RELATING TO TAXATION.

Labor Taxes

Active

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

Sponsor: TAM, AMATO, EVSLIN, GEDEON, GRANDINETTI, HUSSEY, ILAGAN, KAPELA, KILA, KUSCH, LEE, M., MARTEN, MATAYOSHI, OLDS, PERRUSO, REYES ODA, SOUZA
Last action: 2026-03-25
Official status: Report adopted; Passed Second Reading, as amended (SD 1) and referred to WAM.
Effective date: Not listed

Plain English Breakdown

The effective date of July 1, 3050 is likely an error and should be corrected.

Film Production Tax Credit Changes

This bill amends Hawaii's film tax credit to provide additional credits for productions with a high percentage of local hires, requires third-party certification of costs, and mandates annual reports from the Hawaii Film Office.

What This Bill Does

Increases the film tax credit for qualified productions that hire at least 80% local workers in their first or second year, rising to 82% in the third or fourth year, and 85% in the fifth consecutive year.
Requires independent third-party certification of production costs for all films claiming the tax credit.
Allows DBEDT (Department of Business, Economic Development, and Tourism) to waive the credit cap per qualified production once each fiscal year.
Requires the Hawaii Film Office to submit an annual report detailing non-aggregated qualified production costs and expenditures to the Legislature.

Who It Names or Affects

Film productions in Hawaii that qualify for tax credits.
Local workers hired by film productions.
The Department of Business, Economic Development, and Tourism (DBEDT).
The Hawaii Film Office.

Terms To Know

Qualified Production Costs: Expenses related to the production of films or digital media that qualify for tax credits under this bill.
Local Hires: Workers hired by film productions who are residents of Hawaii.

Limits and Unknowns

The bill does not specify how the third-party certification process will be implemented.
It is unclear what specific information will be included in the annual reports to the Legislature.
The effective date listed (7/1/3050) appears to be a placeholder or error.

Amendments

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

HD1

Hawaii published version HD1

Plain English: The amendment changes the percentage of income tax credits available to film productions based on the population size of the county where production occurs.

Increases the tax credit from 22% to 27% for qualified production costs incurred in counties with a population of seven hundred thousand or less.
Reduces the tax credit from 27% to 22% for qualified production costs incurred in counties with a population over seven hundred thousand.

The amendment does not specify how the changes will be implemented or enforced, leaving some details unclear.

HD2

Hawaii published version HD2

Plain English: This amendment modifies the income tax credit for motion picture, digital media, and film production in Hawaii by adjusting the percentage of qualified production costs that can be claimed based on county population.

Changes the tax credit rate to 22% for counties with a population over 700,000 and 27% for counties with a population of 700,000 or less.
Adds an additional 5% credit if certain local hiring requirements are met.

The amendment text is complex and includes many details that are not directly relevant to the main changes described above. For a full understanding of all impacts, one would need to review the entire bill and its context.

SD1

Hawaii published version SD1

Increases the tax credit rate to 27% for counties with a population of seven hundred thousand or less, up from an unspecified previous rate.
Maintains the tax credit rate at 22% for counties with a population over seven hundred thousand.

The amendment text does not specify what the previous rates were for counties with populations over and under seven hundred thousand, so it's unclear how much of an increase this represents.
Details about additional credits based on workforce composition, infrastructure investment, indigenous content, and post-production activities are unchanged by this amendment.

