RELATING TO THE AQUACULTURE INVESTMENT TAX CREDIT.

SB2028

THE SENATE

S.B. NO.

2028

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

RELATING
TO THE AQUACULTURE INVESTMENT TAX CREDIT
.

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

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SECTION 1.
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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-

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Aquaculture investment tax credit.
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(a)
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There shall be allowed to each taxpayer
subject to the taxes imposed by this chapter an aquaculture investment 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 investment
was made and the following four years; provided that the credit is properly
claimed.
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The tax credit shall be as
follows:

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(1)
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In
the year the investment was made,
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per cent or $
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, whichever
is less;

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(2)
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In
the first year following the year in which the investment was made,
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per cent or $
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, whichever is less;

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(3)
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In
the second year following the year in which the investment was made,
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per cent or $
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, whichever is less;

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(4)
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In
the third year following the year in which the investment was made,
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per cent or $
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, whichever is less; and

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(5)
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In
the fourth year following the year in which the investment was made,
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per cent or $
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, whichever is less,

of the qualified investment costs incurred by
the taxpayer in each qualified aquaculture business.

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

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

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(d)
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Every claim, including amended claims, for a
tax credit 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.
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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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(e)
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If at the close of any taxable year in the
five-year period in subsection (a):

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(1)
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The
business no longer qualifies as a qualified aquaculture business;

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(2)
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The
business or an interest in the business has been sold by the taxpayer that
invested in the qualified aquaculture business; or

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(3)
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The
taxpayer has withdrawn the taxpayer's investment wholly or partially from the
qualified aquaculture business,

the credit claimed under this section shall
be recaptured.
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The recapture shall be
equal to
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per cent of the amount of
the total tax credit claimed under this section in the preceding two taxable
years.
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The amount of the credit
recaptured shall apply only to the investment in the particular qualified
aquaculture business that meets the requirements of paragraph (1), (2), or (3).
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The recapture provisions of this subsection
shall not apply to a tax credit claimed for a qualified aquaculture business that
does not fall within the provisions of paragraph (1), (2), or (3).
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The amount of the recaptured tax credit
determined under this subsection shall be added to the taxpayer's tax liability
for the taxable year in which the recapture occurs under this subsection.

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(f)
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Every taxpayer, before March 31 of each year
in which an investment in a qualified aquaculture business was made in the
previous taxable year, shall submit a written, certified statement to the
director of taxation identifying:

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(1)
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Qualified
investment costs, if any, expended in the previous taxable year; and

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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.

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(g)
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The department shall:

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(1)
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Maintain
records of the names and addresses of the taxpayers claiming the credits under
this section and the total amount of the qualified investment costs upon which
the tax credit is based;

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(2)
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Verify
the nature and amount of the qualifying investment costs;

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(3)
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Total
all qualifying and cumulative investment costs that the department certifies;
and

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(4)
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Certify
the amount of the tax credit for each taxable year and cumulative amount of the
tax credit.

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Upon
each determination made under this subsection, the department shall issue a
certificate to the taxpayer verifying information submitted to the department,
including qualifying investment 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.

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The
director of taxation may assess and collect a fee to offset the costs of
certifying tax credits claims under this section.
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All fees collected under this section shall
be deposited into the tax administration special fund established under section
235-20.5.

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(h)
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No other tax credit or deduction shall be
claimed under this chapter for qualifying investments for the taxable year.

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(i)
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As used in this section:

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"Net
income tax liability" means net income tax liability reduced by all other
credits allowed under this chapter.

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"Qualified
aquaculture business" means a business in the State that is engaged in the
propagation, cultivation, or farming of aquatic plants and animals in
controlled or selected environments for research, commercial, or stocking
purposes, including aquaponics or any growing of plants or animals with
aquaculture effluent.

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"Qualified
investment costs" means costs, beyond the research and development phase,
associated with capital improvements, including the acquisition and development
of land, design and construction of new facilities, and making of renovations or
additions to the existing facilities of a qualified aquaculture business.
"

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SECTION 2.
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New statutory material is underscored.

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SECTION 3.
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This Act, upon its approval, shall apply to taxable years beginning
after December 31, 2026.

INTRODUCED BY:

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Report Title:

Aquaculture
Investment Tax Credit

Description:

For
taxable years beginning after 12/31/2026, establishes a 5-year aquaculture
investment tax credit for taxpayers that incur qualifying investment costs
relating to qualified aquaculture businesses.

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