RELATING TO STATE ENTERPRISE ZONES.

SB125

THE SENATE

S.B. NO.

125

THIRTY-THIRD LEGISLATURE, 2025

STATE OF HAWAII

A BILL FOR AN ACT

relating
to state enterprise zones
.

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

����
SECTION
1
.
�
Section 209E-9, Hawaii Revised Statutes, is
amended by amending subsection (b) to read as follows:

����
"(b)
�

A business firm may also be eligible to be designated a qualified
business for purposes of this chapter if the business:

����
(1)
�
Is actively engaged in the conduct of a
trade or business in an eligible business activity in an area immediately prior
to the area being designated an enterprise zone;

����
(2)
�
Meets the requirements of subsection
(a)(2); and

����
(3)
�
Either:

���������
(A)
�
Increases its average annual number of
full-time employees employed at the business' establishment or establishments
within enterprise zones located within the same county by at least ten per cent

by the end of the first year of operation, and by at least
fifteen per cent by the end of each of the fourth, fifth, sixth, [
and
]
seventh
, eighth, and ninth
years of operation, and for businesses
eligible for tax credits extending past the [
seventh
]
ninth
year,
at least maintains that higher level of employment during each subsequent
taxable year; provided that the percentage increase shall be based upon the
employee count at the beginning of the initial year of operation within the
enterprise zone or zones; or

���������
(B)
�
Increases its gross sales of
agricultural crops produced, or agricultural products processed within
enterprise zones located within the same county by two per cent annually."

����
SECTION
2
.
�
Section 209E-10, Hawaii Revised Statutes, is amended
as follows:

����
1.
�

By amending subsection (a) to read:

����
"(a)
�

The department shall certify annually to the department of taxation the
applicability of the tax credit provided in this chapter for a qualified
business against any taxes due the State.
�

Except for the general excise tax, the credit shall be eighty per cent
of the tax due for the first tax year, seventy per cent of the tax due for the
second tax year, sixty per cent of the tax due for the third
tax
year,
fifty per cent of the tax due
for
the fourth
tax
year, forty per
cent of the tax due
for
the fifth
tax
year, thirty per cent of
the tax due
for
the sixth
tax
year, and twenty per cent of the
taxes due
for each of
the seventh [
year.
]
, eighth, and ninth
tax years.
�
For qualified businesses engaged in the manufacturing of
tangible personal property or the producing or processing of agricultural
products, the credit shall continue after the [
seventh
]
ninth tax

year at the rate of twenty per cent of the tax due for each of the subsequent three
tax years.
�
Any tax credit not
usable shall not be applied to future tax years."

����
2.
�

By amending subsection (c) to read:

����
"(c)
�

In addition to any tax credit authorized under this section, any
qualified business shall be entitled to a tax credit against any taxes due the
State in an amount equal to a percentage of unemployment taxes paid.
�
The amount of the credit shall be equal to
eighty per cent of the unemployment taxes paid during the first year, seventy
per cent of the taxes paid during the second year, sixty per cent of the taxes
paid during the third year, fifty per cent of the taxes paid during the fourth
year, forty per cent of the taxes paid during the fifth year, thirty per cent
of the taxes paid during the sixth year, and twenty per cent of the taxes paid
during
each of
the seventh [
year.
]
, eighth, and ninth years.
�
For qualified businesses
engaged in the manufacturing of tangible personal property or the producing or
processing of agricultural products, the credit shall continue after the [
seventh
]

ninth
year in an amount equal to twenty per cent of the taxes paid
during each of the subsequent three tax years."

����
SECTION 3.
�

Section 209E-11, Hawaii Revised Statutes, is amended to read as follows:

����
"
�209E-11
�
State general excise exemptions.
�
The department shall certify annually to
the department of taxation that any qualified business is exempt from the
payment of general excise taxes on the gross proceeds from
an
eligible business activity as defined in this chapter;

provided
that agricultural businesses other than those engaged in the production of
genetically-engineered agricultural products shall not be exempt from the
payment of general excise taxes on the gross proceeds of agricultural retail
sales.
�
The gross proceeds received by a
contractor licensed under chapter 444 shall be exempt from the general excise
tax for construction within an enterprise zone performed for a qualified
business within an enterprise zone or a business that has been approved by the
department to enroll into the enterprise zone program.
�
The exemption shall extend for a period not
to exceed [
seven
]
nine
years;
provided that for qualified businesses engaged in the
manufacturing of tangible personal property or the producing or processing of
agricultural products, the exemption shall extend for a period not to exceed [
ten
]

twelve
years; provided further that if a force majeure event occurs,
then the period of time shall be tolled until the force majeure event ceases.
"

����
SECTION
4
.
�
Statutory material to be repealed is
bracketed and stricken.
�
New statutory
material is underscored.

����
SECTION 5. This Act, upon its approval,
shall apply to taxable years beginning after December 31, 2025.

INTRODUCED BY:

_____________________________

Report Title:

State
Enterprise Zones; Qualified Business; State Business Tax Credit; General Excise
Tax; Exemption; Extension

Description:

Extends
the eligibility period of the State business tax credit and general excise tax
exemption for qualified businesses within State Enterprise Zones from seven
years to nine years.
�
Extends the
eligibility period of the State business tax credit and general excise tax
exemption for qualified businesses within State Enterprise Zones engaged in the
manufacturing of tangible personal property or the producing or processing of
agricultural products from ten years to twelve years.
�
Applies to taxable years beginning after
12/31/2025.

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