HB 1146 Summary

• Establishes a "carbon cashback program" that imposes a carbon emissions tax on fossil fuels (petroleum products, coal, and natural gas) sold by distributors, with tax rates increasing annually from 2024 through 2036.

• Creates a refundable income tax credit for qualified taxpayers filing Hawaii individual income tax returns, with credit amounts ranging from $65-$480 for single filers and $130-$960 for joint filers (plus $30-$240 per qualifying dependent) based on filing status and year.

• Distributes carbon tax revenues with fixed annual amounts to environmental response, energy security, energy systems development, electric vehicle charging, and hydrogen fueling funds, plus aircraft and boat fuel taxes to respective special funds.

• Requires the Office of Planning and Sustainable Development to recommend updates to tax rates and corresponding credits for years 2037 and beyond by December 1 of 2033, 2034, and 2035.

• Applies to taxable years beginning after December 31, 2023, implementing the carbon and dividend model based on the University of Hawaii Economic Research Organization study to reduce fossil fuel consumption while providing net financial benefits to most households.