SB2881 • 2026

RELATING TO STATE INCOME TAX.

Elections Taxes

Passed Legislature

This bill passed both chambers and reached final enrollment, even if later executive action is not shown here.

Sponsor: KIM, CHANG, LAMOSAO, MCKELVEY
Last action: 2026-05-08
Official status: Enrolled to Governor.
Effective date: Not listed

Plain English Breakdown

Using official source text because the generated explanation was unavailable or could not be confirmed against the official bill text.

RELATING TO STATE INCOME TAX.

What This Bill Does

RELATING TO STATE INCOME TAX.
DOTAX; Form 1099-R; Distributions; Income Tax; Voluntary Withholding; Rules Provides that taxable income subject to reporting as distribution on Internal Revenue Service Form 1099-R may be subject to withholding at the taxpayer's election.
Requires the Department of Taxation to adopt rules and prescribe forms.
Applicable to taxable years beginning after 12/31/2026.

Limits and Unknowns

This entry is temporarily using official source text because the generated explanation could not be confirmed against the official bill text during the last sync.

Amendments

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

CD1

Hawaii published version CD1

Plain English: SB2881 CD1 THE SENATE S.B.

SB2881 CD1 THE SENATE S.B.
NO.
2881 THIRTY-THIRD LEGISLATURE, 2026 S.D.
1 STATE OF HAWAII H.D.

HD1

Hawaii published version HD1

Plain English: SB2881 HD1 THE SENATE S.B.

SB2881 HD1 THE SENATE S.B.
NO.
2881 THIRTY-THIRD LEGISLATURE, 2026 S.D.
1 STATE OF HAWAII H.D.

SD1

Hawaii published version SD1

Plain English: SB2881 SD1 THE SENATE S.B.

SB2881 SD1 THE SENATE S.B.
NO.
2881 THIRTY-THIRD LEGISLATURE, 2026 S.D.
1 STATE OF HAWAII A BILL FOR AN ACT RELATING TO STATE INCOME TAX .

Bill History

2026-05-08 S
Enrolled to Governor.
2026-05-08 S
Received notice of passage on Final Reading in House (Hse. Com. No. 888).
2026-05-06 H
Received notice of Final Reading (Sen. Com. No. 816).
2026-05-06 H
Passed Final Reading as amended in CD 1 with none voting aye with reservations; none voting no (0) and none excused (0).
2026-05-06 S
Passed Final Reading, as amended (CD 1). Ayes, 25; Aye(s) with reservations: none . 0 No(es): none. 0 Excused: none.
2026-05-01 H
Forty-eight (48) hours notice Wednesday, 05-06-26.
2026-05-01 H
Reported from Conference Committee (Conf Com. Rep. No. 109-26) as amended in (CD 1).
2026-05-01 S
48 Hrs. Notice (as amended CD 1) 05-06-26.
2026-05-01 S
Reported from Conference Committee as amended CD 1 (Conf. Com. Rep. No. 109-26).
2026-04-30 H
The Conference Committee recommends that the measure be Passed, with Amendments. The votes were as follows: 3 Ayes: Representative(s) Takenouchi, Kitagawa, Gedeon; Ayes with reservations: none; 0 Noes: none; and 0 Excused: none.
2026-04-30 S
The Conference committee recommends that the measure be PASSED, WITH AMENDMENTS. The votes of the Senate Conference Managers were as follows: 3 Aye(s): Senator(s) Kim, Moriwaki, Fevella; Aye(s) with reservations: none ; 0 No(es): none; and 0 Excused: none.
2026-04-29 S
Conference committee meeting scheduled for 04-30-26 11:00AM; Conference Room 309.
2026-04-21 H
Received notice of Senate conferees (Sen. Com. No. 718).
2026-04-21 S
Senate Conferees Appointed: Kim Chair; Moriwaki, Fevella.
2026-04-20 S
Received notice of appointment of House conferees (Hse. Com. No. 787).
2026-04-20 H
House Conferees Appointed: Takenouchi Chair; Kitagawa, Gedeon.
2026-04-16 H
Received notice of disagreement (Sen. Com. No. 710).
2026-04-16 S
Senate disagrees with House amendments.
2026-04-16 S
Received from House (Hse. Com. No. 712).
2026-04-14 H
Passed Third Reading with none voting aye with reservations; none voting no (0) and none excused (0). Transmitted to Senate.
2026-04-09 H
Passed Second Reading as amended in HD 1; placed on the calendar for Third Reading with none voting aye with reservations; none voting no (0) and Representative(s) Cochran excused (1).
2026-04-09 H
Reported from FIN (Stand. Com. Rep. No. 1984-26) as amended in HD 1, recommending passage on Second Reading and placement on the calendar for Third Reading.
2026-04-07 H
The committee on FIN recommend that the measure be PASSED, WITH AMENDMENTS. The votes were as follows: 16 Ayes: Representative(s) Todd, Takenouchi, Hartsfield, Hussey, Keohokapu-Lee Loy, Kitagawa, Kusch, Lee, M., Miyake, Morikawa, Perruso, Templo, Yamashita, Alcos, Gedeon, Reyes Oda; Ayes with reservations: none; 0 Noes: none; and 0 Excused: none.
2026-04-02 H
Bill scheduled to be heard by FIN on Tuesday, 04-07-26 2:00PM in House conference room 308 VIA VIDEOCONFERENCE.
2026-03-12 H
Referred to FIN, referral sheet 17
2026-03-12 H
Pass First Reading
2026-03-10 H
Received from Senate (Sen. Com. No. 313) in amended form (SD 1).
2026-03-10 S
Passed Third Reading, as amended (SD 1). Ayes, 25; Aye(s) with reservations: none . Noes, 0 (none). Excused, 0 (none). Transmitted to House.
2026-03-05 S
48 Hrs. Notice 3/10/2026.
2026-03-05 S
Report adopted; Passed Second Reading, as amended (SD 1).
2026-03-05 S
Reported from WAM (Stand. Com. Rep. No. 2876) with recommendation of passage on Second Reading, as amended (SD 1) and placement on the calendar for Third Reading.
2026-03-02 S
The committee(s) on WAM recommend(s) that the measure be PASSED, WITH AMENDMENTS. The votes in WAM were as follows: 13 Aye(s): Senator(s) Dela Cruz, Moriwaki, DeCoite, Elefante, Hashimoto, Inouye, Kanuha, Kidani, Kim, Lee, C., Wakai, Fevella; Aye(s) with reservations: Senator(s) Richards ; 0 No(es): none; and 0 Excused: none.
2026-02-27 S
The committee(s) on WAM has scheduled a public hearing on 03-02-26 10:00AM; Conference Room 211 & Videoconference.
2026-01-30 S
Referred to WAM.
2026-01-26 S
Passed First Reading.
2026-01-23 S
Introduced.

