Tax Incentives Available for Small Businesses in Hawaii

As a small business owner in Hawaii, understanding the various tax incentives available to you can significantly impact your bottom line. Accounting services in Hawaii can help guide you through the complexities of these tax breaks and ensure you’re making the most of the opportunities available to your business. 

In this blog, we explore key tax incentives designed to support small businesses and promote growth in the state.

Key Tax Incentives for Small Businesses in Hawaii

1. Hawaii Enterprise Zone Program

The Hawaii Enterprise Zone Program is a powerful incentive designed to stimulate economic activity in specific geographic areas of the state.

• Benefits:
  • Up to 80% non-refundable state income tax credit for businesses operating within designated zones.

  • 100% exemption from the General Excise Tax (GET) for up to seven years.

• Eligibility:
  • Businesses must operate within designated Enterprise Zones.

  • Job creation and other growth-related criteria must be met.

This program is particularly beneficial for businesses that want to establish themselves or expand in certain underdeveloped areas of Hawaii.

2. Hawaii Small Business Innovation Research (SBIR) Program

If your business is focused on innovation, the Hawaii Small Business Innovation Research Program offers excellent financial support for research and development projects.

• Benefits:
  • Matching grants covering up to 50% of the federal Phase I award.

  • Phase 0 Grants of up to $3,000 for businesses submitting competitive Phase I SBIR applications.

• Eligibility:
  • Hawaii-based companies that receive federal SBIR Phase I awards.

This program helps small businesses continue to develop their projects and compete for larger Phase II federal funding.

3. Manufacturing Assistance Program Grant (MAP)

Hawaii’s Manufacturing Assistance Program is aimed at helping manufacturers in the state grow and improve their competitiveness.

• Benefits:
  • Up to 20% reimbursement (maximum $100,000) on qualified expenses related to manufacturing improvements.

• Eligibility:
  • Businesses involved in manufacturing activities in Hawaii.

The MAP program supports businesses looking to innovate or streamline their operations, ultimately strengthening Hawaii’s manufacturing sector.

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4. Renewable Energy Tax Credits

Hawaii is committed to clean energy, and this is reflected in the generous tax credits available to businesses investing in renewable energy systems.

• Benefits:
  • Tax credits for owners of solar, wind, and other renewable energy systems installed in Hawaii.

• Eligibility:
  • Businesses that install and use renewable energy systems.

These credits help businesses reduce the initial investment costs associated with switching to sustainable energy sources.

5. Organic Foods Production Tax Credit

Hawaii offers a refundable tax credit to businesses involved in the production or handling of organic foods.

• Benefits:
  • Refundable tax credits for qualified organic production or handling expenses.

• Eligibility:
  • Businesses engaged in organic food production within the state.

This tax credit supports Hawaii’s growing organic food industry by easing the financial burden on producers.

6. High Technology Business Investment Tax Credit

For tech-focused businesses, Hawaii provides a 100% tax credit on equity investments in qualifying high-tech ventures.

• Benefits:
  • 100% tax credit on investments up to $2 million per investor.

• Eligibility:
  • High-tech businesses in Hawaii that qualify for the program.

This incentive aims to boost the state’s technology sector and attract investment into innovative fields.

7. Hawaiʻi State Trade Expansion Program (HiSTEP)

Small businesses with aspirations of expanding internationally can benefit from the HiSTEP program.

• Benefits:
  • Support for small business export development through counseling, training, and targeted activities.

• Eligibility:
  • Small businesses with export potential.

This program helps businesses access international markets and grow their global presence.

Summary

Hawaii offers several tax incentives that can benefit small businesses, ranging from tax credits for renewable energy investments to funding programs that encourage innovation and growth. By taking advantage of these programs, small businesses in Hawaii can reduce their tax burden, improve their operations, and invest in the future.

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Here are some articles you might find helpful:

Form 1120-S: S Corp Tax Returns

Form 4562: Depreciation Deductions

Franchise Tax for Small Businesses