HB916 expands Hawaii’s state low-income housing tax credit so it can be used not only against state income tax liability, but also against transient accommodations tax (TAT) liability in the county where the qualified low-income building is located. The bill amends chapter 237D and section 235-110.8 of the Hawaii Revised Statutes to define the credit as usable against “net income or other tax liability,” and it allows unused credit amounts to be carried forward until exhausted, subject to existing filing and documentation requirements.
The bill also makes permanent changes first enacted in Act 129, Session Laws of Hawaii 2016, and preserved through Act 226, Session Laws of Hawaii 2021. In practical terms, it extends the life of the state low-income housing tax credit framework beyond the prior sunset structure and clarifies that the credit may be claimed by eligible taxpayers associated with qualified low-income housing projects under Internal Revenue Code section 42. The measure is intended to increase the pool of investors and improve financing for affordable housing development by making the credit more flexible and more valuable to hotel and similar taxpayers with TAT liability.
Impact
HB916 would amend Hawaii tax law by broadening the types of state tax liabilities that may be offset with the low-income housing tax credit, specifically adding county-based transient accommodations tax liability under chapter 237D. It would also revise the existing credit statute to reflect that the credit may be applied against income tax or other applicable tax liability, while keeping the county-location limitation tied to the qualified low-income building. In addition, the bill removes the scheduled repeal of the 2016 credit framework, making those provisions permanent and preserving the state’s low-income housing tax credit program as an ongoing financing tool for affordable housing projects.
Sentiment
The bill appears generally supportive of affordable housing policy and tax-credit financing, with its stated purpose focused on increasing investment in low-income housing construction. Even without recorded committee testimony or votes in the provided materials, the bill text itself reflects a favorable policy posture toward expanding the usefulness of the credit and sustaining the program long term. The absence of recorded opposition in the supplied context means no formal sentiment can be inferred from hearings or floor action, but the measure is framed as a housing-supply and financing enhancement.
Contention
The main policy issue is whether a low-income housing tax credit should be allowed to offset transient accommodations tax liability, which effectively benefits taxpayers with TAT exposure, such as hotels and similar entities, rather than only income taxpayers. Supporters would likely view this as a way to broaden the investor base and raise more equity for affordable housing projects, while critics could question whether using a hotel-related tax liability to subsidize housing is an appropriate use of the credit or whether it reduces state revenue in a way that is not tightly targeted. Another point of potential concern is the permanent extension of the 2016 credit structure, which removes a sunset and may be viewed as limiting future legislative review.