RELATING TO AGRICULTURE.

SB2887

THE SENATE

S.B. NO.

2887

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

relating
to agriculture
.

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 article XI,
section 3, of the Hawaii State Constitution, sets out the framework for state
policies to promote agriculture and the conservation of productive agricultural
lands in the State.
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To address the issue
of important agricultural lands, Act 183, Session Laws of Hawaii 2005 (Act 183),
established standards, criteria, and mechanisms to identify important
agricultural lands and directed the department of agriculture and biosecurity to
develop a program of incentives to promote agricultural viability.
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Act 183 was further amended by Act 233,
Session Laws of Hawaii 2008, to provide for the designation of public lands as
important agricultural lands by requiring the department of agriculture and
biosecurity and department of land and natural resources to jointly identify
the state-owned lands that should be designated as important agricultural
lands.

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The legislature further finds that section
204(a) of the Hawaiian Homes Commission Act, 1920, as amended, provides that
Hawaiian home lands shall be under the control of the department of Hawaiian
home lands requiring the use of lands in accordance with the Hawaiian Homes
Commission Act.

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Accordingly, the purpose of this Act is to amend
the important agricultural land qualified agricultural cost tax credit to include
Hawaiian home lands designated for subsistence agriculture, supplemental
agriculture, or pastoral in the definition of "important agricultural
lands" and expand the definition of "qualified agricultural costs"
to include costs relating to the planting of orchard or fruit-bearing crops,
which typically take longer to yield or return and the improvement of former
sugar and pineapple plantation lands.

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SECTION
2
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Section 235-110.93, Hawaii Revised Statutes,
is amended by amending subsection (k) to read as follows:

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"(k)
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[
As used in
]
For the purposes of

this section:

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"Agricultural
business" means any person with a commercial agricultural, silvicultural,
or aquacultural facility or operation, 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;

provided that the principal place of
the agricultural business is maintained in the State and more than fifty per
cent of the land the agricultural business owns or leases, excluding land
classified as conservation land, is important agricultural land.

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"Important
agricultural lands" means lands identified and designated as important
agricultural lands pursuant to part III of chapter 205[
.
]
, and Hawaiian
home lands designated for subsistence agriculture, supplemental agriculture, or
pastoral.

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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, where the majority of the lands serviced by the roads or utilities,
excluding lands classified as conservation lands, are important agricultural
lands;

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(B)
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Agricultural processing facilities in the
State, primarily for agricultural purposes, where the majority of the crops or
livestock processed, harvested, treated, washed, handled, or packaged are from
agricultural businesses;

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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, providing water for lands, the majority of
which, excluding lands classified as conservation lands, are important
agricultural lands; and

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(D)
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Agricultural housing in the State, exclusively
for agricultural purposes; provided that:

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(i)
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The housing units are occupied solely by
farmers or employees for agricultural businesses and their immediate family
members;

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(ii)
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The housing units are owned by the
agricultural business;

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(iii)
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The housing units are in the general vicinity,
as determined by the department of agriculture, of agricultural lands owned or
leased by the agricultural business; and

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(iv)
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The housing units conform to any other
conditions that may be required by the department of agriculture;

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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; [
and
]

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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 retaining the right to farm on lands identified
as important agricultural lands[
.
]
;

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(5)
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Planting
of orchard or fruit-bearing crops on not less than
acres, including:

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(A)
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The purchase of planting materials, including seeds,
transplants, cuttings, and grafted plants; and

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(B)
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Tillage, including the preparation of the soil, planting, weed
control, fertilizing, irrigation, and pest management; and

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(6)
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The
clearing of, removal of trees and debris from, and soil restoration to correct
any nutrient deficiency that is present on former sugar and pineapple
plantation lands that have been out of agricultural use for more than five
years and are to be used primarily for agricultural purposes.
"

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SECTION 3.
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Statutory material to be repealed is bracketed and stricken.
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New statutory material is underscored.

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SECTION 4.
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This Act, upon its approval, shall apply to
taxable years beginning after December 31, 2026.

INTRODUCED
BY:

_____________________________

Report Title:

Important
Agricultural Land Qualified Agricultural Cost Tax Credit; Hawaiian Home Lands;
Important Agricultural Lands; Qualified Agricultural Costs

Description:

For taxable years beginning 1/1/2027, amends the Important
Agricultural Land Qualified Agricultural Cost Tax Credit to:
�
(1) include Hawaiian home lands designated
for subsistence agriculture, supplemental agriculture, or pastoral in the
definition of "important agricultural lands"; and (2) expand the
definition of "qualified agricultural costs" to include costs
relating to the planting of orchard or fruit-bearing crops, or expenditures
related to the clearing of former sugar and pineapple plantation lands.

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