HB 2178 Summary

• Establishes a "carbon cashback program" that incrementally increases the environmental response, energy, and food security tax on fossil fuels from 2025-2035, starting at $3.15 per barrel for petroleum products in 2025 and reaching $40.11 per barrel by 2035, then increasing $1.26 annually thereafter.

• Creates a refundable tax credit for Hawaii resident taxpayers to offset increased fossil fuel costs, with credits ranging from $36 per individual in 2025 to a peak of $646 per individual in 2040, plus $18-$323 per dependent depending on the year.

• Establishes the carbon emissions tax and dividend special fund to administer the tax and credit program, funded with $1,000,000 annually from tax revenues, with remaining revenues distributed to environmental response, energy security, energy systems development, electric vehicle charging, hydrogen fueling, airport, and boating funds.

• Requires the department of taxation to submit annual reports from 2025-2034 on carbon tax revenues and tax credit distributions, and requires the office of planning and sustainable development to submit an evaluation report by 2034 with any recommended program changes.

• Allows qualifying resident taxpayers (those who were Hawaii residents for at least nine months of the taxable year) to claim the refundable tax credit on their income tax returns, with credits refundable even if tax liability is zero.