Clarifies that, for tax credits issued after 7/1/2026, a partner or member that is a partnership or limited liability company that has been allocated a Low-Income Housing Tax Credit may either further allocate the credit, the official text

HOUSE OF REPRESENTATIVES

H.B. NO.

1920

THIRTY-THIRD LEGISLATURE, 2026

H.D. 1

STATE OF HAWAII

S.D. 2

C.D. 1

A BILL FOR AN ACT

RELATING TO THE LOW-INCOME HOUSING TAX CREDIT.

BE IT
ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1.  Section 235-110.8, Hawaii Revised Statutes,
is amended by amending subsection (b) to read as follows:

"(b)  Each taxpayer subject to the tax imposed by
this chapter, who has filed a net income tax return for a taxable year may
claim a low-income housing tax credit against the taxpayer's net income tax
liability.  The amount of the credit
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 on a timely basis.  A credit
under this section may be allocated by a partnership or limited liability
company in any manner agreed to by the partners or members regardless of
whether the individual or entity to receive the credit is deemed to be a
partner or member for federal income tax purposes, so long as the individual or
entity is deemed to be a partner or member pursuant to applicable state law.

For tax credits issued after July 1,
2026, a partner or member that is a partnership or limited liability company
that has been allocated a credit may either further allocate the credit or
transfer, sell, or assign all or a portion of the credit to any taxpayer,
whether or not the taxpayer owns a direct or indirect interest in the qualified
low-income building; provided that for any tax year in which the credit is
transferred, sold, or assigned pursuant to this subsection, the transferor
shall notify the department of taxation of the transfer, sale, or assignment by
the twentieth day of the first month following the end of the taxable year for
which the credit may be claimed in a manner prescribed by the department; provided
further that the transferee shall not further allocate, transfer, sell, or
assign all or a portion of the credit to any taxpayer.

The credit may be claimed whether or not
the taxpayer is eligible to be allocated a federal low-income housing tax
credit pursuant to section 42 of the Internal Revenue Code."

SECTION 2.
Act 129, Session Laws of Hawaii 2016, as amended by Act 226, Session
Laws of Hawaii 2021, section 2, is amended by amending section 4 to read as
follows:

"SECTION 4.  This Act, upon its approval, shall take
effect on January 1, 2017, and shall apply to qualified low-income buildings
awarded credits after December 31, 2016; provided that this Act shall be
repealed on December 31, [2027,] 2032, and section 235-110.8,
Hawaii Revised Statutes, shall be reenacted in the form in which it read on the
day prior to the effective date of this Act."

SECTION 3.
Act 226, Session Laws of Hawaii 2021, is amended by amending section 4
to read as follows:

"SECTION 4.  This Act shall take
effect on July 1, 2021, and shall apply to taxable years beginning after
December 31, 2020; provided that the amendments made to section 235-110.8,
Hawaii Revised Statutes, by section 1 of this Act shall not be repealed when
that section is reenacted on December 31, [2027,] 2032, pursuant
to section 4 of Act 129, Session Laws of Hawaii 2016, [and] as
amended by section 2 of this Act."

SECTION 4.
Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

SECTION 5.
This Act shall take effect upon its approval; provided that the
amendments made to section 235-110.8(b), Hawaii Revised Statutes, by section 1
of this Act shall not be repealed when that section is reenacted on December 31,
2032, pursuant to section 4 of Act 129, Session Laws of Hawaii 2016, as amended
by section 2 of Act 226, Session Laws of Hawaii 2021, and as amended by section
2 of this Act.