HI SB556

Creates a refundable state earned income tax credit equal to 10% of the federal earned income tax credit claimed on the taxpayer's federal return for resident individual taxpayers who file Hawaii income tax returns and are not claimed as dependents.

For non-resident individual taxpayers, the credit equals the calculated amount multiplied by the ratio of Hawaii-sourced adjusted gross income to total adjusted gross income.

Allows the credit to be refunded to taxpayers if it exceeds income tax liability owed, with a minimum refund threshold of $1; taxpayers with no tax liability receive the full credit amount.

Requires the Director of Taxation to prepare forms for claiming the credit, alert eligible taxpayers, and submit annual reports to the legislature and governor detailing the number of credits granted, total amount distributed, and average credit values by income ranges.

Applies to taxable years beginning after December 31, 2015, with a 12-month filing deadline and disallowance periods of 10 years for fraud-related claims or 2 years for reckless/intentional disregard of regulations.