RELATING TO TAXATION.

SB768

THE SENATE

S.B. NO.

768

THIRTY-THIRD LEGISLATURE, 2025

STATE OF HAWAII

A BILL FOR AN ACT

Relating
to Taxation
.

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

����
SECTION 1.
�
The legislature finds that water is essential
to life and flourishing local communities, yet some communities, such as
portions of the Ka
�
ū region of Hawai
�
i island
, lack access to municipal water infrastructure,
leaving residents to rely on water catchment systems and water delivery
services to meet their basic needs.
�
Notably,
areas that lack water resources are often highly impoverished, and a lack of
water access can worsen preexisting economic precarity.

����
The legislature additionally finds
that water catchment systems can be cost-effective, reliable, and safe and
reduce consumer demand for fresh water.
�
Water
catchment systems can promote water conservation; mitigate flooding; and
conserve energy needed to pump, treat, and transport fresh water for consumer
use.

����
The purpose of this Act is to
provide one alternative water source income tax credit to taxpayers who either install,
place into service, or repair a water catchment system or to taxpayers who
purchase water delivery services.

����
SECTION 2.
�
Chapter 235, Hawaii Revised Statutes, is
amended by adding a new section to be appropriately designated and to read as
follows:

����
"
�235-
�
Alternative
water source tax credit.
�
(a)
�

Each taxpayer who files an individual income tax return for a taxable
year may claim a refundable income tax credit equal to the lesser of:

����
(1)
�
The costs of installing,
placing into service, or repairing a water catchment system on a residential
property located in the State that is owned by the taxpayer;

����
(2)
�
The costs of purchasing
water delivery services of at least two hundred fifty gallons of water during
the taxable year to a residential property located in the State that is owned
by the taxpayer; or

����
(3)
�
$500.

����
(b)
�
A taxpayer shall be limited to claiming only
one of the credit amounts in subsection (a)(1), (2), or (3).
�
The tax credit claimed by a taxpayer pursuant
to this section shall be deductible from the taxpayer's net income tax
liability, if any, for the tax year in which the tax credit is properly
claimed.
�
If the tax credit claimed by a
taxpayer exceeds the amount of income tax payments due from the taxpayer, the
excess of credits over payments due shall be refunded to the taxpayer; provided
that tax credits properly claimed by an individual who has no income tax
liability shall be paid to the individual; provided further that no refunds or
payment on account of the tax credits allowed by this section shall be made for
amounts less than $1.

����
(c)
�
All claims for a tax credit under this
section, including any 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.
�
Failure to comply with
the foregoing provision shall constitute a waiver of the right to claim the
credit.

����
(d)
�
The director of taxation shall prepare any
forms that may be necessary to claim a tax credit under this section.
�
The director may also require the taxpayer to
furnish reasonable information to ascertain the validity of the claim for the
credit and adopt rules, pursuant to chapter 91, necessary to implement this
section.

����
(e)
�
As used in this section:

����
"Water catchment
system" means a system of catching rainwater from a surface and transporting
it through a conveyance system to a storage container with a minimum capacity
of one thousand gallons on a residential property located in the State that is
owned by the taxpayer.

����
"Water delivery service"
means a service that delivers fresh water to a residential property located in
the State that is owned by the taxpayer.
"

����
SECTION 3.
�
New statutory material is underscored.

����
SECTION 4.
�
This Act, upon its approval, shall apply to
taxable years beginning after December 31, 2025.

INTRODUCED BY:

_____________________________

Report Title:

Alternative
Water Source Income Tax Credit; Water Conservation; Water Catchment; Water
Delivery Services

Description:

Creates an
alternative water source income tax credit for taxpayers who install, place in
service, or repair a water catchment system or who purchase water delivery
services.

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