RELATING TO THE ESTATE AND GENERATION-SKIPPING TRANSFER TAX.

Small Business Taxes

Active

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

Sponsor: PERRUSO, AMATO, BELATTI, GRANDINETTI, IWAMOTO, KAPELA, MARTEN, TEMPLO
Last action: 2026-03-12
Official status: Referred to WAM.
Effective date: Not listed

Plain English Breakdown

The effective date of July 1, 2026, seems unusually far in the future and may need clarification.

Unrealized Gains Surcharge and Estate Tax Changes

This bill establishes a new tax called an unrealized gains surcharge on certain property transfers and lowers the exclusion amount for estate taxes, except for estates that include owner-occupied residences or farms.

What This Bill Does

Adds a three percent unrealized gains surcharge to property transfers where the fair market value exceeds $2 million by more than what the new owner paid for it.
Requires estates to report the fair market value of transferred property within thirty days after the transfer date.
Exempts bona fide farms and small businesses from the surcharge if they stay in operation with a relative as the new owner for at least two years.

Who It Names or Affects

People who transfer property worth more than $2 million to others.
Estate owners and their heirs.
Farmers and small business owners transferring properties to relatives.

Terms To Know

Unrealized gains surcharge: An additional tax on property transfers where the fair market value exceeds $2 million by more than what the new owner paid for it.
Exclusion amount: The amount of an estate's value that is not taxed under the estate and generation-skipping transfer tax laws.

Limits and Unknowns

It is unclear how the surcharge will be enforced or collected.
The effective date of July 1, 2026, seems unusually far in the future and may need clarification.

Amendments

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

HD1

Hawaii published version HD1

Plain English: This amendment adds a new tax called an unrealized gains surcharge to certain property transfers over $2 million, adjusts the exclusion amount for estate taxes, and includes exceptions for farms and small businesses.

Adds a three percent surcharge on property transfers where the fair market value exceeds the transferee's basis by at least $2 million.
Requires estates to report the fair market value of transferred property within thirty days after the transfer date.
Exempts bona fide farms and small businesses from the surcharge if they stay in operation with a relative transferee, but imposes penalties if sold within two years.
Adjusts the exclusion amount for estate taxes, setting it at $3 million or the federal applicable exclusion amount for estates including owner-occupied residences or farms.

The amendment's effective date is set very far in the future (July 1, 3000), which may indicate a placeholder or error.

Bill History

2026-03-12 S
Referred to WAM.
2026-03-12 S
Passed First Reading.
2026-03-12 S
Received from House (Hse. Com. No. 366).
2026-03-10 H
Passed Third Reading with Representative(s) Souza voting aye with reservations; Representative(s) Alcos, Amato, Garcia, Gedeon, Kong, Matsumoto, Muraoka, Pierick, Reyes Oda, Shimizu voting no (10) and none excused (0). Transmitted to Senate.
2026-03-06 H
Passed Second Reading as amended in HD 1; placed on the calendar for Third Reading with Representative(s) Reyes Oda, Souza voting aye with reservations; Representative(s) Alcos, Amato, Garcia, Gedeon, Kong, Matsumoto, Muraoka, Pierick, Shimizu voting no (9) and Representative(s) Hashem, Perruso, Quinlan, Sayama excused (4).
2026-03-06 H
Reported from FIN (Stand. Com. Rep. No. 1019-26) as amended in HD 1, recommending passage on Second Reading and placement on the calendar for Third Reading.
2026-03-04 H
The committee on FIN recommend that the measure be PASSED, WITH AMENDMENTS. The votes were as follows: 14 Ayes: Representative(s) Todd, Takenouchi, Hartsfield, Hussey, Keohokapu-Lee Loy, Kitagawa, Kusch, Lee, M., Miyake, Morikawa, Perruso, Templo, Yamashita, Reyes Oda; Ayes with reservations: none; 2 Noes: Representative(s) Alcos, Gedeon; and Excused: none.
2026-03-03 H
Bill scheduled for decision making on Wednesday, 03-04-26 10:00AM in conference room 308 VIA VIDEOCONFERENCE.
2026-03-03 H
The committee(s) on FIN recommend(s) that the measure be deferred until 03-04-26.
2026-02-27 H
Bill scheduled to be heard by FIN on Tuesday, 03-03-26 10:00AM in House conference room 308 VIA VIDEOCONFERENCE.
2026-01-30 H
Referred to FIN, referral sheet 5
2026-01-28 H
Introduced and Pass First Reading.
2026-01-26 H
Pending introduction.

