Hawaii R&D Tax Credit Summary


Hawaii State R&D Tax Credit

For taxable years beginning after December 31, 2012:

  • In order to qualify for the tax credit, the qualified high technology business must also claim a federal tax credit for the same qualified research activities, as enacted on December 31, 2011, irrespective of any subsequent amendments to IRC § 41
  • The credit reduces the taxpayer’s net income tax liability for the taxable year in which the credit is properly claimed
  • The federal tax provisions in IRC § 41, as that section was enacted on December 31, 2011, will remain in effect for purposes of determining the Hawaii credit and will apply only to expenses incurred for qualified research activities after December 31, 2012
  • “Qualified research” has the same meaning as in IRC § 41(d)
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    For Taxable Years Beginning Before 2013:

    • References to the base amount do not apply and credit for all qualified research expenses may be taken without regard to the number of expenses for previous years
    • The terms “qualified research” under IRC § 41(d)(1) and “basic research” under IRC § 41(e) do not include research conducted outside of Hawaii

    Pursuant to S.B. 1314, which was enacted on July 5th, 2019, Hawaii extended its Research Credit that was set to expire on December 31, 2019, to December 31, 2024. The legislation amends the research activity so that references to the base amount of §41 of the I.R.C. no longer applies and the credit may be taken regardless of any qualifying research expenditures taken in previous years.

    An aggregated credit cap of $5 million is established and the credits will be certified on a first-come, first-served basis.

    How to Obtain the Credit?

    Effective for taxable years beginning after December 31, 2012, a qualified high technology business that claims the credit must complete and file with the Department of Business, Economic Development, and Tourism (DBEDT) an annual survey on electronic forms prepared and prescribed by that Department. The survey must be filed before June 30 of each calendar year following the calendar year in which the credit may be claimed. All claims for the credit must be filed by the end of the 12th month following the close of the taxable year for which the credit may be claimed. Failure to properly claim the credit constitutes a waiver of the right to claim the credit.

    Refundable/Transferable Tax Credit- Yes

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