HB1729 • 2026

RELATING TO TAXATION.

Taxes

Active

The official status still shows this bill as active or still awaiting another formal step.

Sponsor: EVSLIN, AMATO, BELATTI, GRANDINETTI, ILAGAN, KILA, LOWEN, MARTEN, MATAYOSHI, MORIKAWA, PERRUSO, REYES ODA, SAYAMA, TARNAS, TODD
Last action: 2026-02-19
Official status: Passed Second Reading as amended in HD 1 and referred to the committee(s) on FIN with Representative(s) Gedeon, Souza voting aye with reservations; Representative(s) Cochran, Garcia, Muraoka, Pierick voting no (4) and none excused (0).
Effective date: Not listed

Plain English Breakdown

The bill's effective date in the official summary and text is July 1, 3000, which seems incorrect or a placeholder. The actual implementation date based on legislative action is after December 31, 2025.

Tax Changes for Second Homes

This bill removes the home mortgage interest deduction for second homes under state income tax law, effective July 1, 3000.

What This Bill Does

Removes the ability to deduct mortgage interest on a second home from state income taxes.
Requires that this change applies to taxable years starting after December 31, 2025.

Who It Names or Affects

People who own and pay mortgage interest on a second home in the state.

Terms To Know

Mortgage Interest Deduction: A tax benefit that allows homeowners to reduce their taxable income by the amount of mortgage interest they paid during the year.
Second Home: A property owned by an individual but not used as their primary residence.

Limits and Unknowns

The bill does not specify how it will affect existing second home mortgages before its effective date.
It is unclear if there are any exceptions or additional rules that might apply to this change.

Amendments

These notes stay tied to the official amendment files and metadata from the legislature.

HD1

Hawaii published version HD1

Plain English: This amendment disallows the mortgage interest deduction for second homes under Hawaii's state income tax law, starting from July 1, 3000.

Eliminates the home mortgage interest deduction for second homes in Hawaii's state income tax system.

The amendment specifies an effective date of July 1, 3000, which seems unusual and may be a typographical error.
Further details about how this change will affect taxpayers are not provided in the given text.

Bill History

2026-02-19 H
Passed Second Reading as amended in HD 1 and referred to the committee(s) on FIN with Representative(s) Gedeon, Souza voting aye with reservations; Representative(s) Cochran, Garcia, Muraoka, Pierick voting no (4) and none excused (0).
2026-02-19 H
Reported from HSG (Stand. Com. Rep. No. 559-26) as amended in HD 1, recommending passage on Second Reading and referral to FIN.
2026-02-18 H
The committee on HSG recommend that the measure be PASSED, WITH AMENDMENTS. The votes were as follows: 9 Ayes: Representative(s) Evslin, Miyake, Grandinetti, Kila, Kitagawa, La Chica; Ayes with reservations: Representative(s) Cochran, Muraoka, Pierick; Noes: none; and Excused: none.
2026-02-12 H
Bill scheduled to be heard by HSG on Wednesday, 02-18-26 10:00AM in House conference room 430 VIA VIDEOCONFERENCE.
2026-02-11 H
This measure has been deleted from the meeting scheduled on Friday 02-13-26 9:00AM in conference room 430 VIA VIDEOCONFERENCE.
2026-02-10 H
Bill scheduled to be heard by HSG on Friday, 02-13-26 9:00AM in House conference room 430 VIA VIDEOCONFERENCE.
2026-01-26 H
Referred to HSG, FIN, referral sheet 1
2026-01-21 H
Introduced and Pass First Reading.
2026-01-20 H
Prefiled.

Official Summary Text

RELATING TO TAXATION.
Second Home Mortgage Interest Deduction; Income Tax
Disallows the home mortgage interest deduction for second homes under state income tax law. Effective 7/1/3000. (HD1)

Current Bill Text

Read the full stored bill text

HB1729

HOUSE OF REPRESENTATIVES

H.B. NO.

1729

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

relating
to taxation
.

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

����
SECTION
1.
�
The legislature finds that the State
faces sustained pressure on housing affordability and availability.
�
Tax preferences that subsidize the
acquisition or carrying costs of second homes can increase demand for properties
that are not used as a taxpayer's principal residence.
�
The mortgage interest deduction for second
homes provides such a preference by reducing the after-tax cost of owning a
second home, even when that home is used only intermittently for personal
purposes.

����
The
legislature further finds that this preference does not advance the core public
purposes of the State's income tax system, such as equity, efficiency, and
simplicity, and may work at cross-purposes with the State's housing goals by
encouraging the retention or purchase of homes that are not primary
residences.
�
Eliminating the deduction
for interest attributable to indebtedness secured by a second home will better
align the State's tax code with the State's housing policy objectives, narrow a
nonessential tax expenditure, and allow resources to be redirected by the
legislature toward higher-priority needs, including housing production and
infrastructure that support new homes.

����
Accordingly,
the purpose of this Act is to amend the state income tax law to disallow the
mortgage interest deduction for second homes, as defined by reference to the federal
Internal Revenue Code and as further specified in this Act.

����
SECTION
2
.
�
Section 235-2.4, Hawaii Revised Statutes, is
amended by amending subsection (j) to read as follows:

����
"(j)
�
Section 163
(with respect to interest) of the Internal Revenue Code shall be operative for
the purposes of this chapter, except that the following provisions shall not be
operative for the purposes of this chapter:

����
(1)
�
Section
163(d)(4)(B) (defining net investment income to exclude dividends);

����
(2)
�
Section
163(e)(5)(F) (suspension of applicable high-yield discount obligation (AHYDO)
rules);

����
(3)
�
Section
163(h)(3)(F) (limiting mortgage interest); [
and
]

����
(4)
�
Section 163(h)(5)(A)(i)(II)
(definition of qualified residence for home mortgage interest deduction);

����
(5)
�
Section 163(h)(5)(A)(ii)(II)
(treatment of home mortgage interest deduction for married individuals filing
separately); and

���
[
(4)
]

(6)
�
Section 163(i)(1) as it applies to
debt instruments issued after January 1, 2010 (defining AHYDO)."

����
SECTION 3.
�
Statutory material to be repealed is
bracketed and stricken.
�
New statutory
material is underscored.

����
SECTION 4.
�
This Act, upon its approval, shall apply to
taxable years beginning after December 31, 2025.

INTRODUCED BY:

_____________________________

Report Title:

Second Home
Mortgage Interest Deduction; Income Tax

Description:

Disallows
the home mortgage interest deduction for second homes under state income tax
law.

The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.