Official Summary Text

RELATING TO THE ESTATE AND GENERATION-SKIPPING TRANSFER TAX.
Taxation; Unrealized Gains Surcharge; Estate and Generation-Skipping Transfer Tax; Exclusion Amount
Establishes an unrealized gains surcharge on certain property transfers subject to the estate and generation-skipping transfer tax. Except for certain types of properties within estates, lowers the applicable exclusion amount allowed. Effective 7/1/3000. (HD1)

Current Bill Text

Read the full stored bill text

HB2148

HOUSE OF REPRESENTATIVES

H.B. NO.

2148

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

relating
to the estate and generation-skipping transfer tax
.

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

����
SECTION 1.
�
Chapter 236E, Hawaii Revised Statutes, is
amended by adding a new section to be appropriately designated and to read as
follows:

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"
�236E-
�
Unrealized
gains surcharge.
�
(a)
�
In
addition to the taxes imposed by this chapter, an unrealized gains surcharge equal
to three per cent shall be imposed on any property transferred to a transferee in
which the assessed fair market value of the transferred property exceeds the
transferee's basis in an amount of $2,000,000 or more.

����
(b)
�
An
estate shall report to the department the fair market value of any transferred
property within thirty days of the transfer date.

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(c)
�
This section shall not apply to bona fide
farms and small businesses that stay in operation with a transferee who is a
relative of the transferor; provided that any transferee that sells the
property within two years shall be subject to this section.

����
(d)
�
The director of the department may require
the transferor or transferee to provide information to ascertain the validity
of the value and assets transferred and may adopt rules necessary to effectuate
the purposes of this section pursuant to chapter 91.

����
(e)
�
For purposes of this section,
"relative" has the same meaning as in section 651C-1.
"

����
SECTION
2
.
�
Section 236E-6,
Hawaii Revised Statutes, is amended by amending subsection (a) to read as
follows:

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"
(a)
�

An exclusion from a Hawaii taxable estate shall be allowed to the estate
of every decedent against the tax imposed by section 236E-8.
�
For the purpose of this section, the applicable
exclusion amount is equal to:

����
(1)
�
Either:

���������
(A)
�
The
federal applicable exclusion amount[
;
]
for estates that include an
owner-occupied residence or a bona fide farm; or

���������
(B)
�
$3,000,000, which shall be adjusted
annually to match changes in the
Consumer

Price Index in the Honolulu area as reported by the United States Bureau of
Labor Statistics, for estates that do not include an owner-occupied residence
or a bona fide farm;

����
(2)
�
The exemption equivalent of the unified credit
reduced by the amount of taxable gifts made by the decedent that reduces the
amount of the federal applicable exclusion amount; or

����
(3)
�
The exemption equivalent of the unified credit
on the decedent's federal estate tax return,

as set forth for the decedent in
chapter 11 of the Internal Revenue Code as amended as of December 21, 2017, as
if the decedent died on December 31, 2017, and as further adjusted pursuant to
subsection (b).
"

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

����
SECTION 4.
�
This Act shall take effect on July 1, 2026,
and shall apply to decedents dying or taxable transfers occurring after
December 31, 2025.

INTRODUCED BY:

_____________________________

Report Title:

Taxation;
Unrealized Gains Surcharge; Estate and Generation-Skipping Transfer Tax;
Exclusion Amount

Description:

Establishes
an unrealized gains surcharge on certain property transfers subject to the estate
and generation-skipping transfer tax.
�

Except for certain types of properties within estates, lowers the
applicable exclusion amount allowed.

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