RELATING TO THE GENERAL FUND.

SB2600

THE SENATE

S.B. NO.

2600

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

relating
to the general fund
.

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 article VII, section 6, of the Hawaii State
Constitution requires the legislature to dispose of excess general fund
revenues when certain factors are met, as follows:

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(1)
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Provide
for a tax refund or tax credit to the taxpayers of the State, as provided by
law;

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(2)
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Make
a deposit into one or more funds, as provided by law, which shall serve as
temporary supplemental sources of funding for the State in times of an
emergency, economic downturn, or unforeseen reduction in revenue, as provided
by law; or

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(3)
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Appropriate
general funds for the pre-payment of either or both of the following, as
provided by law:

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(A)
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Debt service for general obligation bonds
issued by the State; or

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(B)
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Pension
or other post-employment benefit liabilities accrued for state employees.

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The legislature finds that the necessary
factors have been met for two successive fiscal years and that the legislature
is constitutionally required to dispose of excess tax revenues, as authorized
under article VII, section 6, of the Hawaii State Constitution.

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Accordingly, the purpose of this Act is to
implement article VII, section 6, of the Hawaii State Constitution by:

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(1)
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Providing
an income tax credit of $ ,
multiplied by the number of a taxpayer's qualified exemptions, to every
resident individual taxpayer of the State to satisfy constitutionally mandated
requirements;

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(2)
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Making
a deposit of $ into
the emergency and budget reserve fund established under section 328L-3, Hawaii
Revised Statutes; and

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(3)
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Making
a deposit of $ into
the other post‑employment benefits trust fund established under section
87A-42, Hawaii Revised Statutes.

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SECTION 2.
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(a)
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There shall be allowed each
resident individual taxpayer who files an individual income tax return for the
2026 taxable year and who is not claimed or is not otherwise eligible to be
claimed as a dependent by another taxpayer for federal or Hawaii state
individual income tax purposes, a general income tax credit of $ ,
which shall be deducted from income tax liability computed under chapter 235,
Hawaii Revised Statutes; provided that a resident individual who has no income
or no income taxable under chapter 235, Hawaii Revised Statutes, and who
is not claimed or is not otherwise eligible to be claimed as a dependent by
another taxpayer for federal or Hawaii state individual income tax purposes may
claim this credit.

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(b)
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Each resident individual taxpayer may claim the general income tax
credit multiplied by the number of qualified exemptions to which the taxpayer
is entitled.

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(c)
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Each person for whom the general income tax credit is claimed shall have
been a resident of the State, as defined in section 235-1, Hawaii Revised
Statutes, for at least nine months regardless of whether the qualified resident
was physically in the State for nine months.
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Multiple exemptions shall not be granted for the general income tax
credit because of age or deficiencies in vision, hearing, or other disability.

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(d)
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The general income tax credit shall not be available to any:

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(1)
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Person
who has been convicted of a felony and who has been committed to prison and has
been physically confined for the full taxable year;

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(2)
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Person
who would otherwise be eligible to be claimed as a dependent but who has been
committed to a youth correctional facility and has resided at the facility for
the full taxable year; or

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(3)
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Misdemeanant
who has been committed to jail and has been physically confined for the full
taxable year.

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(e)
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The tax credit claimed by a resident taxpayer pursuant to this section
shall be deductible from the resident taxpayer's individual income tax
liability for the 2026 taxable year.
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If
the tax credit claimed by a resident taxpayer exceeds the amount of income tax
payment due from the resident taxpayer, the excess of credits over payments due
shall be refunded to the resident taxpayer; provided that a tax credit properly
claimed by a resident individual who has no income tax liability shall be paid
to the resident individual.

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(f)
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All claims for tax credits under this section, including any amended
claims, shall be filed on or before the end of the twelfth month following the
close of the taxable year for which the credits may be claimed.
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Failure to comply with this filing
requirement shall constitute a waiver of the right to claim the credit.

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SECTION 3.
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In accordance with article VII, section 6, of the Hawaii State
Constitution, there is appropriated out of the general revenues of the State of
Hawaii the sum of $
or so much thereof as may be necessary for fiscal year 2026-2027 for deposit
into the other post-employment benefits trust fund established under section
87A-42, Hawaii Revised Statutes.

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SECTION 4.
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In accordance with article VII, section 6, of the Hawaii State Constitution,
there is appropriated out of the general revenues of the State of Hawaii the
sum of $ or so much
thereof as may be necessary for fiscal year 2026-2027 for deposit into the
emergency and budget reserve fund established under section 328L-3, Hawaii
Revised Statutes.

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SECTION 5.
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This Act shall take effect on July 1, 2026; provided that section 2
shall apply to taxable years beginning after December 31, 2025.

INTRODUCED BY:

_____________________________

Report Title:

Mandatory Tax Credit; Emergency and Budget Reserve Fund;
Other Post-employment Benefits Trust Fund; Constitution; Appropriations

Description:

Provides a tax credit to taxpayers and makes deposits to
the emergency and budget reserve fund and other post-employment benefits trust
fund pursuant to article VII, section 6, of the Hawaii State Constitution.
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Appropriates moneys.

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