SB754 amends Hawaii’s low-income housing tax credit statute, section 235-110.8, to place a time limit on the use of unused credits. Under the bill, if the credit exceeds a taxpayer’s income tax liability in a given year, the excess may be carried forward and used in later taxable years, but only through the tenth subsequent taxable year. The measure also preserves the existing requirement that claims be filed within 12 months after the close of the taxable year and include Form 8609, while allowing an initial claim to be made using a carryover allocation or 42(m) letter if Form 8609 has not yet been received, with later amendment once the form is available.
The bill applies to taxable years beginning after December 31, 2024, and is written to avoid disturbing rights, duties, penalties, or proceedings that were already in place before its effective date. It also clarifies that the amendments to section 235-110.8 will remain in effect when the statute is otherwise scheduled for reenactment in 2027 under prior session laws. In practical terms, the bill affects taxpayers claiming the low-income housing tax credit, especially developers and investors in qualified low-income housing projects, by limiting how long unused credits can be carried forward.
The general sentiment reflected in the bill materials is technical and administrative rather than controversial. The report title and description frame the measure as a clarification of expiration rules for the low-income housing tax credit, suggesting a policy goal of tightening credit administration and providing certainty about the credit’s lifespan. The bill was referred to the Senate Ways and Means Committee, and no recorded votes or committee testimony were provided in the materials.
No specific opposition or competing viewpoints are documented in the available record, but the main point of potential contention is the new ten-year cap on carryforward use of the credit. That limitation could matter to taxpayers with large credits that take many years to absorb, while supporters would likely view it as a reasonable limit that encourages timely use of the incentive and simplifies tax administration. The bill also preserves flexibility for first-year claims when Form 8609 is delayed, which appears designed to reduce compliance problems for housing projects.
Impact
SB754 would amend Hawaii Revised Statutes section 235-110.8 governing the low-income housing tax credit by limiting carryforward use of excess credits to no more than ten subsequent taxable years. It would also preserve and clarify filing procedures for claiming the credit, including the use of Form 8609 and temporary reliance on a carryover allocation or 42(m) letter for first-year claims when the form is not yet available. The bill primarily affects taxpayers, developers, and investors involved in qualified low-income housing buildings or projects, and it would apply to taxable years beginning after December 31, 2024.
Sentiment
The available materials suggest a generally neutral to supportive sentiment, with the bill presented as a technical tax administration measure rather than a major policy dispute. The description emphasizes expiration and compliance rules for the low-income housing tax credit, and there is no recorded committee debate or vote history indicating controversy. The referral to Ways and Means is consistent with a fiscal and administrative review of the credit’s operation.
Contention
The main substantive issue is the new restriction that unused low-income housing tax credits may not be carried forward beyond the tenth subsequent taxable year. Taxpayers, project sponsors, or investors who rely on long-term credit utilization could view that as limiting the value of the incentive, while proponents may see it as a reasonable sunset on unused credits. A secondary issue is the bill’s filing and documentation requirements, though the bill softens that burden by allowing an initial claim before Form 8609 is received and requiring later amendment.