

����
(2)
�
Is derived from
biomass resources, waste streams, renewable or zero carbon energy sources, or
gaseous carbon oxides.
"

����
SECTION
3.
�
New statutory material is
underscored.

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SECTION 4.
�
This Act shall take effect upon its approval
and shall apply to taxable years beginning after December 31, 2025; provided
that section 2 of this Act shall be repealed on December 31, 2035.

INTRODUCED BY:

_____________________________

Report Title:

Sustainable
Aviation Fuel Tax Credit

Description:

Establishes a tax credit for sustainable aviation fuel
distribution in Hawaii to reduce greenhouse gas emissions. Provides $1 per
gallon, increasing by 2 cents per additional 1 per cent emissions reduction, up
to $2 per gallon.
�
Caps total credits at
$20,000,000 annually, with carryover provisions. Requires reporting to ensure
transparency and compliance. Applies to taxable years after December 31, 2025,
and sunsets on December 31, 2035.

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