Bill History

2026-03-25 S
Report adopted; Passed Second Reading, as amended (SD 1) and referred to WAM.
2026-03-25 S
Reported from EDT (Stand. Com. Rep. No. 3197) with recommendation of passage on Second Reading, as amended (SD 1) and referral to WAM.
2026-03-19 S
The committee(s) on EDT recommend(s) that the measure be PASSED, WITH AMENDMENTS. The votes in EDT were as follows: 5 Aye(s): Senator(s) DeCoite, Wakai, Fukunaga, Kim, Fevella; Aye(s) with reservations: none ; 0 No(es): none; and 0 Excused: none.
2026-03-16 S
The committee(s) on EDT has scheduled a public hearing on 03-19-26 1:00PM; Conference Room 229 & Videoconference.
2026-03-12 S
Referred to EDT, WAM.
2026-03-12 S
Passed First Reading.
2026-03-12 S
Received from House (Hse. Com. No. 319).
2026-03-10 H
Passed Third Reading as amended in HD 2 with none voting aye with reservations; none voting no (0) and Representative(s) Pierick excused (1). Transmitted to Senate.
2026-03-06 H
Forty-eight (48) hours notice Tuesday, 03-10-26.
2026-03-06 H
Reported from FIN (Stand. Com. Rep. No. 1113-26) as amended in HD 2, recommending passage on Third Reading.
2026-03-03 H
The committee on FIN recommend that the measure be PASSED, WITH AMENDMENTS. The votes were as follows: 16 Ayes: Representative(s) Todd, Takenouchi, Hartsfield, Hussey, Keohokapu-Lee Loy, Kitagawa, Kusch, Lee, M., Miyake, Morikawa, Perruso, Templo, Yamashita, Alcos, Gedeon, Reyes Oda; Ayes with reservations: none; 0 Noes: none; and 0 Excused: none.
2026-02-27 H
Bill scheduled to be heard by FIN on Tuesday, 03-03-26 10:00AM in House conference room 308 VIA VIDEOCONFERENCE.
2026-02-18 H
Passed Second Reading as amended in HD 1 and referred to the committee(s) on FIN with none voting aye with reservations; none voting no (0) and none excused (0).
2026-02-18 H
Reported from ECD (Stand. Com. Rep. No. 427-26) as amended in HD 1, recommending passage on Second Reading and referral to FIN.
2026-02-06 H
The committee on ECD recommend that the measure be PASSED, WITH AMENDMENTS. The votes were as follows: 7 Ayes: Representative(s) Ilagan, Hussey, Holt, Tam, Templo, Yamashita, Gedeon; Ayes with reservations: none; Noes: none; and Excused: none.
2026-02-02 H
Bill scheduled to be heard by ECD on Friday, 02-06-26 8:30AM in House conference room 423 VIA VIDEOCONFERENCE.
2026-01-28 H
Referred to ECD, FIN, referral sheet 3
2026-01-26 H
Introduced and Pass First Reading.
2026-01-23 H
Pending introduction.

Official Summary Text

RELATING TO TAXATION.
DBEDT; Motion Picture, Digital Media, and Film Production Income Tax Credit; Local Workforce Incentive; Qualified Production Incentives; Third-Party Certification; Per Production Cap; Waiver; Hawaii Film Office; Reports
Amends the Motion Picture, Digital Media, and Film Production Income Tax Credit (film tax credit) by providing additional credits to qualified productions that have a workforce of at least eighty per cent local hires in the first taxable year or second consecutive taxable year and meet other specific requirements, then increasing the local workforce threshold to eighty-two per cent in the third or fourth consecutive taxable year and eighty-five per cent in the fifth consecutive taxable year, that the additional credit is claimed; requiring independent third-party certification of qualified production costs for all film productions claiming the film tax credit; authorizing DBEDT to waive the credit cap per qualified production for one qualified production each fiscal year; and requiring the Hawaii Film Office to submit an annual report to the Legislature. Sunsets 1/1/2033. Effective 7/1/3050. (SD1)

Current Bill Text

Read the full stored bill text

HB1939

HOUSE OF REPRESENTATIVES

H.B. NO.

1939

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:

����
SECTION
1
.
�
Section 235-17,
Hawaii Revised Statutes, is amended to read as follows:

����
"
�235-17
�
Motion picture, digital
media, and film production income tax credit.
�
(a)
�

Any law to the contrary notwithstanding, there shall be allowed to each
taxpayer subject to the taxes imposed by this chapter, an income tax credit
that shall be deductible 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.
�
The amount of the credit shall
be[
:
]
equal to the sum of the following:

����
(1)
�
Either:

���������
(A)
�
Twenty-two per cent of the qualified production costs
incurred by a qualified production in any county of the State with a population
of over seven hundred thousand; or

����
[
(2)
]
(B)

Twenty-seven
per cent of the qualified production costs incurred by a qualified production
in any county of the State with a population of seven hundred thousand or less[
.
]
;

����
(2)
�
An additional
five per cent of the qualified production costs incurred by a qualified
production with a workforce of at least:

���������
(A)
�
Eighty
per cent local hires in the first taxable year or second consecutive taxable
year that the additional credit amount is claimed
;

���������
(B)
�
Eighty-two
per cent local hires in the third consecutive taxable year that the additional
credit amount is claimed; and

���������
(C)
�
Eighty-five
per cent local hires in the fifth consecutive taxable year that the additional
credit amount is claimed; and

����
(3)
�
The greatest of either:

���������
(A)
�
Five per
cent of the qualified production costs incurred by a qualified production with
an above-the-line workforce of at least thirty per cent local hires;

���������
(B)
�
Three
per cent of the qualified production costs incurred by a qualified production
that invests in qualified production infrastructure;

���������
(C)
�
Three
per cent of the qualified production costs incurred by a qualified production
that features indigenous content; or

���������
(D)
�
Two
per cent of the qualified production costs incurred by a qualified production
that conducts post-production in the State for qualified productions filmed in
the State.

A qualified production occurring in more than one
county may prorate its expenditures based upon the amounts spent in each
county, if the population bases differ enough to change the percentage of tax
credit.

