SB2496 proposes the establishment of a gray water income tax credit in the state of Hawaii to encourage the use of gray water systems in residential properties. The bill highlights the growing concern over chronic drought conditions affecting agricultural operations and water infrastructure, particularly in regions like east and upcountry Maui. By facilitating the installation of gray water systems, the legislation aims to mitigate the impacts of water scarcity, thereby preserving essential water resources for both residential and agricultural use.
The tax credit, as detailed in the bill, would allow qualified taxpayers to reduce their income tax liability based on the costs incurred from installing certified gray water systems. Notably, the specifics around the percentage of costs eligible for credit and the maximum allowable credit have not been defined in the current draft. Eligibility for the tax credit encompasses individual homeowners, landowners, and corporations involved in building new homes or housing developments that integrate these systems.
The legislation further empowers the Department of Health to regulate the certification of gray water systems, ensuring that the systems installed meet certain standards to qualify for the credit. The bill outlines procedures for tax credit claims and stipulates that these claims must be filed in a timely manner; failure to do so would result in waiving the right to claim the credit. Additionally, it is noted that total tax credits for all qualified taxpayers shall be capped, limiting potential state liability in any given year.
Despite its intentions, SB2496 could stir some contention around its financial implications for both the state budget and taxpayers. Critics may question the sustainability of tax credits for gray water systems, particularly in years of limited state revenue. Environmental advocates might push for broader regulations on water conservation that go beyond just tax incentives. As the bill currently stands, it is set to be effective for taxable years beginning after December 31, 2024, and will automatically repeal after January 1, 2035, unless further action is taken to extend or modify it.