RELATING TO INCOME TAX.

Income tax brackets and rates were modified to include more brackets and higher top rates for future taxable years, affecting how much tax high-income earners pay.

The income limits for claiming the Household and Dependent Care Services Tax Credit were increased, allowing more taxpayers to qualify for the credit.

Income restrictions limiting claims for single-family residential solar energy systems were removed, allowing taxpayers with higher incomes to claim the credit for these systems.

Rules for refunding excess tax credits for renewable energy systems were adjusted, specifically regarding systems that are not third-party financed.

Statutes governing the Capital Goods Excise Tax Credit, High Technology Business Investment Tax Credit, and Renewable Fuels Production Tax Credit were repealed, eliminating these specific tax incentives.

The sunset date for certain tax credit enhancements was extended to December 31, 2032.

Repeals future statutory adjustments to income tax brackets and tax credit percentages that were originally scheduled to take effect between 2026 and 2028.

Establishes a new income tax bracket and increases tax rates for the three highest income tiers, effective for taxable years beginning after December 31, 2026.

Limits the renewable energy tax credit for single-family residential solar systems to taxpayers with an adjusted gross income of $250,000 or less (individual) or $350,000 or less (joint), excluding systems that are third-party financed.

Increases the adjusted gross income thresholds for the household and dependent care services tax credit, allowing more middle-income families to qualify for the credit.

Increases the taxpayer's applicable percentage for calculating the household and dependent care services tax credit, effectively increasing the value of the credit.

Introduces a new definition for 'third-party financed system' to exclude systems where the taxpayer does not own the property from the renewable energy tax credit benefits.

Modifies the refundability rules for the renewable energy tax credit, limiting excess credit refunds to systems that are not third-party financed and raising income limits for eligible taxpayers.

New tax credits were added for solar and wind energy systems, offering 35% and 20% of actual costs respectively, subject to specific dollar caps based on property type (single-family, multi-family, or commercial).

Income tax brackets for joint filers, heads of households, and single filers were updated with new thresholds and rates for taxable years beginning after 2024, 2026, and 2028 to adjust for inflation.

A total annual funding cap of $40 million was established for renewable energy tax credits, allocated specifically for calendar years 2027 through 2030, after which the funding ends.

The expiration date for the capital goods excise tax credit was changed from December 31, 2027, to December 31, 2029.

New administrative requirements were added for taxpayers to submit certified statements regarding income and system costs before March 1 of each year to claim the renewable energy credits.

A new renewable fuels production tax credit was added, providing 20 cents per 76,000 BTUs of renewable fuel sold, with a total annual cap of $20 million.

New definitions were established for 'renewable energy technology system,' 'actual cost,' and 'household use' to clarify eligibility for the new credits.

Added the phrase 'provided further' to Section 9 to clarify the conditions under which the act takes effect, specifically regarding the retroactive application to taxable years after December 31, 2025, and the application of amendments to section 235-12.5(a) to years after December 31, 2026.

Changed the document header from 'HOUSE OF REPRESENTATIVES' to 'SENATE' and updated the amendment title to 'FLOOR AMENDMENT', reflecting a change in the legislative chamber or procedural stage.

Reformatted Section 2 to improve readability by adjusting line breaks and spacing in the description of the amendment to Hawaii Revised Statutes.

The effective dates for the bill's provisions were adjusted; Section 1 applies retroactively to taxable years beginning after December 31, 2025, while other sections take effect in 2026, 2028, or 2029.

The document type changed from a Senate Bill (SB 3125) to a House Amendment, altering the chamber of origin and the legislative workflow.

The amendment reorganized the bill's structure by removing the original Senate Bill text and replacing it with amendment instructions that modify specific sections of the Hawaii Revised Statutes.

Added a new tax credit for renewable energy technologies, including solar and wind systems, with specific percentage caps based on system type and property class.

Added a new tax credit for renewable fuels production, capped at $3.5 million per taxpayer annually, based on the volume of fuel produced.

Increased individual and joint income tax brackets and rates, particularly for incomes over $350,000 and $400,000, to generate additional revenue.

Repealed the High Technology Business Investment Tax Credit, eliminating the tax incentive for investments in qualified high-tech businesses.

Increased the applicable percentage for the Child and Dependent Care Tax Credit for higher-income taxpayers and raised the income thresholds for eligibility.

Established new administrative processes requiring taxpayers to submit certified statements and receive certificates from the Hawaii State Energy Office to claim new renewable energy and fuel credits.

Extended the sunset dates for various tax provisions, including the Child and Dependent Care Tax Credit and income tax bracket adjustments, to later years.