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AI Summary
This bill creates an income tax credit for investments in qualified businesses focused on cybersecurity and artificial intelligence, with specific allocation ratios and recapture rules.
Business Impact
If you invest in cybersecurity or AI businesses in Hawaii, you can claim tax credits for your investments starting in 2020.
What do these statuses mean? ▼
Introduced
— Filed in the legislature; not yet heard in committee
In Committee
— Assigned to and being reviewed by a legislative committee
Passed
— Approved by one or both chambers; awaiting further action
Signed / Enacted
— Signed into law by the governor; may or may not be in effect yet
Dead / Vetoed
— Vetoed, failed to pass, or session expired without action
Unknown
— Status data not yet available or awaiting classification
Affected Industries
Topics How we classify →
What This Means
Hawaii's HB1685 proposes a tax credit to encourage investments in cybersecurity and artificial intelligence businesses. This initiative aims to stimulate growth in these critical sectors by providing financial incentives to taxpayers. The bill outlines specific credit amounts, allocation ratios, and conditions for claiming these credits over a five-year period, impacting businesses involved in these technologies.
Key Provisions
- Establishes a tax credit for investments in cybersecurity and AI businesses with specific allocation ratios.
- Credits can be claimed over five years with decreasing maximum amounts.
- Recapture provisions apply to the total tax credit claimed in the preceding two taxable years if the business ceases to qualify or investment is withdrawn.
- Taxpayers must submit annual certified statements regarding investments and credits.
- Businesses must conduct a certain percentage of activities or derive income from cybersecurity and AI development in Hawaii.
- The bill takes effect on July 1, 2112.
Latest Legislative Action
Referred to CAA, referral sheet 1
Bill Sponsors
| Name | Role |
|---|---|
| KAPELA | Primary |
Compliance Checklist
Submit a certified statement of investments and credits claimed
Who: Taxpayers investing in qualified businesses
Deadline: By March 31 of each year following the investment
Penalty: Waiver of the right to claim the credit if not submitted
Who: Taxpayers investing in qualified businesses
Deadline: By March 31 of each year following the investment
Penalty: Waiver of the right to claim the credit if not submitted
Claim the tax credit against net income tax liability
Who: Taxpayers subject to Hawaii income tax
Deadline: For the taxable year in which the investment was made and the following four years
Penalty: Excess credits may be lost if not claimed properly
Who: Taxpayers subject to Hawaii income tax
Deadline: For the taxable year in which the investment was made and the following four years
Penalty: Excess credits may be lost if not claimed properly
Related & Companion Bills
Full Legal Analysis
HB1685 introduces a tax credit for investments in qualified businesses that focus on cybersecurity and artificial intelligence. Taxpayers can claim this credit against their net income tax liability for the year of investment and the following four years, with varying maximum credit amounts each year. The bill specifies an allocation ratio for the tax credit, which is critical for meeting economic substance and business purpose requirements. Additionally, recapture provisions apply to the total tax credit claimed in the preceding two taxable years if the business no longer qualifies or if the taxpayer withdraws their investment. Compliance requires taxpayers to submit a certified statement to the director of taxation annually, detailing their investments and credits claimed. The bill mandates that businesses conduct a certain percentage of their activities or derive income from cybersecurity and AI development in Hawaii. It is designed to foster growth in Hawaii's technology sector by incentivizing investment in these critical areas, with an effective date set for July 1, 2112.
Official Source
Official Bill Text
View HB1685 on official legislature website →
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