Tax Credit for Research Activities (TCRA) & Hawaii Film Tax Credit

DBEDT Tax Credit Certifications

TAX CREDIT FOR RESEARCH ACTIVITIES

Applications for the Tax Credit for research activities will be accepted starting on Monday, 3/3/2025 at 9am HST.

IMPORTANT NOTE: For the past 3 years, the $5 million cap was reached almost as soon as the online applications were opened. For 2025, the statute has not been amended so the procedure will be the exact same.

  • BE ADVISED THAT THE N-346A FORM HAS BEEN UPDATED. PLEASE INCLUDE UPDATED N-346A FORM IN YOUR SUBMISSION. OLDER FORMS WILL NOT BE ACCEPTED.

Application Instructions:

  1. Step 1 – Upload the completed, signed N346a form in Part A of your application. The form is available to download on the DOTAX website.
    a. The date/time a completed and signed N346a form is received by DBEDT will be considered the applicant’s application date/time.
  2. Step 2 – Upon completion of Step 1, please complete the below Part B. See guidelines for step-by-step instructions in Questionnaire.
    a. Questionnaire Pt B (1) – Link will take you to Survey
    b. Questionnaire Pt B (2).xls – Please download and complete .xls file
  3. Step 3 – Upload Questionnaire Pt B (2).xls file to the last page of Questionnaire Pt B (1).
    a. If there are upload issues, please submit Questionnaire Pt B (1) survey, then email Questionnaire Pt B (2).xls to [email protected]
    a. Deadline for Step 3, completed Part B, is 3/31/2025.

The information must be completed before the application will be reviewed.

See Hawaii Revised Statutes §235-110.91 Tax credit for research activities for complete details.

The application period for 2025 is 3/3/25 to 3/31/25. The application fee for 2025 is being waived.

The Tax Credit for Research Activities (R&D Tax Credit) is a refundable income tax credit for a qualified high technology business equal to the credit for research activities provided by section 41 of the Internal Revenue Code and as modified by HRS 235-110.91.

The maximum credit available per year is $5 million. Certifications will be provided on a first come, first-served basis up until the cap is reached. The tax credit will be repealed from statute on December 31, 2029.

Updates – Please use SB2497 CD1 (hawaii.gov) for reference (Additional guidance to be provided by DOTax):

  1. Section 41 refers to SEC (irs.gov) – Per the updated rules, the base amount in section 41 of the Internal Revenue Code will NOW APPLY and credit for all qualified research expenses may NOT be taken without regard to the amount of expenses for previous years.
  2. Company must conduct more than 50% of its activities in qualified research in the state of Hawaii and must be registered to do business in the state of Hawaii.
  3. Company must have no more than 500 employees.

DBEDT will review and verify the information submitted in the N346a application and, upon acceptance, return an approved certificate to the taxpayer. DBEDT anticipates certifications to be approved around June 30, 2024. The taxpayer is responsible for filing the certificate with the taxpayer’s tax return with the department of taxation. DBEDT may contact filers for expense & payroll documentation upon request.

Frequently Asked Questions

HAWAII FILM TAX CREDIT

This is the DBEDT site for the Tax Credit for Research Activities(§HRS 235-110.91) and the Motion picture, digital media, and film production income tax credit (§HRS 235-17) certifications.

IMPORTANT NOTICES:

22-27% MOTION PICTURE, DIGITAL MEDIA, & FILM PRODUCTION INCOME TAX CREDIT

On November 7, 2019, Governor David Ige signed and adopted new Hawaii Administrative Rules (HAR) relating to the Motion Picture, Digital Media, and Film Production Income Tax Credit. These new Rules, which took effect on November 17, 2019, supersede the previously issued film credit guidance.

IMPORTANT UPDATE: HRS section 235-17 was amended by ACT 217- GM 1318 (effective Jan 1, 2023) these amendments supersede all previous guidance. See amendments here: ACT 217 GM1318_.PDF (hawaii.gov)

Previous Tax Information Releases (superseded by newly adopted and amended Hawaii Administrative Rules):

IMPORTANT NOTICE TO ALL TAX CREDIT APPLICANTS AND CLAIMANTS:
The Hawaii Department of Taxation has issued a new Tax Advisory 2023 (12-23-22.)

Please review the above documents carefully before registering for the tax credit.

ALL TAX CREDIT APPLICANTS SHOULD CONTACT THE APPLICABLE STATE AND COUNTY FILM OFFICES FOR ANY NECESSARY PERMITS FOR FILMING IN HAWAII WITHIN STATE OR COUNTY JURISDICTIONS.
22-27% MOTION PICTURE, DIGITAL MEDIA, & FILM PRODUCTION INCOME TAX CREDIT

This is a refundable tax credit based on a production company’s qualified Hawaii expenditures while producing a qualified film, television, commercial, or digital media project. The credit equals 22% of qualified production costs incurred on Oahu, and 27% on the neighbor islands (Big Island, Kauai, Lanai, Maui, Molokai).

UPDATE: The tax credit rate has increased to 22% on qualified production costs incurred on Oahu, and 27% on the neighbor islands (Big Island, Kauai, Lanai, Maui, Molokai) for filers who register for the tax credit on or after January 1, 2023

For more information or questions contact : 808-492-6233 or filmoffice.hawaii.gov/incentives-tax-credits