����
In the case of a partnership, S
corporation, estate, or trust, the tax credit allowable is for qualified
production costs incurred by the entity for the taxable year.
�
The cost upon which the tax credit is
computed shall be determined at the entity level.
�
Distribution and share of credit shall be
determined by rule.

����
If a deduction is taken under
section 179 (with respect to election to expense depreciable business assets)
of the Internal Revenue Code of 1986, as amended, no tax credit shall be
allowed for those costs for which the deduction is taken.

����
The basis for eligible property for
depreciation of accelerated cost recovery system purposes for state income
taxes shall be reduced by the amount of credit allowable and claimed.

����
For the purposes of this
subsection,
"above-the-line
workforce" means the employees involved with the production of a qualified
production whose salaries are negotiated before the commencement of production,
including but not limited to actors, directors, producers, and writers.

����
(b)
�

The credit allowed under this section shall be claimed against the net
income tax liability for the taxable year.
�

For the purposes of this section, "net income tax liability"
means net income tax liability reduced by all other credits allowed under this
chapter.

����
(c)
�

If the tax credit under this section exceeds the taxpayer's income tax
liability, the excess of credits over liability shall be refunded to the
taxpayer; provided that no refunds or payment on account of the tax credits
allowed by this section shall be made for amounts less than $1.
�
All claims, including any amended claims, for
tax credits under this section shall be 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 any
of the foregoing provision shall constitute a waiver of the right to claim the
credit.

����
(d)
�

To qualify for this tax credit, a production shall:

����
(1)
�
Meet the
definition of a qualified production specified in subsection (o);

����
(2)
�
Have qualified
production costs totaling at least $100,000;

����
(3)
�
Provide the State
a qualified Hawaii promotion, which shall be at a minimum, a shared-card,
end-title screen credit, where applicable;

����
(4)
�
Provide evidence
of reasonable efforts to hire local talent and crew;

����
(5)
�
Provide evidence
when making any claim for products or services acquired or rendered outside of
this State that reasonable efforts were unsuccessful to secure and use
comparable products or services within this State;

����
(6)
�
Provide evidence
of financial or in-kind contributions or educational or workforce development
efforts, in partnership with related local industry labor organizations,
educational institutions, or both, toward the furtherance of the local film and
television and digital media industries;

����
(7)
�
Provide evidence
of reasonable efforts to comply with all applicable requirements under title
14, including tax return filing and payments; and

����
(8)
�
Provide complete
responses to the department of taxation's inquiries and document requests, in
the form prescribed by the department, no later than ninety days from the
inquiry or request;

provided that a taxpayer shall be given notice of
and an opportunity to cure any failure to meet the requirements of this
subsection, including chapter 237, within thirty days of receipt of the notice;
provided further that nothing in this
subsection shall
be interpreted as waiving any act required by this section
.

����
(e)
�

On or after July 1, 2006, no qualified production cost that has been
financed by investments for which a credit was claimed by any taxpayer pursuant
to section 235-110.9 is eligible for credits under this section.

����
(f)
�

To receive the tax credit, the taxpayer shall first prequalify the
production for the credit by registering with the department of business,
economic development, and tourism during the development or preproduction
stage.

����
(g)
�

The director of taxation shall prepare forms as may be necessary to
claim a credit under this section.
�
The
director may also require the taxpayer to furnish information to ascertain the
validity of the claim for credit made under this section and may adopt rules
necessary to effectuate the purposes of this section pursuant to chapter 91.

����
(h)
�

Every taxpayer claiming a tax credit under this section for a qualified
production shall, no later than ninety days following the end of each taxable
year in which qualified production costs were expended, submit a written, sworn
statement to the department of business, economic development, and tourism that
identifies:

����
(1)
�
All qualified
production costs as provided by subsection (a), if any, incurred in the
previous taxable year;

����
(2)
�
The amount of tax
credits claimed pursuant to this section, if any, in the previous taxable year;
and

����
(3)
�
The number of
total hires versus the number of local hires by category and by county.

This information may be reported from the department
of business, economic development, and tourism to the legislature pursuant to
subsection (i)(4).

����
(i)
�

The department of business, economic development, and tourism shall:

����
(1)
�
Maintain records
of the names of the taxpayers and qualified productions thereof claiming the
tax credits under subsection (a);

����
(2)
�
Obtain and total
the aggregate amounts of all qualified production costs per qualified
production and per qualified production per taxable year;

����
(3)
�
Provide a letter
to the director of taxation specifying the amount of the tax credit per
qualified production for each taxable year that a tax credit is claimed and the
cumulative amount of the tax credit for all years claimed; and

����
(4)
�
Submit a report to
the legislature no later than twenty days prior to the convening of each
regular session detailing the non-aggregated qualified production costs that
form the basis of the tax credit claims and expenditures, itemized by taxpayer,
in a redacted format to preserve the confidentiality and that shall include the
dollar amount claimed, name of company, and name of the qualified production of
the taxpayers claiming the credit.

