HOUSE OF REPRESENTATIVES
THIRTY-FIRST LEGISLATURE, 2021
STATE OF HAWAII
A BILL FOR AN ACT
RELATING TO TAX CREDITS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that homelessness is a serious problem in Hawaii, due in part to the high cost of housing in the State. Since 1977, the State has made tax credits available to assist eligible renters. The legislature further finds that this tax credit is the third most commonly used among Hawaii residents. The income eligibility threshold was last adjusted in 1989 and the credit amount allowed was last adjusted in 1981. Since 1989, the cost of housing has increased by three hundred ninety per cent. Therefore, the legislature finds that it is appropriate to adjust the eligibility requirements for the income tax credit for low‑income household renters.
The purpose of this Act is to:
(1) Adjust the eligibility requirements under the income tax credit for low-income household renters;
(2) Increase the amount of this tax credit by creating tax brackets that will phase out the credit as the taxpayer's income rises using categories of different types of households; and
(3) Increase the amount of the credit every three years using a percentage based on the consumer price index.
SECTION 2. Section 235-55.7, Hawaii Revised Statutes, is amended to read as follows:
"§235-55.7 Income tax credit for low-income household renters. (a) As used in this section:
"Adjusted gross income" is
defined by section 235-1.
"Consumer price index" means the urban Hawaii consumer price index for all urban consumers published by the United States Department of Labor or a successor index.
"Qualified exemption" includes
those exemptions permitted under this chapter; provided that a person for whom
exemption is claimed has physically resided in the State for more than nine
months during the taxable year; [ and] provided further that
multiple [ exemption] exemptions shall not be granted because of
deficiencies in vision, hearing, or other disability.
"Rent" means the amount paid
in cash in any taxable year for the occupancy of a dwelling place [ which]
that is used by a resident taxpayer or the resident taxpayer's immediate
family as the principal residence in this State. [ Rent] "Rent" is
limited to the amount paid for the occupancy of the dwelling place only, and is
exclusive of charges for utilities, parking stalls, storage of goods, yard
services, furniture, furnishings, and the like.
[ Rent] "Rent" shall not include any rental
claimed as a deduction from gross income or adjusted gross income for income
tax purposes, any ground rental paid for use of land only, and any rent allowance
or subsidies received.
(b) Each resident taxpayer who occupies and pays
rent for real property within the State as the resident taxpayer's residence or
the residence of the resident taxpayer's immediate family [
is not partially or wholly exempted from real property tax, who is not eligible
to be claimed as a dependent for federal or state income taxes by another, and
who files an individual net income tax return for a taxable year, may claim a
tax credit under this section against the resident taxpayer's Hawaii state
individual net income tax.
(c) Each taxpayer [
with an adjusted gross
income of less than $30,000] who has paid more than $1,000 in rent during
the taxable year for which the credit is claimed may claim a tax credit [ of
$50 multiplied by the number of qualified exemptions to which the taxpayer is entitled;]
in accordance with the table in this subsection; provided that each
taxpayer sixty-five years of age or over may claim double the tax credit; [ and]
provided further that a resident individual who has no income or no
income taxable under this chapter may also claim the tax credit as set forth in
Federal adjusted gross income Credit per exemption
for taxpayers filing
a single return or married
Under $20,000 $200
$20,000 under $30,000 $150
$30,000 under $40,000 $100
$40,000 and over $ 0.
Federal adjusted gross Credit per exemption
income for heads of
Under $30,000 $200
$30,000 under $45,000 $150
$45,000 under $60,000 $100
$60,000 and over $ 0.
Federal adjusted gross Credit per exemption
income for taxpayers
filing a joint return
under section 235-93
or a surviving spouse
Under $40,000 $200
$40,000 under $60,000 $150
$60,000 under $80,000 $100
$80,000 and over $ 0.
(d) For each taxable year beginning after December 31, 2022, and every three years thereafter, each dollar amount contained in the table in subsection (c) shall be increased by an amount equal to that dollar amount, multiplied by the percentage, if any, by which the consumer price index for June of the preceding calendar year exceeds the consumer price index for June of 2021, rounded to the nearest whole dollar amount.
(e) If a rental unit is occupied
by two or more individuals, and more than one individual is able to qualify as
a claimant, the claim for credit shall be based upon a pro rata share of the
(f) The tax credits shall be
deductible from the taxpayer's individual net income tax for the tax year in
which the credits are properly claimed; provided that a [ husband and wife]
married couple filing separate returns for a taxable year for which a
joint return could have been made by them shall claim only the tax credits to
which they would have been entitled had a joint return been filed. In the event the allowed tax credits exceed
the amount of the income tax payments due from the taxpayer, the excess of
credits over payments due shall be refunded to the taxpayer; provided that
allowed tax credits properly claimed by an individual who has no income tax
liability shall be paid to the individual; [ and] provided further that
no refunds or payments on account of the tax credits allowed by this section
shall be made for amounts less than $1.
(g) The director of taxation
shall prepare and prescribe the appropriate form or forms to be used herein,
may require proof of the claim for tax credits, and may adopt rules pursuant to
(h) All of the provisions
relating to assessments and refunds under this chapter and under section
231-23(c)(1) shall apply to the tax credits hereunder.
(i) Claims for tax credits under
this section, including any amended claims [ thereof], shall be filed on
or before the end of the twelfth month following the taxable year for which the
credit may be claimed."
SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 4. This Act shall take effect on July 1, 2050, and shall apply to taxable years beginning after December 31, 2020.
Income Tax Credit for Low-income Household Renters; Adjustments; Eligibility Caps; Inflation
Increases the amount of the tax credit for individuals and households and the adjusted gross income eligibility cap for the income tax credit for low-income household renters using tax brackets for individuals and different categories of households. Provides for inflation increases every three years based on the consumer price index. Applicable to taxable years beginning after 12/31/2020. Effective 7/1/2050. (HD1)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.