HAWAII INVENTIONINDEX | DECEMBER 2025

December 2025: 1.01% (C grade)

Hawaii inventionINDEX December 2025: 1.01% (C grade)

The inventionINDEX measures innovation output by comparing GDP growth with patent production growth. 

Anything over C grade is positive sentiment; anything under C is negative outlook/sentiment. Using that sentiment, it is possible to observe trends over time, and also compare states/countries. In doing so, we can predict which states have the best chance to recover economically from the pandemic (or any other economic incident that may occur).

Hawaii inventionINDEX Scores – Last 12 months

The Hawaii inventionINDEX concludes December 2025 with a score of 1.01% and a C rating, representing a period of moderate stability compared to the broader historical context. While this latest figure aligns with the performance seen in late 2024, it sits below the sixty-month average of approximately 1.30%. This current standing follows a notable descent from the high of 1.85% recorded in September 2025, suggesting a cooling of innovative output or commercialization efficiency as the year draws to a close. When viewed against the previous year’s December score of 1.68%, the current metric indicates a contraction in momentum that warrants careful observation by industry stakeholders.

Examining the five-year trajectory reveals a landscape defined by significant volatility and periodic surges in excellence. The index reached an impressive peak of 3.03% in July 2024, marking the highest point in the data set and demonstrating the state’s potential for exceptional performance. Conversely, the market experienced a sharp trough only one month prior in June 2024, when the score dipped to a low of 0.50%. These fluctuations highlight a recurring cycle where periods of rapid expansion are often followed by sharp corrections. The current score of 1.01% reflects a more tempered environment, avoiding the extreme lows of the D and F ranges seen in past years but failing to recapture the A-grade heights achieved during the more robust quarters of 2021 and 2024.

A higher inventionINDEX score, such as the A+ ratings achieved in early 2021 and mid-2024, serves as a powerful indicator of a thriving local economy. When scores climb above the 1.50% threshold, it typically signifies a robust influx of new patents, increased venture capital interest, and a more streamlined path from conceptualization to market realization. These peak performance periods foster an environment where entrepreneurship is incentivized and institutional support for researchers is at its most effective. High ratings also enhance the region’s competitive edge, attracting talent and investment that further stimulate long-term economic resilience and technological leadership.

Conversely, lower scores such as the current 1.01% or the occasional drops into the sub-0.80% range present several negative implications for the innovation ecosystem. A sustained decline in the index can lead to a perception of stagnation, potentially discouraging investors and slowing the pace of local startup development. When the rating falls toward a D or F, it often reflects systemic bottlenecks, such as reduced funding or a lack of commercialization infrastructure, which can result in the loss of intellectual property to other regions. Moving forward, reversing the current downward trend from the September peak will require a focused effort to bolster support systems, ensuring that Hawaii can transition from the current C rating back toward the high-performing benchmarks established in years past.

Discussion:

In December, the Hawaii inventionINDEX scored a positive sentiment which was lower than the previous year’s average and underperformed the upward trend for the year. This is similar to the prior 12 months, which experienced an upward trend. 

As the economy continues to stabilize in the post-pandemic era, it remains uncertain whether any backlog of applications still exists or if the department has returned to normal processing timelines. The inventionINDEX could also be affected by lingering consequences from the pandemic, such as company closures, reduced workforces, and limited R&D capabilities, which may still be impacting current operations.

Learn More:

Are you thinking of patenting any of your bright ideas? Did you know your research work could be eligible for the R&D Tax Credit and you can receive up to 14% back on your expenses? To find out more, please check out our free online eligibility test.

Swanson Reed’s Hawaii office provides R&D tax credit consulting and advisory services to Honolulu, East Honolulu, Pearl City, Hilo and Kailua.

Feel free to book a quick teleconference with one of R&D tax specialists if you would like to learn more about R&D tax credit opportunities.

Who We Are:

Swanson Reed is the largest Specialist R&D tax credit advisory firm in the United States. With offices nationwide, we are one of the only firms globally to exclusively provide R&D tax credit consulting services to our clients. We have been exclusively providing R&D tax credit claim preparation and audit compliance solutions for over 30 years. 

Swanson Reed hosts daily free webinars and provides free IRS CE and CPE credits for CPAs.  For more information please visit us at www.swansonreed.com/free-webinars or contact your usual Swanson Reed representative.