RELATING TO TAXATION.

SB2801

THE SENATE

S.B. NO.

2801

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:

PART I

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SECTION 1.
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The legislature finds that the State is facing fiscal difficulties that
significantly impact the general fund.
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The council on revenues acknowledged the high level of uncertainty
surrounding federal policy changes that impact the State's fiscal health.
�
Federal uncertainty already impacted the State
in fiscal year 2025-2026 during the federal government shutdown, which saw the
State utilize state funds to temporarily replace frozen federal programs.
�
The actions at the federal level combined with
weaker revenue collections create significant risk for the State's general
fund.
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The State's general fund is
essential to maintaining programs that benefit state residents, including
social services, infrastructure maintenance, and education services.
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The legislature recognizes the potential
burdens that may fall on residents should general fund revenues be at risk.

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The legislature further finds that the
administration's proposed repeal of certain tax credits passed in Act 46, Session
Laws of Hawaii 2024, would have a significant impact on residents with regards
to the high cost of living in the State.
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Accordingly, the legislature finds that
general fund revenues should be protected, while also ensuring that any
measures that affect tax relief from Act 46, Session Laws of Hawaii 2024, are
limited.

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The purpose of this Act is to protect the
fiscal health of the State while also protecting past legislative efforts to
address the cost of living in the State for residents.
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These actions support the general fund while
also minimizing the impacts to Act 46, Session Laws of Hawaii 2024, tax credits
by redirecting more tax revenues into the general fund and temporarily suspending
certain income tax credits.

PART II

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SECTION
2
.
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Section 247-7, Hawaii Revised Statutes, is
amended to read as follows:

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"
�247-7
�
Disposition of
taxes.
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All taxes collected under this chapter shall be paid into the state
treasury to the credit of the general fund of the State, to be used and
expended for the purposes for which the general fund was created and exists by
law; provided that of the taxes collected each fiscal year[
:
]
,

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[
(1)
�
Ten
]
ten
per cent or $5,100,000,
whichever is less, shall be paid into the land conservation fund established
pursuant to section 173A-5[
; and

����
(2)
�
Fifty per cent or $38,000,000, whichever is
less, shall be paid into the rental housing revolving fund established by
section 201H-202
].
"

PART III

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SECTION 3.
�

Unless otherwise provided by law, the following sections of the Hawaii
Revised Statutes are temporarily
suspended from January 1, 2026 to December
31, 2031:

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Hawaii Revised Statutes
����������
Subject
Matter

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(1)
�
�235-12.5
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Renewable
Energy Technologies

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Tax
Credit;

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(2)
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�235-110.7
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Capital
Goods Excise Tax

���������������������������������
Credit;

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(3)
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�235-110.9
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High
Technology Business

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Investment
Tax Credit;

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(4)
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�235-110.32
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Renewable
Fuels Production Tax

���������������������������������
Credit;

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(5)
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�235-110.51
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Technology
Infrastructure

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Renovation
Tax Credit;

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(6)
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�235-110.65
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Ship
Repair Industry Tax

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Credit;

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(7)
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�235-110.91
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Tax
Credit for Research

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Activities.

PART IV

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SECTION 4.
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Statutory material to be repealed is bracketed and stricken.
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New statutory material is underscored.

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SECTION 5.
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This Act shall take effect upon its approval; provided that part III
shall be applied retroactively to January 1, 2026.

INTRODUCED BY:

_____________________________

Report Title:

Conveyance
Tax; Rental Housing Revolving Fund; Suspension of Tax Credits

Description:

Repeals
allocation of conveyance tax revenues to the rental housing revolving
fund.
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Temporarily suspends selected
state income tax credits retroactively to 1/1/2026.

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