H.B. 1881 Summary

• Establishes a college savings program tax credit for Hawaii taxpayers who contribute to accounts under Hawaii's college savings program (chapter 256) or rollover distributions from other states' programs, effective for taxable years beginning after December 31, 2017.

• Provides a tax credit equal to 10% of contributions, with maximum contribution amounts varying by filing status: $5,000 for joint filers/surviving spouses, $2,500 for single filers/married filing separately, and $3,750 for head of household filers.

• Caps the annual tax credit at $500 per designated beneficiary and disallows credits for contributions when the beneficiary's account value equals or exceeds the maximum investment level under section 256-4(l).

• Requires taxpayers to repay all previously claimed credits through increased income tax liability if they cancel their tuition savings agreement or make nonqualified withdrawals as defined in section 256-1.

• Allows unused credits to carry forward to subsequent taxable years if they exceed current year tax liability, and requires claims to be filed within 12 months following the taxable year or the right to claim is waived.