Hawaii · research and development · HI-RD-001
Tax Credit for Research Activities
Publication revised September 24, 2026. Sourcebook page 91.
Credit amount / calculation
Credit tied to qualified research expenditures, subject to annual $5 million statewide cap and certification window.
Business fit and eligible activity
Qualified high-technology businesses conducting Hawaii research may receive a refundable credit; ordinary wood businesses may not meet the QHTB definition. Qualified research activity. Ordinary production, routine quality control and an equipment purchase alone do not qualify.
Eligibility and practical use
The high-technology-business qualification requires more than half of the business's activities to be qualified research. An ordinary production mill does not qualify merely because it conducts a small process-development project.
Illustrative business benefit
Use-of-credit illustration, not an estimated award: assume the agency or completed tax form establishes a $1,000 credit for the qualifying activity described above. With $600 of eligible tax due, a fully refundable $1,000 award would offset that tax and leave $400 refundable, subject to the program's refund procedure. Obtain the actual program calculation before estimating a project benefit.
Timing / first action
Check application or certification requirements before incurring the qualifying expense or beginning the qualifying activity.
Official sources
Related programs
Renewable Energy Technologies Income Tax Credit
2026 percentage/caps depend on technology
Businesses installing qualifying solar or wind systems may claim the state energy credit; woody biomass is not included merely because it is renewable.
Clean Electricity Investment Credit (Internal Revenue Code §48E)
Generally
Potentially relevant when a forest-products facility owns qualifying zero-emission generation or energy-storage property.
Credit for Increasing Research Activities (Internal Revenue Code §41)
Regular research-credit method
A sawmill, secondary manufacturer or biomass business can qualify when it performs genuine technological experimentation to improve a product or process.
Rehabilitation Credit (Internal Revenue Code §47)
Generally
A forest-products company rehabilitating a certified historic mill or industrial building for income-producing use may qualify.