| 47 | | - | SECTION 1. The purpose of this Act is to establish an agroecological and climate-smart farming practices tax credit to promote: soil quality and health; fertility management for organic and conventional farming systems; preventative and biological pest management; crop rotation, cover cropping, and poly-cultures; and the conservation or restoration of native and Polynesian-introduced plants into agricultural landscapes. SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows: "§235- Agroecological and climate-smart farming practices tax credit. (a) There shall be allowed to each qualified taxpayer subject to the tax imposed under this chapter an agroecological and climate-smart farming practices income tax credit that shall be deductible from the qualified taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed. (b) The amount of the tax credit shall be equal to per cent of the qualified expenses of the qualified taxpayer, up to a maximum of $25,000 per taxable year. (c) In the case of a partnership, S corporation, estate, or trust, the tax credit allowable shall be for qualified expenses incurred by the entity for the taxable year. The expenses upon which the tax credit is computed shall be determined at the entity level. Distribution and share of credit shall be determined by rule. (d) The total amount of tax credits allowed under this section shall not exceed $1,000,000 for all qualified taxpayers in any taxable year; provided that any qualified taxpayer who is not eligible to claim the credit in a taxable year due to the $1,000,000 cap having been exceeded for that taxable year shall be eligible to claim the credit in the subsequent taxable year until exhausted within five consecutive taxable years of the filing of the initial claim for the credit under this section. (e) Every qualified taxpayer, before March 31 of each year in which qualified expenses were incurred by the qualified taxpayer in the previous taxable year, shall submit a written, certified statement to the chairperson of the board of agriculture identifying: (1) Qualified expenses incurred in the previous taxable year; and (2) The amount of the tax credit claimed by the qualified taxpayer pursuant to this section, if any, in the previous taxable year. (f) The board of agriculture, in consultation with the department of taxation, shall establish clear standards for certifying qualified expenses and eligible farming practices. These standards may be incorporated into administrative rules or codified within this section to ensure uniformity and efficiency in administering the tax credit. (g) The director of taxation: (1) Shall prepare any forms that may be necessary to claim a tax credit under this section; (2) May require the qualified taxpayer to furnish reasonable information to ascertain the validity of the claim for the tax credit made under this section; and (3) May adopt rules under chapter 91 necessary to effectuate the purposes of this section. (h) If the tax credit under this section exceeds the qualified taxpayer's net income tax liability, the excess of the credit over liability may be used as a credit against the qualified taxpayer's net income tax liability in subsequent years until exhausted within five consecutive taxable years of the filing of the initial claim for the credit under this section. All claims for the tax credit under this section, including amended claims, 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. (i) For the purposes of this section: "Agroecological and climate-smart farming practices" means sustainable farming practices that promote soil quality and health; fertility management for organic and conventional farming systems; preventative and biological pest management; crop rotation, cover cropping, and polycultures; and the conservation or restoration of native and Polynesian-introduced plants to agricultural landscapes. These practices shall include but not be limited to Native Hawaiian agricultural systems, such as loi kalo wetland cultivation, dryland field systems, agroforestry, and loko ia fishponds. "Net income tax liability" means income tax liability reduced by all other credits allowed under this chapter. "Qualified expenses" means expenses incurred in the practice or adoption of agroecological and climate-smart farming practices. "Qualified taxpayer" means a farmer that adopts agroecological and climate-smart farming practices." SECTION 3. New statutory material is underscored. SECTION 4. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2025. |
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| 47 | + | SECTION 1. The purpose of this Act is to establish an agroecological and climate-smart farming practices tax credit to promote: soil quality and health; fertility management for organic and conventional farming systems; preventative and biological pest management; crop rotation, cover cropping, and poly-cultures; and the conservation or restoration of native and Polynesian-introduced plants into agricultural landscapes. SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows: "§235- Agroecological and climate-smart farming practices tax credit. (a) There shall be allowed to each qualified taxpayer subject to the tax imposed under this chapter an agroecological and climate-smart farming practices income tax credit that shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed. (b) The amount of the tax credit shall be equal to the qualified expenses of the qualified taxpayer, up to a maximum of $ . (c) In the case of a partnership, S corporation, estate, or trust, the tax credit allowable shall be for qualified expenses incurred by the entity for the taxable year. The expenses upon which the tax credit is computed shall be determined at the entity level. Distribution and share of credit shall be determined by rule. (d) The total amount of tax credits allowed under this section shall not exceed $ for all qualified taxpayers in any taxable year; provided that any taxpayer who is not eligible to claim the credit in a taxable year due to the $ cap having been exceeded for that taxable year shall be eligible to claim the credit in the subsequent taxable year. (e) Every qualified taxpayer, before March 31 of each year in which qualified expenses were incurred by the taxpayer in the previous taxable year, shall submit a written, certified statement to the chairperson of the board of agriculture identifying: (1) Qualified expenses incurred in the previous taxable year; and (2) The amount of the tax credit claimed by the taxpayer pursuant to this section, if any, in the previous taxable year. (f) The board of agriculture shall: (1) Maintain records of the names and addresses of the qualified taxpayers claiming the credits under this section and the total amount of the qualified expenses upon which the tax credits are based; (2) Verify the nature and amount of the qualified expenses; (3) Total all qualified and cumulative expenses that the board certifies; and (4) Certify the amount of the tax credit for each taxpayer for each taxable year and the cumulative amount of the tax credit. Upon each determination made under this subsection, the board of agriculture shall issue a certificate to the taxpayer verifying information submitted to the board of agriculture, including amounts of qualified expenses, the credit amount certified for the taxpayer for each taxable year, and the cumulative amount of tax credits certified. The taxpayer shall file the certificate with the taxpayer's tax return with the department of taxation. The board of agriculture may assess and collect a fee to offset the costs of certifying tax credit claims under this section. (g) The director of taxation: (1) Shall prepare any forms that may be necessary to claim a tax credit under this section; (2) May require the taxpayer to furnish reasonable information to ascertain the validity of the claim for the tax credit made under this section; and (3) May adopt rules under chapter 91 necessary to effectuate the purposes of this section. (h) If the tax credit under this section exceeds the taxpayer's net income tax liability, the excess of the credit over liability may be used as a credit against the taxpayer's net income tax liability in subsequent years until exhausted. All claims for the tax credit under this section, including amended claims, 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. (i) For the purposes of this section: "Agroecological and climate-smart farming practices" means sustainable farming practices that promote soil quality and health; fertility management for organic and conventional farming systems; preventative and biological pest management; crop rotation, cover cropping, and polycultures; and the conservation or restoration of native and Polynesian-introduced plants to agricultural landscapes. "Net income tax liability" means income tax liability reduced by all other credits allowed under this chapter. "Qualified taxpayer" means a farmer that adopts agroecological and climate-smart farming practices." SECTION 3. New statutory material is underscored. SECTION 4. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2025. INTRODUCED BY: _____________________________ |
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