Official Summary Text

RELATING TO STATE INCOME TAX.
DOTAX; Form 1099-R; Distributions; Income Tax; Voluntary Withholding; Rules
Provides that taxable income subject to reporting as distribution on Internal Revenue Service Form 1099-R may be subject to withholding at the taxpayer's election. Requires the Department of Taxation to adopt rules and prescribe forms. Applicable to taxable years beginning after 12/31/2026. (CD1)

Current Bill Text

Read the full stored bill text

SB2881

THE SENATE

S.B. NO.

2881

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

Relating
to state income tax
.

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

����
SECTION 1.
�
The legislature finds that existing law does
not address the withholding of state income tax from distributions subject to
reporting on Internal Revenue Service Form 1099-R.
�
The lack of clear withholding guidelines in
statute limits the department of taxation's ability to collect state income
taxes efficiently and may result in taxpayers owing large sums at the end of
the year, creating unnecessary compliance burdens.
�

����
The
legislature further finds that allowing voluntary withholding of taxable
distributions subject to reporting on Internal Revenue Service Form 1099-R,
including individual retirement arrangements and tax-deferred annuities, would
improve tax administration, reduce taxpayer risk of underpayment, and enhance
the State's ability to collect revenue in a timely and predictable manner.
�

����
Accordingly,
the purpose of this Act is to provide for voluntary withholding of state income
tax from taxable income subject to reporting as a distribution on Internal
Revenue Service Form 1099-R.

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

����
"
�235-
�
Voluntary withholding of tax for
distributions reported on Form 1099-R.
�
(a)
�
A taxpayer may elect to have any taxable income
received by the taxpayer that is subject to reporting as a distribution on
Internal Revenue Service Form 1099-R be subject to withholding under this
chapter at an applicable rate pursuant to this chapter.

����
(b)
�
Income upon which any tax has
been withheld at the source pursuant to this section shall be included in the
return of the recipient of the income, but any amount of tax withheld shall be
credited against the amount of income tax as computed in the return, and if in
excess of the tax due for the taxable year shall be refunded as provided in
section 235-110.

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(c)
�
The director of taxation shall
adopt rules pursuant to chapter 91 necessary to implement this section,
including the procedure for a taxpayer to elect withholding pursuant to
subsection (a), and prescribe all necessary forms.
"

����
SECTION
3.
�
New statutory material is
underscored.

����
SECTION
4.
�
This Act, upon its approval, shall
apply to taxable years beginning after December 31, 2026.

INTRODUCED BY:

_____________________________

Report Title:

DOTAX; Form
1099-R; Distributions; Income Tax; Voluntary Withholding; Rules

Description:

Provides
that taxable income subject to reporting as distribution on Internal Revenue
Service Form 1099-R may be subject to withholding at the taxpayer's election.
�
Requires the Department of Taxation to adopt
rules and prescribe forms.
�
Applicable to
taxable years beginning after 12/31/2026.

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