Report Title:

Medical School; Tax Credit for Student Loan Repayment

Description:

Creates an income tax credit to repay student loans for students who practice in medically underserved areas in the State.

HOUSE OF REPRESENTATIVES

H.B. NO.

238

TWENTY-THIRD LEGISLATURE, 2005

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO TAX CREDITS FOR MEDICAL STUDENT LOANS.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that there is a serious crisis in the provision of medical services in the medically underserved areas of the State, particularly in the rural areas. The legislature further finds that incentives need to be extended to medical students to practice after graduation in those areas. The legislature further finds that some medical students finance their education with substantial student loans, oftentimes amounting to $90,000. The legislature further finds that an ideal incentive for these students to practice in the medically underserved areas is for student loans to be repaid from income tax credits allowed to the loan recipient, on the condition that the doctor practices in those areas.

The purpose of this Act is to establish an income tax credit to be applied to the repayment of loans to attend medical school granted to a physician who practices after training in medically underserved areas of the State.

SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235-   Tax credit to repay student loans for physicians practicing in underserved areas. (a) Any taxpayer licensed to practice medicine under chapter 453 who files an individual income tax return for a taxable year may claim an income tax credit under this section against the Hawaii state individual net income tax, if the taxpayer has received a student loan to attend medical school and is obligated to repay the loan after graduation.

(b) The director of taxation shall cause all tax credits under this section to be remitted in the name of the physician taxpayer to the lender.

(c) The tax credit shall be in the amount of the physician's actual loan repayment, not to exceed $20,000 per taxable year in which the credit is claimed, up to a maximum amount of $100,000 amortized in equal amounts over five years; provided that:

(1) The taxpayer physician is indebted to a lender to repay a student loan;

(2) The taxpayer physician practices in a medically underserved area for the entire taxable year; provided that the areas of the State deemed to be medically underserved shall be determined in advance by the department of human services; and

(3) The taxpayer derives not less than ten per cent of total income for the taxable year from medicaid or QUEST reimbursement.

(d) If the tax credit claimed by the taxpayer under this section exceeds the amount of the income tax payments due from the taxpayer, the excess of credit over payments due shall be remitted in the name of the physician taxpayer to the lender; provided that no refunds or payments on account of the tax credit allowed by this section shall be made for amounts less than $1.

(e) The director of taxation shall prepare such forms as may be necessary to claim a credit under this section, may require proof of the claim for the tax credit, and may adopt rules pursuant to chapter 91.

(f) All of the provisions relating to assessments and refunds under this chapter and under section 231-23(c)(1) shall apply to the tax credit under this section.

(g) Claims for the tax credit under this section, including any amended claims, shall be filed on or before the end of the twelfth month following the taxable year for which the credit may be claimed."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval, and shall apply to taxable years beginning after December 31, 2004.

INTRODUCED BY:

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