Relating To Tax Credit For Research Activities.
One significant aspect of HB990 is its impact on the tax benefits available to businesses. The bill consolidates the survey and certification requirements for qualifying for the tax credit and places a cap on the amount of credit a taxpayer and their entities can claim, specifically limiting it to $1,000,000 per taxable year. Furthermore, to qualify, businesses must also claim the corresponding federal tax credit, ensuring a degree of consistency with federal standards. This alignment is expected to foster a more robust research environment in Hawaii, potentially leading to increased investment from high technology firms.
House Bill 990 is aimed at amending Section 235-110.91 of the Hawaii Revised Statutes, which relates to the tax credit for research activities. The bill's primary focus is to streamline the tax credit process for qualified high technology businesses conducting research activities in Hawaii. It aims to align Hawaii's tax provisions with federal laws regarding research activities while allowing businesses to claim substantial credits to reduce their income tax liabilities. This is particularly important for enhancing the competitiveness of Hawaii's high-tech sector and promoting innovation within the state.
While the bill seems promising for the economic landscape in Hawaii, there may be points of contention surrounding the limitations imposed on tax credits and the requirement to claim federal credits. Some may argue that the restrictions on the overall credit cap could be limiting for businesses that engage in extensive research and development. Moreover, the condition of aligning with federal tax provisions could be perceived as reinforcing federal oversight in state matters, which might raise concerns among local policymakers advocating for greater autonomy in local economic strategies.