HI HB128

Establishes a college savings program tax credit for taxpayers contributing to Hawaii's college savings program under chapter 256, including rollover distributions from out-of-state college savings programs.

Joint filers or surviving spouses may claim a credit equal to 10% of the first $5,000 contributed annually; single filers or married filing separately may claim 10% of the first $2,500; head of household filers may claim 10% of the first $3,750.

Tax credit is capped at $500 per designated beneficiary per taxable year and applies to contributions made on or after January 1, 2017.

Taxpayers must repay the tax credit if they cancel the tuition savings agreement or make a nonqualified withdrawal from the college savings program account.

Unused tax credits may be carried forward to subsequent years if they exceed the taxpayer's income tax liability; claims must be filed within 12 months of the taxable year or the credit is forfeited.