New Tax Credit and Required Certifications for Qualifying Cesspools in Hawai’i

Did you now that awai`i is the only state in the US that still allows construction of new cesspool? There are almost 100,000 cesspools in the state of Hawai’i and over half are located on the Big Island. Cesspools are sub standard systems that, depending on where they are located, can contaminate our ground water, streams and oceans. Cesspools are little more than holes in the ground that discharge raw, untreated human waste. For these reasons, the Department of Health (DOH) is in the process of amending Hawaii Administrative Rules, Title 11, Chapter 62, Wastewater Systems (HAR 11-62).


Act 120 – A Temporary Income Tax Credit

The proposed amendments would prohibit the construction of new cesspools in order to protect public health and preserve our natural resources, however, DOH is not proposing rules to require the mandatory upgrades of existing cesspools tied to the sale of a property. DOH is also proposing amendments needed to implement Act 120, which involves providing a temporary income tax credit for the cost of upgrading or converting a qualified cesspool to a septic tank system or an aerobic treatment unit system, or connecting to a sewer system. A taxpayer may apply for a tax credit of up to $10,000 for each qualified cesspool.


When? Taxpayer Year 2016 Through Taxpayer Year 2020

The tax credit program starts January 1, 2016 and ends December 31, 2020. There is a $5,000,000 cap that is available for each tax year. Any taxpayer who is not eligible to claim the credit in a taxable year shall be eligible to claim the credit in the subsequent taxable years from 2017 to 2020. To qualify for the tax credit, work must start on or after January 1, 2016, and tax application forms will be posted online by January 4, 2016.


What Constitutes a Qualified Cesspool Under Act 120?

Qualified cesspools are cesspools that are either located within 200 feet of a shoreline, a stream, a wetland, or, within a source water assessment program area (two year time of travel from a cesspool to a public drinking water source). The wastewater department has identified locations of qualified cesspools state wide, and below is a list of the TMK for the properties that may be eligible for the tax credit. If TMK Certification Status indicates “Certification Required”, the owner of that qualified cesspool will be required to retain the services of a licensed engineer or licensed contractor to certify the cesspool is qualified. It is highly recommended that owners who have qualifying cesspools that are required to be upgraded/converted, obtain the certification prior to initiating any work.

Remember – to qualify for the tax credit, work must begin on or after January 1, 2016.

List of Qualified Cesspools based on TMKs:

Tax Credit Information with maps

Hawaii Island Cesspool TMK

Kauai Cesspool TMK

Maui Cesspool TMK

Molokai Cesspool TMK

Oahu Cesspool TMK