RELATING TO TAXATION.

HB2391

HOUSE OF REPRESENTATIVES

H.B. NO.

2391

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:

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SECTION 1.
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The legislature finds that Hawaii taxpayers
are some of the most overburdened taxpayers in the nation.
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This burden is most exacerbated when
consumers are taxed on critical items needed for school.
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Nationally, consumer groups estimated that
families with students between grades K-12 are estimated to spend an average of
over $800 on back-to-school necessities.
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This is a daunting price tag for many local
families, as the school supply list begins to grow and the cost of living only
ever seems to increase.

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Several states, including Alabama,
Connecticut, Florida, Georgia, Illinois, Iowa, Louisiana, Maryland, Missouri,
Mississippi, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee,
Texas, Vermont, and Virginia, have temporary state sales tax holidays.
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A general excise tax holiday would allow Hawaii
residents to retain more of their money to spend on other necessities.

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The legislature further recognizes
that the State levies a general excise tax on businesses, rather than a state
sales tax on consumers.
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The purpose of
this Act is to authorize a state general excise tax holiday for school supplies
sold in the State prior to the start of the school year on the condition that
businesses pass the savings on to consumers.

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SECTION 2.
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Chapter 237, Hawaii Revised Statutes, is
amended by adding a new section to be appropriately designated and to read as
follows:

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�237-
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School supply tax holiday.
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(a)
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Notwithstanding any law to the contrary, taxes under this chapter shall
not be due on the

sale of clothing or bags with a retail sales price of $100
or less per item or the sale of school supplies if the sale takes place between
12:01 a.m. on the last Friday prior to students' first day of public school, as
designated on the department of education official school calendar, and ending
at 12 midnight of the Sunday immediately following that Friday; provided that
all savings generated by this section shall be passed on by the seller to the
purchaser without any increase in price.
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This exemption shall apply to the sale of school supplies only and not
to sales of items that will be resold in any manner.

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(b)
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The exemption provided in this section shall
not apply to:

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(1)
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Rebates,
layaway sales, rain checks, or exchanges when the transactions occur before or
after the tax holiday period;

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(2)
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The rental of
goods and services; and

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(3)
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Taxable
services performed on retail items.

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(c)
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The exemption provided in this section shall
apply only to businesses operating with a general excise tax license from the
department.

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(d)
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Multiple articles that are normally sold as a
collective unit shall continue to be sold in that manner and shall not be
priced separately and sold as individual items to qualify for the exemption.

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(e)
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Shipping and handling charges shall be
included as part of the sales price of the item.

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(f)
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The retailer shall not be required to obtain
any special license, permit, or other documentation of sales during the
exemption holiday period; provided that the retailer's records shall clearly
identify the type of item sold, the date the item was sold, and the sales price
of the item.

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(g)
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For purposes of this section:

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"Bag" includes
handbags, backpacks, fanny packs, and tote bags.
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The term does not include briefcases,
suitcases, and other garment bags.

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"Clothing" means any
article of wearing apparel, including footwear, intended to be worn on or about
the human body.
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The term shall include
but not be limited to cloth and other material used to make school uniforms or
other school clothing.
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Items normally
sold in pairs, such as socks and shoes, shall not be separated to qualify for
the exemption.
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The term shall not
include watches, watchbands, jewelry, handkerchiefs, umbrellas, scarves, ties,
headbands, or belt buckles.

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"School supply" means
binders, book bags, calculators, cellophane tape, blackboard chalk, compasses,
composition books, crayons, erasers, expandable folders, pocket folders,
plastic folders, manila folders, glue, paste, paste sticks, highlighters, index
cards, index card boxes, legal pads, lunch boxes, markers, notebooks, loose
leaf ruled notebook paper, copy paper, graph paper, tracing paper, manila
paper, colored paper, poster board, construction paper, pencil boxes and other
school supply boxes, pencil sharpeners, pencils, pens, protractors, rulers,
scissors, correction tape, flash drives, and writing tablets.
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"School supply" excludes all items
not listed in this definition.
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SECTION 3.
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New statutory material is underscored.

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SECTION 4.
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This Act shall take effect upon its approval.

INTRODUCED BY:

_____________________________

Report Title:

General
Excise Tax; Tax Holiday; School Supplies

Description:

Establishes
a general excise tax holiday on school supplies, provided that businesses pass
the savings on to consumers.

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