HI HB2168

Creates a new state income tax credit for taxpayers holding qualified equity investments in community development entities, equal to 5% of the investment amount for the first three credit allowance dates and 6% for subsequent dates.

Allows the credit to be claimed against net income tax liability for the taxable year, with unused credits carrying forward to subsequent years until exhausted and must be claimed within 12 months following the close of the taxable year.

Makes federal Internal Revenue Code section 45D (new markets tax credit) operative for Hawaii tax purposes, subject to Hawaii modifications, and applies passive activity loss limitations under IRC section 469.

Permits partners in partnerships to allocate new markets tax credits among themselves without conforming to IRC section 704(b)(2) requirements, consistent with treatment of other tax credits.

Effective upon approval and applies to taxable years beginning after December 31, 2009.