HB476 • 2026

RELATING TO CAPITAL GAINS TAX.

Taxes

Active

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

Sponsor: SAYAMA, HOLT, KILA, MATAYOSHI
Last action: 2025-12-08
Official status: Carried over to 2026 Regular Session.
Effective date: Not listed

Plain English Breakdown

The bill summary does not specify the exact details of how the alternative capital gains tax is changed for corporations.

Changes to Capital Gains Tax

This bill amends the capital gains tax rate for individuals, estates, trusts, and corporations in Hawaii.

What This Bill Does

Amends the capital gains tax rate for individuals, estates, and trusts from 7.25% to 9%
Changes how the alternative capital gains tax is calculated for corporations

Who It Names or Affects

Individuals who have capital gains in Hawaii
Estates and trusts with capital gains
Corporations, regulated investment companies, and real estate investment trusts that earn capital gains

Terms To Know

Capital Gains Tax: A tax on the profit from selling an asset like stocks or property.
Alternative Capital Gains Tax: An additional way to calculate capital gains taxes for corporations, offering a lower rate under certain conditions.

Limits and Unknowns

The changes will not take effect until July 1, 2050.
It is unclear how many people or businesses this change will affect.

Amendments

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

HD1

Hawaii published version HD1

Plain English: This amendment increases the capital gains tax rate for individuals, estates, and trusts to nine percent and sets a new alternative capital gains tax rate for corporations at five percent.

Increases the capital gains tax rate for individuals, estates, and trusts from 7.25% to 9%. This applies to taxable years beginning after December 31, 1986.
Establishes a new alternative capital gains tax rate of 5% for corporations, regulated investment companies, and real estate investment trusts.

The amendment specifies an effective date of July 1, 3000, which seems unusual and may be a placeholder or error in the text.
Details on how the tax changes will be implemented before the stated effective date are not provided.

HD2

Hawaii published version HD2

Plain English: This amendment changes the capital gains tax rate for individuals, estates, trusts, and corporations in Hawaii.

For individuals, estates, and trusts, the tax on net capital gain will be calculated at a new rate of 7.25% instead of the previous rate.
Corporations with net capital gain will have their tax computed using a tiered system: 3.08% for part of the gain and an additional 4% for any excess above that amount.

The amendment specifies an effective date of July 1, 3000, which seems unrealistic and may indicate a placeholder or error in the text.

SD1

Hawaii published version SD1

Plain English: This amendment changes the capital gains tax rate for individuals, estates, trusts, and corporations in Hawaii.

For individuals, estates, and trusts, it sets a new maximum tax rate of 7.25% on net capital gain income starting from January 1, 2025.
For corporations, regulated investment companies, and real estate investment trusts, it introduces an alternative tax calculation method based on the Internal Revenue Code's Section 1201.

The exact details of how the new tax rates will be applied to specific situations are not fully explained in the amendment text.
There is uncertainty about the full impact and implementation of these changes due to the complexity of tax law.

Bill History

2025-12-08 D
Carried over to 2026 Regular Session.
2025-04-04 S
Recommitted to WAM.
2025-04-04 S
Reported from WAM (Stand. Com. Rep. No. 1742) with recommendation of passage on Second Reading, as amended (SD 1) and placement on the calendar for Third Reading.
2025-04-01 S
The committee(s) on WAM recommend(s) that the measure be PASSED, WITH AMENDMENTS. The votes in WAM were as follows: 11 Aye(s): Senator(s) Dela Cruz, Moriwaki, Aquino, Elefante, Hashimoto, Inouye, Kanuha, Kidani, Lee, C., Fevella; Aye(s) with reservations: Senator(s) Kim ; 0 No(es): none; and 2 Excused: Senator(s) DeCoite, Wakai.
2025-03-28 S
The committee(s) on WAM deferred the measure until 04-01-25 10:00AM; Conference Room 211 & Videoconference.
2025-03-25 S
The committee(s) on WAM has scheduled a public hearing on 03-28-25 10:00AM; Conference Room 211 & Videoconference.
2025-03-06 S
Referred to WAM.
2025-03-06 S
Passed First Reading.
2025-03-06 S
Received from House (Hse. Com. No. 246).
2025-03-04 H
Passed Third Reading as amended in HD 2 with Representative(s) Kila, Lamosao, Miyake voting aye with reservations; Representative(s) Alcos, Amato, Garcia, Kong, Matsumoto, Muraoka, Reyes Oda, Shimizu, Souza voting no (9) and Representative(s) Pierick, Ward excused (2). Transmitted to Senate.
2025-02-28 H
Forty-eight (48) hours notice Tuesday, 03-04-25.
2025-02-28 H
Reported from FIN (Stand. Com. Rep. No. 1166) as amended in HD 2, recommending passage on Third Reading.
2025-02-24 H
The committee on FIN recommend that the measure be PASSED, WITH AMENDMENTS. The votes were as follows: 13 Ayes: Representative(s) Yamashita, Takenouchi, Grandinetti, Holt, Hussey, Kitagawa, Kusch, Lee, M., Morikawa, Templo; Ayes with reservations: Representative(s) Keohokapu-Lee Loy, Lamosao, Miyake; 2 Noes: Representative(s) Alcos, Reyes Oda; and 1 Excused: Representative(s) Ward.
2025-02-21 H
Bill scheduled to be heard by FIN on Monday, 02-24-25 10:00AM in House conference room 308 VIA VIDEOCONFERENCE.
2025-02-12 H
Passed Second Reading as amended in HD 1 and referred to the committee(s) on FIN with Representative(s) Amato voting aye with reservations; Representative(s) Alcos, Garcia, Kong, Matsumoto, Muraoka, Pierick, Reyes Oda, Shimizu voting no (8) and Representative(s) Cochran, Sayama, Ward excused (3).
2025-02-12 H
Reported from ECD (Stand. Com. Rep. No. 498) as amended in HD 1, recommending passage on Second Reading and referral to FIN.
2025-01-29 H
The committee on ECD recommend that the measure be PASSED, WITH AMENDMENTS. The votes were as follows: 7 Ayes: Representative(s) Ilagan, Hussey, Holt, Tam, Templo, Todd; Ayes with reservations: Representative(s) Matsumoto; Noes: none; and Excused: none.
2025-01-23 H
Bill scheduled to be heard by ECD on Wednesday, 01-29-25 10:00AM in House conference room 423 VIA VIDEOCONFERENCE.
2025-01-21 H
Referred to ECD, FIN, referral sheet 2
2025-01-21 H
Introduced and Pass First Reading.
2025-01-17 H
Pending introduction.

