RELATING TO TAXATION.

HB701

HOUSE OF REPRESENTATIVES

H.B. NO.

701

THIRTY-THIRD LEGISLATURE, 2025

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.
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The
legislature finds that family caregivers are the backbone of the
long-term care
system in the State.
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AARP's 2023 report "Valuing the
Invaluable" found that 154,000 residents of the State provide unpaid caregiving
services for a loved one.
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The report
finds that each year, these family caregivers contribute nearly 144,000,000
hours of unpaid services, estimated at a value of $2,600,000,000.
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Caregiving services can range from managing
personal finances and transporting for medical visits to providing twenty-four-hour
supervision and assisting with bathing, toileting, and dressing so that their
loved ones are not prematurely institutionalized and can remain in their homes.

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The legislature further finds that nonpaid
family caregivers face many physical, emotional, and financial challenges and
often balance caregiving with work and other personal responsibilities.
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A 2021 national study found that, on average,
family caregivers spend twenty-six per cent of their income on caregiving services;
nearly eight in ten caregivers report having routine out-of-pocket expenses
related to caregiving; and that these out-of-pocket expenses average $7,242 per
year.
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The legislature believes that the
demands on family caregivers are not isolated family issues and that the State should
assist in the delivery of meaningful support and solutions for those that
provide unpaid long-term care services in the State.

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Accordingly, the purpose of this Act is to
establish a tax credit for nonpaid family caregivers.

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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‑
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Family
caregiver tax credit.
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(a)
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Each
eligible taxpayer subject to the tax imposed by this chapter may claim a
refundable family caregiver tax credit against the taxpayer's individual 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 family caregiver tax credit shall be equal to the qualified expenses
of the taxpayer, up to a maximum of $5,000 in any taxable year; provided that
married individuals who do not file a joint tax return shall only be entitled
to claim the tax credit to the extent that they would have been entitled to
claim the tax credit had they filed a joint return.

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(c)
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An eligible taxpayer may claim the tax credit for every taxable year or
part thereof that the eligible taxpayer:

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(1)
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Provides
care to a care recipient during the taxable year;

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(2)
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Has
personally incurred uncompensated expenses directly related to the care of a
care recipient; and

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(3)
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Has
not claimed the care recipient as a dependent for the purpose of a tax
deduction in the same taxable year.

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(d)
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Only one eligible taxpayer per household may claim a tax credit under
this section for any care recipient cared for in a taxable year.
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Only one tax credit under this section shall
be claimed by an eligible taxpayer in any one taxable year, regardless of the
number of care recipients receiving care from the eligible taxpayer.

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(e)
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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 pursuant to chapter
91 necessary to carry out this section.

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(f)
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If the tax credit claimed by the eligible taxpayer under this section
exceeds the amount of income tax payments due from the eligible taxpayer, the
excess of credit over payments due shall be refunded to the eligible taxpayer.
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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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(g)
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The department of taxation shall report to
the legislature, no later than twenty days prior to the convening of each
regular session, on the number of eligible taxpayers claiming the tax credit
and the total cost of the tax credit under this section to the State during the
past year.

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(h)
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For the purposes of this section:

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"Activity of daily living" has
the same meaning as defined in section 349-16.

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"Care
recipient" means an individual who:

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(1)
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Is
a citizen of the United States or a qualified alien; provided that for the
purposes of this paragraph, "qualified alien" means a lawfully
admitted permanent resident under the Immigration and Nationality Act;

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(2)
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Does
not reside in a long-term care facility, such as an intermediate care facility,
assisted living facility, skilled nursing facility, hospital, adult foster
home, community care foster family home, adult residential care home, expanded
adult residential care home, or developmental disabilities domiciliary home;
and

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(3)
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Has
impairments of at least:

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(A)
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Two activities of daily living;

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(B)
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Two instrumental activities of daily living;

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(C)
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One activity of daily living and one instrumental activity of
daily living; or

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(D)
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Substantive cognitive impairment requiring substantial
supervision because the individual behaves in a manner that poses a serious
health or safety hazard to the individual or another person.

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"Care recipient" includes a
person with a disability as that term is defined under section 515-2.

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"Eligible
taxpayer" means any relative of a care recipient who:

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(1)
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Has
a federal adjusted gross income of $75,000 or less, or $125,000 if filing a
joint tax return; and

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(2)
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Has
undertaken the care, custody, or physical assistance of the care recipient.

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"Instrumental activities of daily
living" has the same meaning as defined in section 349-16.

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"Kupuna care services" has the
same meaning as defined in section 349-16.

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"Qualified expenses" means out-of-pocket
expenses directly incurred by the eligible taxpayer in providing care to a care
recipient that have not been reimbursed, credited, paid, or otherwise covered
by another individual, organization, provider, or government entity.
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"Qualified expenses" includes but is
not limited to:

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(1)
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The
improvement or alteration to the eligible taxpayer's primary residence to
permit the care recipient to live in the residence and remain mobile, safe, and
independent, including entrance ramps, safety grab bars by toilets, and the
conversion of tubs to accessible showers;

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(2)
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The
purchase or lease of equipment and supplies, including but not limited to
durable medical equipment, incontinent undergarments, and portable commodes,
necessary to assist a care recipient in carrying out one or more activities of
daily living; and

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(3)
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Other
paid or incurred expenses by the eligible taxpayer that assists the eligible
taxpayer in providing care to a care recipient, such as expenditures related
to:

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(A)
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Home care aides or chore workers;

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(B)
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Respite care;

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(C)
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Adult day care or adult day health center services;

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(D)
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Personal care attendants;

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(E)
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Transportation, including but not limited to paratransit service
for non-emergency medical transport;

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(F)
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Health care equipment; and

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(G)
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Assistive technology, including emergency alert systems and
voice activated medication dispensers or reminders.

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"Relative"
means a spouse, child, parent, sibling, legal guardian, a reciprocal
beneficiary as defined in section 572C-3, a partner as defined in
section 572B-1, or any other person who is related to a care recipient by
blood, marriage, or adoption, including a person who has a hanai or substantial
familial relationship to the care recipient.
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SECTION 3.
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New statutory material is underscored.

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SECTION 4.
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This Act shall take effect upon its approval and shall apply to taxable
years beginning after December 31, 2024.

INTRODUCED BY:

_____________________________

Report Title:

Kupuna
Caucus; DOTAX; Family Caregiver Tax Credit; Report

Description:

Establishes
a refundable Family Caregiver Tax Credit for nonpaid family caregivers.
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Requires the Department of Taxation to report
to the Legislature before the convening of each Regular Session.

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