N-346: Tax Credit for Research Activities (Revision 2024)
Hawaii · Hawaii DoTax · Used for tax years 2025, 2026
Hawaii Form N-346 is used to calculate and claim the Tax Credit for Research Activities. It reports the federal research credit, eligible research expenses attributable to Hawaii, credits received from other entities, and the total Hawaii credit allowed.
Who files this form
Use Form N-346 to figure and claim Hawaii’s tax credit for research activities.
A qualified high technology business may claim the credit. It must:
- Have no more than 500 employees.
- Conduct more than 50 percent of its activities in qualified research in Hawaii.
- Be registered to do business in Hawaii.
You must also claim the federal research credit under Internal Revenue Code section 41 and have eligible Hawaii research expenses.
Partnerships, S corporations, estates, trusts, and cooperatives that allocate the credit must attach Form N-346, Form N-346A, and federal Form 6765 to their income tax returns. Taxpayers claiming a share passed through from another entity must also attach copies of their Schedules K-1.
When it's due
For tax years 2025 and 2026, the deadline to claim the credit, including amended claims, is 12 months after the close of your taxable year. You cannot claim the credit after that deadline.
What you'll need
Attach these documents to your income tax return:
- Form N-346, Tax Credit for Research Activities.
- Form N-346A, the certification form. The credit must be certified by the Department of Business, Economic Development and Tourism (DBEDT).
- A copy of your federally filed Form(s) 6765.
- Copies of Schedules K-1 if you claim a pro rata share of the credit.
- Schedule CR, if required for your tax return.
To complete Form N-346, have your federal research credit amount and eligible research expense amounts, including the portion attributable to research conducted in Hawaii. For a passed-through credit, have the entity’s name, federal employer identification number, and credit amount. Patrons use the amount from federal Form 1099-PATR.
For tax years after 2024, fiscal-year taxpayers may need federal Forms 6765 from more than one tax year because DBEDT allocates the credit on a calendar-year basis.
How to file
Attach Form N-346 and the required supporting forms to your applicable Hawaii return: N-11, N-15, N-20, N-30, N-35, N-40, or N-70NP.
- Enter your federal research credit on line 1.
- On lines 2a through 2f, enter eligible expenses reported on federal Form 6765 in Column A and the Hawaii portion in Column B. Total each column on line 2g.
- Divide line 2g, Column B by line 2g, Column A. Enter the result on line 3, rounded to six decimal places.
- Multiply line 1 by line 3 and enter the result on line 4.
- If claiming a credit passed through from a partnership, S corporation, estate, trust, or cooperative, skip lines 1 through 4 and start on line 5. Include the entity’s name and federal employer identification number.
- Add lines 4 and 5 on line 6, rounded to the nearest dollar. Report the amount on Schedule CR, or on the appropriate return lines for a pass-through entity.
The qualified high technology business must also complete DBEDT’s annual survey. More information is available at dbedt.hawaii.gov.
The supplied text does not give a mailing address or e-filing directions.
Common mistakes
- Claiming without the federal credit or eligible Hawaii expenses. The credit is not allowed if either requirement is missing.
- Including research expenses from outside Hawaii. Those expenses do not qualify for the Hawaii credit.
- Including wages used for the federal work opportunity credit. Do not include those wages on line 2c.
- Starting on line 1 for a passed-through credit. If claiming your share from a partnership, S corporation, estate, trust, or cooperative, start on line 5.
- Missing certification, attachments, or the annual survey. Failure to meet these requirements waives the right to claim the credit.
- Filing the claim late. The deadline also applies to amended claims.
Questions people ask
Can I claim the Hawaii credit without claiming the federal research credit?
No. You must also claim the federal credit for increasing research activities under Internal Revenue Code section 41.
How is the Hawaii credit calculated?
Multiply the federal research credit by the ratio of eligible Hawaii research expenses to total expenses eligible for the federal research credit.
What if I receive the credit through another entity?
Skip lines 1 through 4 and start on line 5. Enter your share of the credit and the entity’s name and federal employer identification number. Attach copies of your Schedules K-1 for a pro rata share claim.
Is certification required?
Yes. DBEDT must certify the credit. Certification is issued on a first-come, first-served basis, and total certified credits are limited to $5,000,000 across all taxpayers each taxable year after December 31, 2019.