| 47 | | - | SECTION 1. The legislature finds that investing in the well-being of Hawaii's children is essential to the creation of a prosperous and sustainable future. To address child poverty, the American Rescue Plan Act of 2021 increased the federal child tax credit from $2,000 to $3,600 for qualifying children under age six, and to $3,000 for other qualifying children under age eighteen, while allowing the credit to be distributed to qualifying taxpayers on a monthly basis. The legislature additionally finds that the provisions of the American Rescue Plan Act that strengthened the child tax credit expired at the end of 2021, despite lifting millions of families and their children out of poverty. In the face of federal inaction to maintain a robust child tax credit, states have a responsibility to enact policies that assist working families with children in meeting their basic needs. The legislature further finds that according to the National Conference of State Legislatures, twelve other jurisdictions have enacted a state child tax credit. State laws vary regarding refundability and how child tax credits are calculated. The two primary approaches are either establishing a fixed limit or a percentage of the federal child tax credit. The fixed limit for state child tax credits ranges from $75 to $1,000 per child. The percentage for state child tax credits range from five per cent to thirty-three per cent of the federal child tax credit. The purpose of this Act is to establish a nonrefundable child tax credit for Hawaii's working families. SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows: "§235- Nonrefundable child tax credit. (a) Each qualifying individual taxpayer with an adjusted gross income of $60,000 or less may claim a nonrefundable child tax credit. The tax credit shall be $ per taxable year for each child dependent aged five years or less and $ for each child dependent aged six years but less than eighteen years. (b) The credit allowed under this section shall be claimed against the net income tax liability for the taxable year. If the tax credit under this section exceeds the taxpayer's net income tax liability, the excess of the tax credit over liability may be used as a credit against the taxpayer's net income liability in subsequent years until exhausted. (c) All claims, including amended claims, for a tax credit under this section shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit. (d) No credit shall be allowed under this section for any taxable year in the disallowance period. For purposes of this subsection, the disallowance period is: (1) The period of ten taxable years after the most recent taxable year for which there was a final administrative or judicial decision that the taxpayer's claim for credit under this section was due to fraud; or (2) The period of two taxable years after the most recent taxable year for which there was a final administrative or judicial decision disallowing the taxpayer's claim for credit for reasons other than fraud. (e) The director of taxation: (1) Shall prepare any forms necessary to claim a tax credit under this section; (2) May require proof of the claim for the tax credit; (3) Shall alert eligible taxpayers of the tax credit using appropriate and available means; (4) Shall submit an annual public report to the governor and legislature containing the: (A) Number of credits granted for the prior calendar year; (B) Total amount of the credits granted; and (C) Average value of the credits granted to taxpayers whose adjusted gross income falls within various income ranges; and (5) May adopt rules pursuant to chapter 91 to effectuate this section. (f) For purposes of this section, "qualifying individual taxpayer" means a taxpayer who: (1) Files a federal income tax return for the taxable year claiming the child tax credit under section 24 of the Internal Revenue Code; and (2) Files a Hawaii income tax return using the same filing status used on the taxpayer's federal income tax return for the taxable year and claiming the same dependents claimed on the federal income tax return for the taxable year. (g) This section shall apply to taxable years beginning after December 31, 2023." SECTION 3. New statutory material is underscored. SECTION 4. This Act shall take effect on June 30, 2050, and shall apply to taxable years beginning after December 31, 2023. |
|---|
| 47 | + | SECTION 1. The legislature finds that investing in the well-being of Hawaii's children is essential to the creation of a prosperous and sustainable future. To address child poverty, the American Rescue Plan Act of 2021 increased the federal child tax credit from $2,000 to $3,600 for qualifying children under age six, and $3,000 for other qualifying children under age eighteen, while allowing the credit to be distributed to qualifying taxpayers on a monthly basis. The legislature additionally finds that the provisions of the American Rescue Plan that strengthened the child tax credit expired at the end of 2021, despite lifting millions of families and their children out of poverty. In the face of federal inaction to maintain a robust child tax credit, states have a responsibility to enact policies that assist working families with children in meeting their basic needs. The legislature further finds that according to the National Conference of State Legislatures, twelve other jurisdictions have enacted a state child tax credit. State laws vary regarding refundability and how child tax credits are calculated. The two primary approaches are either establishing a fixed limit or a percentage of the federal child tax credit. The fixed limit for state child tax credits ranges from $75 to $1,000 per child. The percentage for state child tax credits range from five per cent to thirty-three per cent of the federal child tax credit. The purpose of this Act is to establish a refundable child tax credit for Hawaii's working families. SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows: "§235- Refundable child tax credit. (a) Each qualifying individual taxpayer with an adjusted gross income of $60,000 or less may claim a refundable child tax credit. The tax credit shall be $ per year for each child dependent aged five years or less and $ for each child dependent aged six years but less than eighteen years. (b) The refundable child tax credit awarded under this section shall be equally distributed to a qualifying individual taxpayer over twelve consecutive months. (c) The credit allowed under this section shall be claimed against the net income tax liability for the taxable year. If the tax credit under this section exceeds the taxpayer's net income tax liability, the excess of the tax credit over liability shall be refunded to the taxpayer; provided that no refunds or payment on account of the tax credit allowed by this section shall be made for amounts less than $1. (d) All claims, including amended claims, for a tax credit under this section shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit. (e) No credit shall be allowed under this section for any taxable year in the disallowance period. For purposes of this subsection, the disallowance period is: (1) The period of ten taxable years after the most recent taxable year for which there was a final administrative or judicial decision that the taxpayer's claim for credit under this section was due to fraud; or (2) The period of two taxable years after the most recent taxable year for which there was a final administrative or judicial decision disallowing the taxpayer's claim for credit for reasons other than fraud. (f) The director of taxation: (1) Shall prepare any forms necessary to claim a tax credit under this section; (2) May require proof of the claim for the tax credit; (3) Shall alert eligible taxpayers of the tax credit using appropriate and available means; (4) Shall submit an annual public report to the governor and legislature containing the: (A) Number of credits granted for the prior calendar year; (B) Total amount of the credits granted; and (C) Average value of the credits granted to taxpayers whose adjusted gross income falls within various income ranges; and (5) May adopt rules pursuant to chapter 91 to effectuate this section. (g) For purposes of this section, "qualifying individual taxpayer" means a taxpayer who: (1) Files a federal income tax return for the taxable year claiming the child tax credit under section 24 of the Internal Revenue Code; and (2) Files a Hawaii income tax return using the same filing status used on the taxpayer's federal income tax return for the taxable year and claiming the same dependents claimed on the federal income tax return for the taxable year. (h) This section shall apply to taxable years beginning after December 31, 2023." SECTION 3. New statutory material is underscored. SECTION 4. This Act shall take effect on June 30, 3000, and shall apply to taxable years beginning after December 31, 2023. |
|---|