between-intakes State Tax Credit

Hawaii Research Activities Tax Credit

Hawaii Department of Taxation

Equal to the federal §41 credit on Hawaii research (refundable)

See if you qualify — free Visit official program ↗

Researched for this program: 4 rejection traps · 6 required documentsWhat decides this award ↓

The short version

Refundable Hawaii R&D credit for high-tech firms

Hawaii provides a refundable income tax credit for qualified high technology businesses equal to the federal IRC §41 credit for research activities, as modified by HRS 235-110.91, on research conducted in Hawaii. Since the 2026 update the §41 base amount applies, so the credit can no longer be taken on all qualified research expenses without regard to prior years. Companies need a DBEDT certification applied for in a short annual window (2026: March 2–31), granted first come, first served under a $5 million annual cap. The credit is scheduled to be repealed from statute on December 31, 2029.

Funding type: Tax Credit
Level: State
Amount: Equal to the credit for research activities under IRC §41, as modified by HRS 235-110.91, computed on research conducted in Hawaii; the §41 base amount now applies. Refundable. Maximum credit available statewide is $5 million per year, certified first come, first served.
Realistic amount: Depends on the federal §41 credit computed on Hawaii research (the §41 base amount applies since the 2026 update). Because the credit is refundable, a pre-profit company can receive it as cash, subject to DBEDT certification and the $5M statewide annual cap.
Deadline: Annual application window (2026: March 2 - March 31, 2026); closed now. 2027 dates not yet announced.
Status: between-intakes
States: HI
Payment model: tax offset

Who qualifies

Must be a qualified high technology business that conducts more than 50% of its activities in qualified research in Hawaii and is registered to do business in Hawaii
Company must have no more than 500 employees
Qualified research must be physically located in Hawaii and follows the federal IRC section 41 test as modified by HRS 235-110.91 (per DBEDT's 2026 update, the section 41 base amount now applies)
Qualified research expenses include: wages of Hawaii-based employees performing, supervising, or supporting research; supplies consumed in Hawaii research; 65% of contract research payments for Hawaii-located work
All entity types eligible: C-corporations, S-corporations, LLCs, partnerships, sole proprietors; must file a Hawaii income tax return
No minimum revenue or project size threshold
Refundable: excess credit over Hawaii income tax liability is paid as a cash refund
Must apply to DBEDT with form N-346A in the annual application window (2026: March 2 - March 31) and file the DBEDT certificate with the Hawaii tax return; first come, first served until the $5 million annual cap is reached

What it covers

Eligible expenses

Wages of Hawaii-based employees directly performing qualified research activities
Wages of Hawaii-based employees directly supervising or directly supporting qualified research
Supplies and materials consumed or destroyed in Hawaii-located qualified research
65% of payments to contractors for qualified research conducted in Hawaii
Computer rental costs for Hawaii-located qualified research

Ineligible expenses

Research conducted outside Hawaii (by any employee, regardless of Hawaii residency)
Research funded or reimbursed by a third party such as a government contract or client
Social sciences, arts, humanities, cosmetic design changes
Market research and consumer surveys
Research after commercial production begins
Routine quality assurance testing and data collection not involving technological uncertainty
Management and administrative time not directly tied to qualified research

How to apply

1

Identify Hawaii-located qualified research expenses

Calculate your total QRE using federal IRC §41 definitions but limit to research physically conducted in Hawaii. Wages for employees working remotely from the mainland, out-of-state supply costs, and mainland contractor payments do not qualify. Build a location-by-project allocation supporting your Hawaii-specific QRE amount.

~6 hrs
2

Compute the credit using the federal §41 rules

The credit equals the federal §41 research credit, as modified by HRS 235-110.91, computed on Hawaii research. Per DBEDT's 2026 update, the §41 base amount now applies: the credit can no longer be taken on all QRE without regard to prior years.

~1 hrs
3

Complete Hawaii Form N-346

File Form N-346 (Tax Credit for Research Activities) to claim the credit. The form captures Hawaii-located QRE and computes the credit. Attach to your Hawaii income tax return — Form N-11 (individuals), Form N-30 (C-corporations), Form N-35 (S-corporations), or Form N-20 (partnerships).

~3 hrs
4

File Hawaii income tax return and receive refund

Submit your Hawaii income tax return with Form N-346 attached by April 20 (or applicable extension). The credit first offsets any Hawaii income tax liability; any excess is refunded to the taxpayer. The Hawaii Department of Taxation typically issues refunds within 8-12 weeks of filing for electronic returns.

~2 hrs
5

Maintain supporting documentation

Keep records supporting your Hawaii-located QRE for at least 3 years (Hawaii's standard audit lookback period). Documentation should include: employee timesheets showing Hawaii work location by project, supply invoices showing Hawaii delivery or consumption, contract research agreements with Hawaii-located scope.

~4 hrs

Insider tip

Hawaii's credit is refundable, so a pre-profit company gets cash, but it now follows the federal §41 base rules and needs a DBEDT certificate applied for in a short March window, first come, first served under a $5 million statewide cap. Apply as early in the window as you can.

Deadline & timing

Claimed on Form N-346 (Tax Credit for Research Activities) filed with the Hawaii income tax return. Hawaii individual and corporate income tax returns are generally due April 20 (not April 15 — Hawaii has a different due date). Extensions are available.

Not accepting applications right now — get one email when it reopens

GrantCompass tracks Hawaii Research Activities Tax Credit’s application windows in the live catalog. Leave an email and we’ll tell you the day the next window opens.

Free. One email when the window moves, deadline warnings on your watchlist, and the monthly closing-soon digest. Unsubscribe anytime.

Programs that stack well

Related programs

This program is not taking applications today — these are

Alternatives computed from the live GrantCompass catalog on November 1, 2026 — all 170 open grant programs · filter the database.

Explore more funding

Last updated October 25, 2026. GrantCompass is an independent funding-discovery tool and is not affiliated with any government agency. Always confirm details on the official program page.