����
(j)
�

Upon each determination required under subsection (i), the department of
business, economic development, and tourism shall issue a letter to the
taxpayer, regarding the qualified production, specifying the qualified
production costs and the tax credit amount qualified for in each taxable year a
tax credit is claimed; provided that the department of business, economic
development, and tourism shall issue the letter to the taxpayer no later than
seven months after receipt of the taxpayer's statement under subsection
(h).
�
The taxpayer for each qualified
production shall file the letter with the taxpayer's tax return for the
qualified production to the department of taxation.
�
Notwithstanding the authority of the
department of business, economic development, and tourism under this section,
the director of taxation may audit and adjust the tax credit amount to conform
to the information filed by the taxpayer.

����
(k)
�

Each taxpayer claiming a tax credit under this section shall s
ubmit
to the department of business, economic development, and tourism a fee for the
motion picture, digital media, and film production income tax credit in an
amount equal to 0.2 per cent of the tax credit claimed by the qualified
production no later than the deadline stated in subsection (c).
�
The department of business, economic
development, and tourism may prescribe the form and method by which this fee is
remitted, including through electronic means.
�

The fees collected under this subsection shall be deposited into the
Hawaii film and creative industries development special fund under section
201-113.

����
(l)
�

Total tax credits claimed per qualified production shall not exceed
$17,000,000[
.
]
; provided that:

����
(1)
�
The department
of business, economic development, and tourism may waive this cap for one
qualified production each fiscal year; provided further that the total tax
credits claimed by a qualified production in any fiscal year shall not exceed
seventy per cent of the total amount of tax credits allowed under this section
pursuant to subsection (n);

����
(2)
�
No qualified
production shall have the cap waived for more than two fiscal years; and

����
(3)
�
The department
of business, economic development, and tourism shall submit a report to the
legislature no later than twenty days prior to the convening of each regular
session that provides a justification for the selection of the qualified
production designated for the waiver and the status of the qualified
production.

����
(m)
�

Qualified productions shall comply with subsections (d), (e), (f), (h),
and (k).

����
(n)
�

The total amount of tax credits allowed under this section in any
particular year shall be $50,000,000; however, if the total amount of credits
applied for in any particular year exceeds the aggregate amount of credits
allowed for that year under this section, the excess shall be treated as having
been applied for in the subsequent year and shall be claimed in the subsequent
year; provided that no excess shall be allowed to be claimed after December 31,
2032.

����
(o)
�

The Hawaii film office shall submit an annual report to the legislature
no later than twenty days prior to the convening of each regular session.
�
The annual report shall include the following
information:

����
(1)
�
A list of the
qualified productions that received the tax credit;

����
(2)
�
How funds
received from the tax credit were spent in the State and to what extent local
communities, workers, and businesses benefited;

����
(3)
�
The impact of
the tax credit on tax revenue, job creation, industry development, and tourism;
and

����
(4)
�
An analysis of
why the tax credit provides greater long-term value to the State than other tax
credits and alternative uses of state funds.

����
[
(o)
]
(p)
�
For the purposes of this section:

����
"Commercial":

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

����
(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.

����
"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.

����
"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.

����
"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.

����
"Qualified production":

����
(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 series pilot, single
season (up to twenty-two episodes) of a television series regularly filmed in
the State (if the number of episodes per single season exceeds twenty-two,
additional episodes for the same season shall constitute a separate qualified
production), television special, single television episode that is not part of
a television series regularly filmed or based in the State, national magazine
show, or 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

����
(2)
�
Does not include:

���������
(A)
�
News;

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

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

���������
(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.

����
"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 but are
not limited to:

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

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

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

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

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

����
(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;

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

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

����
(9)
�
Insurance and
bonding;

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

���
(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.
"

����
SECTION 2.
�
Statutory material to be repealed is
bracketed and stricken.
�
New statutory
material is underscored.

����
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; Local Workforce
Incentive; Qualified Production Infrastructure Incentive; Indigenous Content
Incentive; Local Post-Production Incentive; Per Production Cap; Waiver; Hawaii
Film Office; Report

Description:

Amends
the Motion Picture, Digital Media, and Film Production Income Tax Credit by providing
additional credits to qualified productions that have a workforce of at least
eighty per cent local hires and that either have an above-the-line workforce of
at least thirty per cent local hires, invest in qualified production
infrastructure, feature indigenous content, or conduct post-production in the
State; establishing that the minimum local hires requirement will increase to
eighty-two per cent in the third consecutive taxable year that the additional
credit is claimed and to eighty-five per cent in the fifth consecutive taxable
year; authorizing the Department of Business, Economic Development, and Tourism
to waive the credit cap per qualified production for one qualified production
each fiscal year; and requiring the Hawaii Film Office to submit an annual
report to the Legislature.

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