High Technology Business Investment Tax Credit

Summary

NOTE: With the passage of SB 199 in July 2009, several temporary changes were made to this tax credit. For tax years beginning January 1, 2009 until January 1, 2011, there is a temporary cap on the amount of credit a taxpayer can receive. The amount of credit a taxpayer can take for investments in a qualified high tech business, where the property is placed in service on or after May 1, 2009, is limited to 80% of the taxpayer's income tax liability. For these years, excess credit cannot be carried over.

On July 1, 2001, Hawaii became the only state in the nation to offer a 100% tax credit on an equity investment in a qualified high tech business (QHTB). The purpose of this credit is to encourage investment in Hawaii's high tech companies. A "qualified high technology business" is defined as "a business that conducts more than fifty per cent of its activities in qualified research." Qualified research includes development of energy technologies based on non-fossil sources such as "wind, solar energy, hydropower, geothermal resources, ocean thermal energy conversion, wave energy, hydrogen, fuel cells, landfill gas, waste to energy, biomass including municipal solid waste, and biofuels."

The credit will be allocated as follows:

(1) 35% in the year the investment was made (maximum credit of $700,000)
(2) 25% in the first year following the year in which the investment was made (maximum credit of $500,000)
(3) 20% in the second year following the investment (maximum credit of $400,000)
(4) 10% in the third year following the investment (maximum credit of $200,000)
(5) 10% in the fourth year following the investment (maximum credit of $200,000)

HB 2396 of 2004 extended the expiration date of the tax credit the end of 2010 (previously 12/31/05).