Official Summary Text

RELATING TO CAPITAL GAINS TAX.
Capital Gains Tax
Amends the capital gains tax rate for individuals, estates, and trusts. Amends the alternative capital gains tax for corporations. Effective 7/1/2050. (SD1)

Current Bill Text

Read the full stored bill text

HB476

HOUSE OF REPRESENTATIVES

H.B. NO.

476

THIRTY-THIRD LEGISLATURE, 2025

STATE OF HAWAII

A BILL FOR AN ACT

relating
to capital gains tax
.

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

����
SECTION
1
.
�
Section 235-51, Hawaii Revised Statutes, is
amended by amending subsection (f) to read as follows:

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"(f)
�
If a taxpayer has a net capital gain for any
taxable year to which this subsection applies, then the tax imposed by this
section shall not exceed the sum of:

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(1)
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The tax computed at the rates and in the same
manner as if this subsection had not been enacted on the greater of:

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(A)
�
The taxable income reduced by the amount of
net capital gain, or

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(B)
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The amount of taxable income taxed at a rate
below [
7.25
]
nine
per cent, plus

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(2)
�
A tax of [
7.25
]
nine
per cent of
the amount of taxable income in excess of the amount determined under paragraph
(1).

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This
subsection shall apply to individuals, estates, and trusts for taxable years
beginning after December 31, 1986."

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SECTION
2
.
�
Section 235-71.5, Hawaii Revised Statutes, is
amended to read as follows:

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"
�235-71.5
�

Alternative tax for corporations.
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Section 1201 (with respect to alternative tax for corporations) of the
Internal Revenue Code of 1986, as amended as of December 31, 1996, shall be
operative for the purposes of this chapter and shall be applied as set forth in
this section.
�
If for any taxable year a
corporation, regulated investment company, or real estate investment trust has
a net capital gain, then, in lieu of the tax imposed by section 235-71, there
is hereby imposed a tax (if such tax is less than the tax imposed under section
235-71) which shall consist of the sum of:

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(1)
�
A tax computed on the taxable income reduced
by the amount of the net capital gain, at the rates and in the manner as if
this section had not been enacted, plus

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(2)
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The sum of:

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(A)
�
3.08 per cent of the lesser of:

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(i)
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The net capital gain determined by including
only the gain or loss which is properly taken into account for the portion of
the taxable year before April 1, 1987 (i.e., the amount in paragraph (1)), or

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(ii)
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The net capital gain for the taxable year,
plus

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(B)
�
[
4
]
Five
per cent of the excess
(if any) of:

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(i)
�
The net capital gain for the taxable year,
over

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(ii)
�
The amount of the net capital gain taken into
account under subparagraph (A)."

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

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SECTION 4.
�
This Act shall take effect on July 1, 2025.

INTRODUCED BY:

_____________________________

Report Title:

Capital
Gains Tax; Income Tax; Increase

Description:

Increases
the capital gains tax threshold to nine percent. Increases the alternative
capital gains tax for corporations to five percent.

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