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AI Summary
This bill creates an income tax credit for investments in qualified businesses focused on cybersecurity and AI, with specific activity and location requirements.
Business Impact
If you invest in cybersecurity or AI businesses in Hawaii, you can claim significant tax credits over five years.
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
What This Means
H.B. No. 454 introduces a tax credit aimed at encouraging investments in cybersecurity and artificial intelligence sectors in Hawaii. This initiative is designed to stimulate growth in these critical technology areas, providing financial incentives for businesses that meet specific criteria, including activity and location requirements. The bill outlines the credit percentages and recapture provisions, making it essential for investors in these fields to understand the implications.
Key Provisions
- Tax credit percentages: 35% in the investment year, decreasing over four years.
- Maximum credit limits: $700,000 in the first year, decreasing thereafter.
- Recapture provisions apply to the total tax credit claimed in the preceding two taxable years if the business no longer qualifies or if the investment is sold or withdrawn.
- Taxpayers must submit a certified statement to the director of taxation annually.
- The department will maintain records and verify qualifying investments.
- Common law principles apply to ensure economic substance and business purpose.
Latest Legislative Action
Referred to ECD, CPC, FIN, referral sheet 1
Bill Sponsors
| Name | Role | District |
|---|---|---|
| Sam Kong D | Sponsor | HD-033 |
Compliance Checklist
Claim the tax credit for investments in qualified businesses.
Who: Taxpayers investing in cybersecurity or AI businesses.
Deadline: By the end of the twelfth month following the close of the taxable year.
Penalty: Loss of right to claim the credit if not filed on time.
Who: Taxpayers investing in cybersecurity or AI businesses.
Deadline: By the end of the twelfth month following the close of the taxable year.
Penalty: Loss of right to claim the credit if not filed on time.
Submit a certified statement of qualified investments and claimed credits.
Who: Taxpayers who made investments in the previous taxable year.
Deadline: By March 31 of each year following the investment.
Penalty: Failure to submit may result in loss of credit eligibility.
Who: Taxpayers who made investments in the previous taxable year.
Deadline: By March 31 of each year following the investment.
Penalty: Failure to submit may result in loss of credit eligibility.
Related & Companion Bills
Full Legal Analysis
H.B. No. 454 proposes a tax credit for investments in qualified businesses that focus on cybersecurity and artificial intelligence. The credit structure allows taxpayers to deduct a percentage of their investment from their net income tax liability over five years, with specific percentages allocated for each year following the investment. Taxpayers must ensure that their investments meet the criteria for qualified businesses, which include having more than fifty percent of their activities in cybersecurity and AI, with more than seventy-five percent of these activities conducted in Hawaii. Additionally, the bill includes recapture provisions that apply to the total tax credit claimed in the preceding two taxable years if their investment status changes within the five-year period. Compliance with the reporting requirements is crucial, as failure to do so may result in the loss of the right to claim the credit.
Official Source
Official Bill Text
View HB454 on official legislature website →
Affected Industries
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