Act 24 allows insurance companies to offset their insurance premium taxes with the low-income housing tax credit provided by Hawaii Revised Statutes (HRS) section 235-110.8 effective for taxable year 1999. This will encourage the inflow of capital into Hawaii by providing insurance companies with the same tax incentives enjoyed by individuals and financial institutions to invest in low-income housing projects.
HRS section 235-110.8 provides that Internal Revenue Code section 42, relating to the low-income housing tax credit, is applicable for Hawaii income tax purposes. Under HRS section 235-110.8, a resident taxpayer may deduct from the taxpayer's net income tax liability, if any, a credit equal to thirty percent of the applicable percentage of the qualified basis of each building located in Hawaii. Banks and financial institutions may claim the low-income housing tax credit under HRS section 241-4.7.
Insurance companies are subject to a tax based on the amount of gross premiums received. See HRS section 431:7-202. Under prior law, however, insurance companies could not claim the low-income housing tax credit. Act 24 now allows insurance companies to offset their insurance premium taxes with the low-income housing tax credit.
Forms and other tax information may be downloaded from the Department's website at http://www.state.hi.us/tax/tax.html. On Oahu, forms may be ordered by calling the Department's Forms Request Line at 587-7572. Persons who are not calling from Oahu may call 1-800-222-7572 to receive forms by mail or 808-678-0522 from a fax machine to receive forms by fax.
RAY K. KAMIKAWA
Director of Taxation