HI SB940

Establishes a state income tax deduction for contributions to Hawaii's section 529 college savings program (HI529) for taxable years beginning after December 31, 2017.

Allows individual taxpayers and married couples filing separately to deduct up to $5,000 annually in contributions; married couples filing jointly, heads of household, and surviving spouses may deduct up to $10,000 annually.

Requires the contributor to be an account owner in HI529 to claim the deduction, and contributions must be credited to the account by the last day of the taxable year (or postmarked by that date if mailed).

Prohibits rollovers from other states' college savings programs from qualifying for the deduction; requires recapture of previously deducted contributions if the account holder makes a nonqualified withdrawal or rolls over the account to another state's program.

Allows excess deductions that exceed taxable income in a given year to be carried forward and applied against taxable income in subsequent years until exhausted.