House Bill No. 7008 establishes a personal income tax credit for pass-through entities, allowing a credit equal to 6% of qualifying research and development (R&D) expenses incurred during the taxable year. This credit can be claimed by shareholders or partners of S corporations and partnerships, as well as by the owners of single-member limited liability companies (LLCs) that are disregarded as separate entities. The bill specifies that the credit does not apply against withholding tax and caps the total amount of credits available at $5 million per fiscal year. The definition of "research and development expenses" aligns with the existing state R&D Tax Credit Program, which includes certain federally deductible R&D spending and basic research payments made to qualifying institutions.

The bill is set to take effect on January 1, 2026, and will apply to taxable years commencing on or after that date. Additionally, the Commissioner of Revenue Services is authorized to adopt regulations to implement the provisions of this section. The fiscal impact of the bill includes a projected revenue loss of up to $5 million annually starting in FY 27, along with a one-time cost of up to $75,000 for necessary updates to the Department of Revenue Services' tax administration systems.