SB138 creates a new nonrefundable Hawaii income tax credit for taxpayers who incur qualified expenses to design, purchase materials for, install, or construct one or more hurricane-resistant safe rooms on their property. The credit would apply against state net income tax liability, and any unused credit could be carried forward to later years until exhausted. The bill also allows the credit to be claimed by partnerships, S corporations, estates, and trusts at the entity level, with allocation of the credit to be determined by rule.
The bill defines a safe room as a windowless room in or attached to a residence that is designed to resist wind pressure and windborne debris, is not located in a flood-prone area, is accessible to residents, and meets FEMA safe-room guidance and hurricane standards. It requires the Department of Taxation to create forms, verify claims, and may require certification from a licensed architect or structural engineer. The bill also bars taxpayers from claiming any other tax credit or deduction for the same qualified expenses and sets a future effective date of July 1, 2077.
Impact
If enacted, SB138 would amend chapter 235, Hawaii Revised Statutes, by adding a new income tax credit provision tied to residential storm-hardening improvements. It would create a new tax expenditure for the state, subject to a percentage credit, per-taxpayer cap, and an overall annual statewide cap, while shifting administrative responsibilities to the director of taxation. The bill would affect individual taxpayers and pass-through entities that build qualifying safe rooms, as well as architects and structural engineers who may be asked to certify compliance with the required standards.
Sentiment
The available voting history suggests the bill was generally supported in committee, passing the Senate Public Safety, Intergovernmental and Military Affairs Committee 4-1 with amendments. No transcript excerpts are available, so the broader discussion record is limited, but the amended passage indicates there was enough support to advance the measure while still leaving at least some concern or disagreement reflected in the lone dissenting vote.
Contention
The main points of contention likely center on the cost and scope of the tax credit, including the unspecified credit percentage, individual cap, and statewide cap left blank in the bill text. Another likely issue is whether a tax credit is the best policy tool for encouraging hurricane-resistant construction, especially given the long carryforward period and the prohibition on stacking other credits or deductions for the same expenses. The dissenting vote suggests at least one committee member had reservations, though the record provided does not specify the objection.