HB1729 – Creating B&O tax credits for hydrogen fuel cells and electrolyzers.
Prime Sponsor – Representative Abbarno (R; 20th District; Centralia) (Co-Sponsors Klicker, Volz, Orcutt, Schmidt, and Cheney – Rs)
Current status – Referred to the Senate Committee on Environment, Energy & Technology.
Next step would be –  Scheduling a hearing.
Legislative tracking page for the bill.

In the House – Passed
Had a hearing in the House Committee on Finance at 8:00 AM on Wednesday February 22nd. Replaced by a substitute that capped the total annual credits at $3 million, required prevailing wage rates to use the credits, and made a few other minor changes. Amended to make expenditures on research, development and deployment of hydrogen products eligible for the credits and passed out of committee March 9th. Referred to Rules, and passed by the House unanimously on March 16th.

Summary –
The bill would set the B&O tax on manufacturing or selling electrolyzers and fuel cells at 0.2094% for ten years.

It would provide a ten year B&O tax credit of 1.75% of a business’s expenditures in research and development for these products, capped at the level of the tax due in that year, and allow carrying those credits forward to be applied against later tax bills. (This would apply to expenses for manufacturing tool and engineering design, as well as to other research and engineering activity; it wouldn’t apply to payments to other parties for research and development with the exception of “a public educational or research institution.” These credits could only be carried forward for a year.

It would provide a ten year B&O tax credit equal to a fraction of the property and leasehold excise taxes due on new buildings (as of 2023) primarily used in manufacturing these products, and the land they occupied, as well as on any increased property taxes resulting from expansions or renovations of such buildings. There would be an additional credit for a fraction of the property taxes on any new machinery and equipment (as of 2023) for manufacturing, research, development, and testing that would be exempt from the sales and use taxes under existing law. (As I understand the bill, this additional credit would be calculated as a percentage of the amount of a business’s activity that was taxable under the special B&O rate for electrolyzers and fuel cells compared to the taxable B&O value of all of its manufacturing. For example, if 30% of the business’s manufacturing and sales were eligible for the reduced B&O tax rate, then the credit would be for 30% of the property taxes on that covered research and development equipment.)