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Hawaii extends, modifies tax credit for research activities

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August 2019


The Hawaii Tax Credit for Research Activities (Research Credit), previously set to expire on December 31, 2019, has been extended to December 31, 2024, pursuant to S.B. 1314, enacted on July 5. The new legislation also removes references to the base amount and prior-year expenses under IRC Section 41 when computing the credit available for tax years beginning after December 31, 2019. 

An annual credit cap of $5 million of the aggregate amount of certified credit is established, Credits will be certified on a first-come, first-served basis. 

The takeaway

Hawaii provides a refundable income tax credit for qualified high technology businesses with Hawaii research activities subject to an annual cap of $5 million. ​With references to the base amount under IRC Section 41 no longer applying after 2019, credit for all qualified research expenses may be taken without regard to the amount of expenses for previous years. The program will now sunset on December 31, 2024 rather than December 31, 2019. Note: Certification of credits is done on a first-come, first-served basis.

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Peter Michalowski

Peter Michalowski

Partner, State and Local Tax Consulting Leader, PwC US

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