RELATING TO THE COLLEGE SAVINGS PROGRAM.

Education Taxes

Active

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

Sponsor: TAKENOUCHI
Last action: 2025-12-08
Official status: Carried over to 2026 Regular Session.
Effective date: Not listed

Plain English Breakdown

The effective date of July 1, 3000 is likely a placeholder and will be updated in future versions of the bill.

Hawaii College Savings Program Tax Deduction

This bill establishes a state income tax deduction for contributions to Hawaii's college savings program (529 accounts) and aligns with federal law allowing these funds to be used for K-12 educational expenses.

What This Bill Does

Establishes a state income tax deduction for contributions made to Hawaii's 529 college savings accounts.
Limits the maximum annual deduction: $5,000 for single filers and married individuals filing separately; $10,000 for joint filers, heads of households, and surviving spouses.
Requires that any withdrawn funds used for non-qualified expenses be included in taxable income with penalties similar to federal law.
Aligns Hawaii's college savings program rules with federal amendments allowing 529 benefits to cover K-12 educational expenses.

Who It Names or Affects

Hawaii residents who contribute to 529 accounts for education savings.
Taxpayers filing state income tax returns in Hawaii.

Terms To Know

529 account: A type of investment plan that allows individuals to save money for future educational expenses, including college and K-12 education under this bill.
Tax deduction: An amount subtracted from taxable income, reducing the total tax owed.

Limits and Unknowns

The effective date of July 1, 3000 is likely a placeholder and will be updated to reflect an actual implementation date.
It's unclear how many Hawaii residents will take advantage of this deduction or what impact it might have on state tax revenue.

Amendments

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

HD1

Hawaii published version HD1

Plain English: This amendment establishes a state income tax deduction for contributions to Hawaii's college savings program (529 accounts) and the ABLE Savings Program, and allows these programs to be used for K-12 educational expenses.

Adds a new section in Chapter 235 of Hawaii Revised Statutes allowing a tax deduction for contributions made to Hawaii 529 college savings program and ABLE accounts.
Amends Section 235-2.4 to conform with federal Internal Revenue Code changes that allow 529 benefits for K-12 educational expenses.
Updates the College Savings Program in Chapter 256 to include elementary or secondary schools within its scope.

The amendment specifies an effective date of July 1, 3000, which seems incorrect and may need clarification.

Bill History

2025-12-08 D
Carried over to 2026 Regular Session.
2025-02-13 H
Passed Second Reading as amended in HD 1 and referred to the committee(s) on FIN with none voting aye with reservations; none voting no (0) and Representative(s) Cochran, Kitagawa, Ward excused (3).
2025-02-13 H
Reported from HED/EDN (Stand. Com. Rep. No. 571) as amended in HD 1, recommending passage on Second Reading and referral to FIN.
2025-02-11 H
The committee on EDN recommend that the measure be PASSED, WITH AMENDMENTS. The votes were as follows: 10 Ayes: Representative(s) Woodson, La Chica, Amato, Evslin, Garrett, Kapela, Olds, Sayama, Muraoka, Souza; Ayes with reservations: none; Noes: none; and 1 Excused: Representative(s) Kila.
2025-02-11 H
The committee on HED recommend that the measure be PASSED, WITH AMENDMENTS. The votes were as follows: 10 Ayes: Representative(s) Garrett, Amato, Evslin, Kapela, La Chica, Olds, Sayama, Woodson, Muraoka, Souza; Ayes with reservations: none; Noes: none; and 1 Excused: Representative(s) Kila.
2025-02-07 H
Bill scheduled for decision making on Tuesday, 02-11-25 2:00PM in conference room 309 VIA VIDEOCONFERENCE.
2025-02-05 H
The committee(s) on HED/EDN recommend(s) that the measure be deferred until 02-11-25.
2025-01-31 H
Bill scheduled to be heard by HED/EDN on Wednesday, 02-05-25 2:00PM in House conference room 309 VIA VIDEOCONFERENCE.
2025-01-27 H
Re-referred to HED/EDN, FIN, referral sheet 4
2025-01-21 H
Referred to HED, FIN, referral sheet 2
2025-01-21 H
Introduced and Pass First Reading.
2025-01-17 H
Pending introduction.

