RELATING TO RESILIENCY.

HB499

HOUSE OF REPRESENTATIVES

H.B. NO.

499

THIRTY-THIRD LEGISLATURE, 2025

STATE OF HAWAII

A BILL FOR AN ACT

relating
to resiliency
.

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

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SECTION 1.
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The
legislature finds that Hawai
ʻ
i's geographic
isolation and reliance on centralized supply chains make the State uniquely
vulnerable to disruptions caused by natural disasters.
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Any damage to the State's harbors during
hurricanes, tsunamis, or other emergencies could leave residents with limited
access to food and essential supplies for extended periods.

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This risk underscores the need to expand
local food production, processing, and storage capacity to ensure the State is
prepared for potential disasters.
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Strengthening the State's food supply chain will not only enhance
resilience but also reduce food insecurity, which affects one in three Hawai
ʻ
i
residents, and alleviate the high costs of food that disproportionately impact
low-income families.

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The legislature further finds that despite
the State's goal of doubling local food production by 2030, small businesses
engaged in food and beverage production, distribution, and retailing face
significant challenges.
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Regulatory
hurdles, permitting delays, and an onerous tax environment hinder their ability
to scale and meet local demand.
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Many
businesses relocate operations to the continental United States or overseas to
remain viable, leaving Hawai
ʻ
i without the
necessary infrastructure to build food resilience.

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The legislature believes that to achieve
food security and resilience, the State must provide incentives for improving food
and beverage supply chain activities, streamlining permitting processes, and
creating an environment where local businesses can expand and succeed.
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To ensure access to affordable and nutritious
food and to prepare Hawai
ʻ
i for emergencies, it
is essential that the State support local producers, processors, distributors,
and retailers in building a robust and self-sustaining food system.

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Accordingly, the purpose of this Act is to:

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(1)
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Establish
a refundable income tax credit for qualified taxpayers that incur qualified
expenses in connection with activities that enhance the resiliency of the food
and beverage supply chain; and

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(2)
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Require
the department of business, economic development, and tourism to establish
expedited permitting processes for certain food and beverage supply chain
projects.

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

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"
�235-
�
Food and beverage supply chain resiliency
income tax credit.
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(a)
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There shall be allowed to each qualified
taxpayer subject to the tax imposed under this chapter, a food and beverage
supply chain resiliency income tax credit that shall be deductible from the qualified
taxpayer's net income tax liability, if any, imposed by this chapter for the
taxable year in which the credit is properly claimed.

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(b)
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The food and beverage supply chain resiliency
income tax credit shall be equal to forty per cent of qualified food and
beverage supply chain costs of the qualified taxpayer, up to a maximum of
$ , whichever is
less.

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(c)
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The total amount of tax credits allowed under
this section shall not exceed $2,000,000 for all qualified taxpayers in any
taxable year; provided that any qualified taxpayer who is not eligible to claim
the credit in a taxable year due to the $2,000,000 cap having been exceeded for
that taxable year shall be eligible to claim the credit in the subsequent
taxable year.

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(d)
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Each taxpayer claiming a tax credit under this section shall register
with the department of business, economic development, and tourism and submit a
written, certified statement to the department that identifies:

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(1)
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Qualified
food and beverage supply chain costs, if any, incurred in the previous taxable
year;

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

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(3)
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Proof
of compliance with all federal, state, and county laws.

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(e)
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The department of business, economic
development, and tourism:

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(1)
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May, in consultation with the director
of taxation, prepare any forms that may be necessary to certify costs to claim
a tax credit under this section;

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(2)
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Shall
maintain records of the names of the taxpayers claiming the tax credit under
this section;

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(3)
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Shall
obtain and total the aggregate amounts of all qualified food and beverage
supply chain costs per qualified taxpayer per taxable year;

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(4)
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Shall
certify the amount of qualified food and beverage supply chain costs eligible
to claim a tax credit made under this section;

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(5)
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Shall
provide a letter to the director of taxation specifying the amount of the tax
credit per qualified taxpayer for each taxable year that a tax credit is
claimed; and

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(6)
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May
adopt rules under chapter 91 as necessary to effectuate the purposes of this
section.

