HI HB1266

Establishes a non-refundable income tax credit equal to 5% of tax liability for principal operators of inter-island ferries filing individual or corporate net income tax returns.

Defines "principal operator" as any taxpayer deriving at least 51% of gross annual income from inter-island ferry vessel operations.

Defines "inter-island ferry" as vessels designed to transport at least 400 passengers per voyage along with motor vehicles and cargo between Hawaiian islands.

Allows excess tax credits exceeding a taxpayer's income tax liability to be carried forward to subsequent years until exhausted, with claims required to be filed within 12 months of the applicable taxable year.

Waives 50% of dockage and other harbor charges for inter-island ferries at state-controlled wharves and docks during the first 12 months of operation.