Official Summary Text

RELATING TO THE COLLEGE SAVINGS PROGRAM.
College Savings Program; 529 Accounts; Hawaii ABLE Savings Program; Income Tax; Deduction; Internal Revenue Code Conformance
Establishes a state income tax deduction for contributions made to Hawaii 529 accounts through the college savings program and accounts made through the Hawaii ABLE Savings Program. Conforms to the amendments of the Internal Revenue Code that authorize 529 benefits to be used for K-12 educational expenses. Effective 7/1/3000. (HD1)

Current Bill Text

Read the full stored bill text

HB707

HOUSE OF REPRESENTATIVES

H.B. NO.

707

THIRTY-THIRD LEGISLATURE, 2025

STATE OF HAWAII

A BILL FOR AN ACT

relating
to the college savings program
.

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

����
SECTION 1.
�
The legislature finds that in 2002, the State
established a college savings program called "TuitionEDGE" pursuant
to chapter 256, Hawaii Revised Statutes, and section 529 of the Internal
Revenue Code of 1986, as amended.
�
In
2007, the program was revamped under a new program manager, and re-branded as
"HI529 Hawaii's College Savings Program".
�
The program assists and encourages families
to save and invest funds for future higher education expenses.
�
The investment income earned under the
program is exempt from federal and state taxes; provided that the funds are
used for qualified higher education expenses.

����
The legislature further finds that the
federal Tax Cuts and Jobs Act of 2017 expanded 529 plan benefits to include
K-12 educational expenses.
�
However, the
state decided to not conform to these specific changes made to the Internal
Revenue Code.

����
The purpose of this Act is to strengthen
Hawaii's 529 college savings program by:

����
(1)
�
Establishing a
state income tax deduction for contributions made to Hawaii 529 accounts
through the college savings program; and

����
(2)
�
Opting
into the amendments of the Internal Revenue Code that authorize 529 benefits to
be used for K-12 educational expenses as authorized by federal law.

����
SECTION 2.
�
Chapter 235, Hawaii Revised Statutes, is
amended by adding a new section to be appropriately designated and to read as
follows:

����
"
�235-
�
Section
529 contributions; deduction.
�
(a)
�

There shall be allowed as a deduction from gross income the following
amounts for contributions made to an account or college account pursuant to
chapter 256 and section 529 of the Internal Revenue Code of 1986, as amended:

����
(1)
�
For single
filers and married individuals filing separately, a maximum deduction of $5,000
per taxable year; and

����
(2)
�
For married
individuals filing jointly, heads of households, and surviving spouses, a
maximum deduction of $10,000 per taxable year.

����
(b)
�
Contributions are eligible for the deduction
only in the taxable year in which they are made.

����
(c)
�
Contributions withdrawn for non-qualified
expenses shall be subject to recapture and included as taxable income for the
purposes of income tax, consistent with penalties under federal law.

����
(d)
�
The director of taxation shall prepare forms
as may be necessary to claim a tax deduction under this section, may require
proof of the claim for the tax deduction, and may adopt rules pursuant to
chapter 91.
"

����
SECTION
3
.
�
Section
235-2.4, Hawaii Revised Statutes, is amended by amending subsection (ii) to
read as follows:

����
"(ii)
�
Section 529 (with respect to qualified
tuition programs) shall be operative for the purposes of this chapter[
,
except that sections 529(c)(6), 529(c)(7), and 529(e)(3)(A)(iii) shall not be
operative
]."

����
SECTION
4
.
�
Section 256-2,
Hawaii Revised Statutes, is amended to read as follows:

����
"
[
[
]�256-2[
]
]
�

College savings program established.
�

There is established the college savings program.
�
The purpose of this program is to enable
families to save for college tuition and other expenses through college
accounts.
�
The program shall provide
college accounts to:

����
(1)
�
Enable residents
of this State and other states to benefit from the tax incentive provided for
qualified state tuition programs under the Internal Revenue Code of 1986, as
amended; and

����
(2)
�
Attract students
to public and private colleges [
and
]
,
universities
, and
elementary or secondary public, private, or religious school
within the
State."

����
SECTION
5
.
�
Statutory
material to be repealed is bracketed and stricken.
�
New statutory material is underscored.

����
SECTION
6
.
�
This Act, upon
its approval, shall apply to taxable years beginning after December 31, 2024.

INTRODUCED BY:

_____________________________

Report Title:

College
Savings Program; 529 Accounts; Income Tax; Deduction; Internal Revenue Code
Conformance

Description:

Establishes a state income tax deduction for contributions
made to Hawaii 529 accounts through the college savings program.
�
Conforms to the amendments of the Internal
Revenue Code that authorize 529 benefits to be used for K-12 educational
expenses.

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