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SB2805
THE SENATE
S.B. NO.
2805
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII
A BILL FOR AN ACT
RELATING
TO AGRICULTURE
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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 the Hawaii State
Constitution mandates that the State "conserve and protect agricultural
lands[.]"
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The legislature also
finds that the best way to protect agricultural lands is to increase the
production and profitability of those lands.
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Accordingly,
the purpose of this Act is to incentivize significant investment in
agricultural production and support the expansion of agricultural crops that
take longer to become productive, such as orchard and fruit crops, by providing
an agricultural investment tax credit.
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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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Agricultural investment tax credit.
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(a)
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There shall be allowed to each qualified taxpayer
subject to the taxes imposed by this chapter an agricultural 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; provided the credit is properly claimed.
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In the case of a partnership, S
corporation, estate, or trust, the tax credit allowable is for costs incurred
by the entity for the taxable year.
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The
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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If a deduction is taken under section 179 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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(b)
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The amount of the credit shall
be per cent of the qualified
agricultural costs incurred by a qualified taxpayer, up to a maximum of $ .
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(c)
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The total amount of tax
credits allowed under this section shall not exceed $
for all taxpayers in any taxable year; provided that any taxpayer who is not
eligible to claim the credit in a taxable year due to the $
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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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 necessary to effectuate the purposes
of this
section.
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(e)
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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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If the tax credit under this
section exceeds the taxpayer's income tax liability, the excess of the credit
over liability may be used as a credit against the taxpayer's income tax
liability in subsequent years until exhausted.
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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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(f)
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As used in this section:
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"Net income tax liability" means income tax liability reduced
by all other credits allowed under this chapter.
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"Qualified agricultural costs" means expenditures for:
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(1)
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The plans, design, engineering,
construction, renovation, repair, maintenance, and equipment for:
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(A)
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Roads or utilities, primarily for
agricultural purposes;
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(B)
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Agricultural processing facilities
where the majority of the crops or livestock processed, harvested, treated,
washed, handled, or packaged are from agricultural businesses; and
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(C)
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Water wells, reservoirs, dams, water
storage facilities, water pipelines, ditches, or irrigation systems in the
State, primarily for agricultural purposes;
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(2)
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Feasibility studies, regulatory
processing, and legal and accounting services related to the items under
paragraph (1);
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(3)
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Equipment, primarily for
agricultural purposes, used to cultivate, grow, harvest, or process
agricultural products by an agricultural business;
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(4)
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Regulatory processing, studies, and
legal and other consultant services related to obtaining or retaining
sufficient water for agricultural activities; and
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(5)
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The costs relating to the planting
of orchard or fruit-bearing crops on not less than
acres, including:
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(A)
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The p
urchase of planting
materials, including seeds, transplants, cuttings, and grafted plants;
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(B)
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The clearing of and removal of trees
and debris; and
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(C)
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Tillage, including the preparation
and restoration of the soil to correct any nutrient deficiency, planting, weed
control, fertilizing, irrigation, and pest management.
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"Qualified taxpayer" means any person with a commercial
agricultural, silvicultural, or aquacultural project with qualified
agricultural costs of not less than $ ,
on not less than acres,
including:
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(1)
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The care and production of livestock
and livestock products, poultry and poultry products, apiary products, and
plant and animal production for nonfood uses;
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(2)
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The planting, cultivating,
harvesting, and processing of crops; and
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(3)
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The farming or ranching of any plant
or animal species in a controlled salt, brackish, or freshwater environment.
"
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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; provided that:
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(1)
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This
Act shall apply to taxable years beginning after December 31, 2025; and
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(2)
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This
Act shall be repealed on January 1, 2031.
INTRODUCED BY:
_____________________________
Report Title:
Agricultural
Investment Tax Credit
Description:
Establishes
a nonrefundable income tax credit to incentivize significant investment in
agricultural production and support the expansion of agricultural crops that
take longer to become productive.
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Sunsets 1/1/2031.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.