Bill > HB796

This bill introduces a new requirement for income tax credits in Hawaii, mandating that all tax credits existing on December 31, 2025, or established or renewed after that date must include either a five-year sunset provision or a gradual reduction mechanism. Specifically, credits subject to this rule would need to either automatically expire after five years or be phased out by reducing the credit amount by one-third annually for three years, starting in the sixth year of the credit's existence. The bill provides two compliance options for tax credits: a complete termination after five years or a gradual reduction that brings the credit to zero over three years. Importantly, the bill explicitly excludes certain tax credits from this requirement, specifically those in section 235-15 and credits found in part III of the Hawaii Revised Statutes chapter on taxation. The purpose of this legislation appears to be creating more fiscal accountability and preventing indefinite tax credits by requiring periodic review and potential elimination of tax incentive programs. The bill will take effect immediately upon approval by the relevant authorities.

Budget and Finance, Business and Industry

https://www.capitol.hawaii.gov/session/measure_indiv.aspx?billtype=HB&billnumber=796&year=2025