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(f)
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Upon each determination made under subsection (d), the department of
business, economic development, and tourism shall issue a certificate to the taxpayer
verifying information submitted to the department, including the qualified food
and beverage supply chain costs, the credit amount certified for each taxable
year, and the cumulative amount of the tax credit during the credit period.
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The taxpayer shall file the certificate with
the taxpayer's tax return with the department of taxation.
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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.

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The department of business economic
development and tourism may assess and collect a fee to offset the costs of
certifying tax credit claims under this section.

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(g)
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The director of taxation:

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

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(2)
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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)
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May adopt rules under chapter 91 as
necessary to effectuate the purposes of this section.

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(h)
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If the tax credit claimed by the qualified
taxpayer under this section exceeds the amount of the income tax payments due
from the taxpayer, the excess of credit over payments due shall be refunded to
the taxpayer; provided that the tax credit properly claimed by the taxpayer who
has no income tax liability shall be paid to the taxpayer; provided further
that no refunds or payments on account of the tax credit allowed by this
section shall be made for amounts less than $1.
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All claims for the tax credit under this section, including amended
claims, 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.
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Failure to comply with the foregoing
provision shall constitute a waiver of the right to claim the credit.

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(i)
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As used in this section:

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"Food and beverage supply chain"
means all entities involved in the production, processing, distribution,
storage, retailing, and donation of food and beverage products in the State,
including:

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(1)
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Farmers
and ranchers;

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(2)
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Food
and beverage hubs and cooperatives;

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(3)
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Food
and beverage processors and manufacturers;

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(4)
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Distributors
and logistics companies;

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(5)
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Grocery
stores, markets, and other food and beverage retailers; and

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(6)
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Food
banks and organizations that provide food assistance.

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"Qualified
food and beverage supply chain costs" means operational costs relevant to
food and beverage supply chain activities in the State, including but not
limited to:

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(1)
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Salaries,
wages, and other labor costs for employees directly involved in food and
beverage supply chain activities;

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(2)
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Expenses
for establishing, upgrading, or maintaining infrastructure for food and
beverage processing, distribution, storage, or retailing;

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(3)
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Costs
for purchasing agricultural equipment, vehicles, or renewable energy systems
used in food and beverage supply chain operations;

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(4)
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Utilities
and energy costs necessary for food and beverage supply chain operations; and

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(5)
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Costs
for developing or implementing food donation and recovery programs to reduce
food waste and improve access to food for underserved communities.

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"Qualified
taxpayer" means a taxpayer subject to tax under this chapter who is
engaged in activities that strengthen the State's food and beverage supply
chain.
"

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SECTION 3.
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(a)
�
The department of business,
economic development, and tourism shall establish expedited permitting
processes for:

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(1)
�
Building
food and beverage storage and processing facilities;

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(2)
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Expanding
retail operations for local food and beverage businesses; and

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(3)
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Establishing
agricultural production or processing infrastructure.

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(b)
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Permits for food and beverage supply chain projects shall be reviewed
and approved within one hundred eighty days of submission; provided that the
requests for permits are submitted with approval of licensed contractors.

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SECTION 4.
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The department of taxation, in consultation with the department of
business, economic development, and tourism, shall adopt rules under chapter 91,
Hawaii Revised Statutes, to effectuate the purposes of this Act, including
procedures for claiming the food and beverage supply chain resiliency income
tax credit and enforcing compliance.

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SECTION 5.
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New statutory material is underscored.

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SECTION 6.
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This Act shall take effect on July 1, 2025; provided that section 2
shall apply to taxable years beginning after December 31, 2025.

INTRODUCED BY:

_____________________________

Report Title:

DBEDT; DOTAX; Food and Beverage Supply Chain; Resiliency; Tax
Credit; Permits

Description:

Establishes the Food and Beverage Supply Chain Resiliency
Income Tax Credit to be administered by the Department of Business, Economic
Development, and Tourism and Department of Taxation.
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Requires DBEDT to establish expedited
permitting processes for food and beverage supply chain activities.

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