- Tax Credit for Research Activities (TCRA) – Refundable Hawaii tax credit for qualified R&D.
- Hawaii Revised Statutes (HRS) §235−110.91 – Primary statute governing Hawaii’s research tax credit.
- Hawaii Department of Taxation (DOTAX) – State agency administering tax laws and collection.
- Department of Business, Economic Development, and Tourism (DBEDT) – Agency certifying credits and promoting economic growth.
- Qualified High Technology Business (QHTB) – Business meeting specific R&D activity criteria.
- QHTB Annual Survey – Mandatory yearly survey for claiming the credit.
- QHTB Full-Time or Part-Time Employees Limit (500) – Eligibility cap on workforce size for applicants.
- Activities in Qualified Research (> 50%) – Required percentage of business activity in research.
- Domiciled and Registered to do Business – Must be legally established and based in Hawaii.
- Independently Owned and Operated – Business cannot be a subsidiary of another.
- Qualified Research Expenses (QREs) – Eligible costs used to calculate the tax credit.
- Research Activity Conducted – R&D work performed directly within Hawaii.
- IRC §41 (Federal Research Credit Reference) – Federal tax code section defining qualified research.
- IRC §41 as Enacted on December 31, 2011 – Hawaii conforms to federal law from this date.
- Wages for Qualified Services (Hawaii) – Employee salaries paid for performing qualified research.
- Cost of Supplies (Hawaii) – Expenses for materials used in research processes.
- Rental or Lease Costs of Computers (Hawaii) – Payments for cloud or hardware used in R&D.
- Contract Research Expenses Percentage (65%) – Allowable portion of third-party research costs.
- Applicable Percentage of Contract Research Expenses – Percentage of contractor costs eligible for credit.
- Basic Research Payments to Qualified Organizations – Payments to non-profits for scientific research.
- Research Expenses Incurred Outside of the State (Exclusion) – Costs outside Hawaii are not eligible for credit.
- Fully Refundable Credit – Excess credit is paid out as a refund.
- Refund of Excess Credit over Tax Liability – Taxpayer receives cash if credit exceeds tax owed.
- Annual Aggregate Cap ($5,000,000 or §10,000,000) – Total statewide limit on credits issued per year.
- First-Come, First-Served Basis – Certification priority based on application submission time.
- Certification of Credits – DBEDT process verifying eligibility and credit amount.
- DBEDT Certification Application – Formal request submitted to DBEDT for credit approval.
- Form N-346A (Application for Certification) – Specific form filed with DBEDT to certify credits.
- Application Date/Time (N-346A Receipt) – Timestamp determining priority for the aggregate cap.
- DBEDT Questionnaire Part B – Section of survey detailing research projects and costs.
- Application Deadline (March 31st) – Final date to submit certification for previous year.
- Form N-346 (Tax Credit for Research Activities) – Tax form attaching the certified credit to return.
- Schedule CR (Credit Schedule) – Summary form listing all claimed tax credits.
- Taxpayer’s Net Income Tax Liability – Tax owed before applying refundable credits.
- Corporate Income Tax (Form N-30) – Tax return form for corporations in Hawaii.
- Individual Income Tax (Form N-11/N-15) – Tax return forms for Hawaii residents or non-residents.
- S Corporation (Form N-20) – Information return for S-Corps passing credits through.
- Partnership (Flow-Through Entity) – Business structure passing credits to partners.
- Pro-Rata Share of Credit – Credit allocation based on ownership percentage.
- Schedule K-1 (Pass-Through Allocation) – Form reporting partner’s share of income and credits.
- Technological in Nature (4-Part Test) – Research must rely on hard sciences principles.
- Elimination of Uncertainty (4-Part Test) – Work must intend to discover unknown information.
- Process of Experimentation (4-Part Test) – Systematic trial and error to evaluate alternatives.
- Permitted Purpose (4-Part Test) – Intent to improve performance, quality, or reliability.
- Sunset Provision (December 31, 2029) – Date when the tax credit program expires.
- Amended Claims Deadline (12 Months) – Time limit to correct or adjust credit claims.
- Taxable Year – Fiscal period for which the credit is claimed.
- Base Amount Inapplicability (Previous Law) – Hawaii does not use a base amount calculation.
- High Technology Business Investment Tax Credit (§235−110.9) – Separate credit for investing in high-tech businesses.
