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SB2580
THE SENATE
S.B. NO.
2580
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII
A BILL FOR AN ACT
Relating
to the motion picture, digital media, and film production income tax credit
.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
����
SECTION
1
.
�
Section 235-17, Hawaii Revised Statutes, is amended
as follows:
����
1.
�
By amending subsection (a) to read:
����
"(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:
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(1)
�
[
Twenty-two
]
Twenty-seven
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
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(2)
�
[
Twenty-seven
]
Thirty-two
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.
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.
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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.
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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.
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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."
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2.
�
By amending subsection (h) to read:
����
"
(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
]
:
����
(1)
�
A
written, sworn statement to the department of business,
economic development, and tourism that identifies:
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[
(1)
]
(
A
)
�
All
qualified production costs as provided by subsection (a), if any, incurred in
the previous taxable year;
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[
(2)
]
(
B
)
�
The
amount of tax credits claimed pursuant to this section, if any, in the previous
taxable year; and
����
[
(3)
]
(
C
)
�
The
number of total hires versus the number of local hires by category and by
county
[
.
]
; and
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(2)
�
A
n independent third-party
certification issued by a qualified certified public accountant, that verifies
the
information described in paragraph (1)(A), (B), and (C) and other
representations made for the
purposes of claiming the credit under this section, using procedures prescribed
by the department of business, economic development, and tourism and the
department of taxation.
This information may be reported from the
department of business, economic development, and tourism to the legislature
pursuant to subsection (i)(4)."
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3.
�
By amending subsection (l) to read:
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"
(l)
�
Total tax credits claimed per qualified
production shall not exceed $17,000,000[
.
]
; provided that this limit
shall not apply to any qualified production that incurs at least $60,000,000 of
qualified production costs.
"
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4.
�
By amending subsections (n) and (o) to read:
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"(n)
�
The total amount of tax credits allowed under
this section in any particular year shall be [
$50,000,000;
]
$60,000,000;
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.
]
2037.
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(o)
�
For the purposes of this section:
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"Commercial":
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(1)
�
Means an advertising message that is
filmed using film, videotape, or digital media, for dissemination via
television broadcast or theatrical distribution;
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(2)
�
Includes a series of advertising
messages if all parts are produced at the same time over the course of six
consecutive weeks; and
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(3)
�
Does not include an advertising message
with Internet‑only distribution.
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"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.
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"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.
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"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.
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"Qualified
production":
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(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,
broadcast
television
or streaming platform
series pilot, single season (up to twenty-two episodes[
)
]
for
broadcast television series and up to eight episodes for an ongoing series for
streaming platforms)
of a [
television
] series [
regularly
]
filmed in the State [
(if
]
.
�
If
the number of episodes per single season exceeds twenty-two[
,
]
for a
broadcast television series or eight for a streaming platform series,
additional episodes for the same season shall constitute a separate qualified
production[
),
]
.
�
"Qualified production" includes a broadcast
television
or
streaming platform
special, single [
television
] episode that is not
part of a
broadcast
television
or streaming platform
series
regularly filmed or based in the State, national magazine show, [
or
]
and
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
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(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.
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"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;
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(2)
�
Costs of set construction and
operations, purchases or rentals of wardrobe, props, accessories, food, office
supplies, transportation, equipment, and related services;
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(3)
�
Wages or salaries of cast, crew, and
musicians;
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(4)
�
Costs of photography, sound
synchronization, lighting, and related services;
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(5)
�
Costs of editing, visual effects,
music, other post-production, and related services;
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(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;
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(7)
�
Rentals of vehicles and lodging for
cast and crew;
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(8)
�
Airfare for flights to or from Hawaii,
and interisland flights;
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(9)
�
Insurance and bonding;
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(10)
�
Shipping of equipment and supplies to
or from Hawaii, and interisland shipments; and
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(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.
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"Streaming
platform" means an online provider of entertainment, including but not
limited to movies and music, that delivers content via an internet connection
to the subscriber's computer, television, or mobile device through a paid
subscription.
"
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SECTION
2.
�
Act 88, Session Laws of Hawaii 2006,
as amended by section 3 of Act 89, Session Laws of Hawaii 2013, as amended by
section 3 of Act 143, Session Laws of Hawaii 2017, as amended by section 4 of
Act 217, Session Laws of Hawaii 2022, is amended by amending section 4 to read
as follows:
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"
SECTION
4.
�
This
Act shall take effect on July 1, 2006; provided that:
����
(1)
�
Section
2 of this Act shall apply to qualified production costs incurred on or after
July 1, 2006, and before January 1, [
2033;
]
2038;
and
����
(2)
�
This Act shall be repealed on January
1, [
2033,
]
2038,
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 this Act."
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SECTION
3.
�
Act 143, Session Laws of Hawaii 2017,
is amended by amending section 6 to read as follows:
����
"SECTION
6.
�
[
No later than January 1, 2018,
and each January 1 thereafter, each film production that has production
expenditures of $1,000,000 or more and is claiming a tax credit pursuant to
section 235-17, Hawaii Revised Statutes, shall obtain an independent third party
certification of qualified production costs eligible for the motion picture,
digital media, and film production income tax credit in the form of a tax
opinion, as required under section 235-17(h), Hawaii Revised Statutes,
submitted to the department of business, economic development, and tourism.
]
Repealed.
"
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SECTION
4.
�
Statutory material to be repealed is
bracketed and stricken.
�
New statutory
material is underscored.
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SECTION
5.
�
This Act shall take effect upon its
approval; provided that section 1 shall apply to taxable years beginning after
December 31, 2025.
INTRODUCED BY:
_____________________________
Report Title:
DBEDT; Department
of Taxation; Motion Picture, Digital Media, and Film Production Income Tax
Credit; Qualified Production; Costs; Third-Party Certification
Description:
Increases
the Motion Picture, Digital Media, and Film Production Income Tax Credit to 27
per cent of qualified production costs in counties with a population of over
seven hundred thousand and 32 per cent in counties with a population of seven
hundred thousand or less.
�
Requires each
taxpayer claiming the tax credit to submit an independent third-party
certification verifying certain information to the Department of Business,
Economic Development, and Tourism.
�
Excludes
qualified productions that incur at least $60 million of qualified production
costs from the per-production total tax credit cap of $17 million.
�
Increases the total amount of tax credits
allowed to be claimed annually to $60 million.
�
Defines "streaming platform" and amends the definition of
"qualified production" to include certain streaming productions.
�
Extends the sunset date of the tax credit to 1/1/2038.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.