HB 2278 Summary

• Establishes a carbon cashback program that imposes a carbon emissions tax on fossil fuel distributors and returns equivalent revenue to Hawaii residents through refundable income tax credits.

• Creates new income tax credits ranging from $65 to $480 annually for single filers (beginning 2023), with higher amounts for head of household and joint filers, plus additional amounts per qualifying child.

• Expands the existing environmental response, energy, and food security tax to include carbon emissions from petroleum products and fossil fuels (coal and natural gas), with specific tax amounts per barrel and per million BTUs scheduled to increase annually through 2035.

• Distributes carbon tax revenues to the environmental response revolving fund, energy security special fund, energy systems development special fund, and electric vehicle charging systems, with excess revenues going to the general fund.

• Takes effect July 1, 2100, with the income tax credit provisions applying to taxable years beginning after December 31, 2022.