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SB3337
THE SENATE
S.B. NO.
3337
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:
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SECTION 1.
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The
legislature finds that Hawaii residents bear substantial state fuel tax
burdens, with a large share being felt by working families who are dependent on
their personal vehicles to travel between home and work.
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The legislature finds that tax relief is
needed to help residents with high gas prices and lower the cost of living.
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The legislature further finds that the
increasing adoption of electric and hybrid vehicles reduces state fuel tax
collections resulting in a greater diversification of sources for the State
Highway Fund, where fuel taxes presently comprise 21% of total revenues, down
dramatically from 45% in 2011. As the State Department of Transportation
explores alternative funding mechanisms, it is important to consider changes
that provide direct relief to our drivers.
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Therefore, the purpose of this Act is to eliminate
state taxes on
motor fuels
.
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SECTION
2
.
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Section 243-4,
Hawaii Revised Statutes, is amended by amending subsection (a) and (b) to read
as follows:
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"(a)
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Every distributor shall, in addition to any
other taxes provided by law, pay a license tax to the department of taxation
for each gallon of liquid fuel refined, manufactured, produced, or compounded
by the distributor and sold or used by the distributor in the State or imported
by the distributor, or acquired by the distributor from persons who are not
licensed distributors, and sold or used by the distributor in the State.
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Any person who sells or uses any liquid fuel,
knowing that the distributor from whom it was originally purchased has not paid
and is not paying the tax thereon, shall pay such tax as would have applied to
such sale or use by the distributor.
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The
rates of tax imposed are as follows:
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(1)
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For each gallon of diesel oil, 1 cent;
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(2)
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For each gallon of gasoline or other
aviation fuel sold for use in or used for airplanes, 1 cent;
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(3)
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For each gallon of naphtha sold for use
in a power-generating facility, 2 cents;
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(4)
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For each gallon of liquid fuel, other
than fuel mentioned in paragraphs (1), (2), and (3), and other than an
alternative fuel, sold or used in the city and county of Honolulu, or sold in
any county for ultimate use in the city and county of Honolulu, [
16 cents
state tax, and in addition thereto
] an amount, to be known as the
"city and county of Honolulu fuel tax", as shall be levied pursuant
to section 243-5;
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(5)
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For each gallon of liquid fuel, other
than fuel mentioned in paragraphs (1), (2), and (3), and other than an
alternative fuel, sold or used in the county of Hawaii, or sold in any county
for ultimate use in the county of Hawaii, [
16 cents state tax, and in
addition thereto
] an amount, to be known as the "county of Hawaii fuel
tax", as shall be levied pursuant to section 243-5;
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(6)
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For each gallon of liquid fuel, other
than fuel mentioned in paragraphs (1), (2), and (3), and other than an
alternative fuel, sold or used in the county of Maui, or sold in any county for
ultimate use in the county of Maui, [
16 cents state tax, and in addition
thereto
] an amount, to be known as the "county of Maui fuel tax",
as shall be levied pursuant to section 243-5; and
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(7)
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For each gallon of liquid fuel, other
than fuel mentioned in paragraphs (1), (2), and (3), and other than an
alternative fuel, sold or used in the county of Kauai, or sold in any county
for ultimate use in the county of Kauai, [
16 cents state tax, and in
addition thereto
] an amount, to be known as the "county of Kauai fuel
tax", as shall be levied pursuant to section 243-5.
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If
it is shown to the satisfaction of the department, based upon proper records
and from any other evidence as the department may require, that liquid fuel,
other than fuel mentioned in paragraphs (1), (2), and (3), is used for
agricultural equipment that does not operate upon the public highways of the
State, the user thereof may obtain a refund of all taxes thereon imposed by
this section in excess of 1 cent per gallon.
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The department shall adopt rules to administer such refunds.
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(b)
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Every distributor of diesel oil, in addition
to the tax required by subsection (a), shall pay a license tax to the
department for each gallon of diesel oil sold or used by the distributor for
operating a motor vehicle or motor vehicles upon public highways of the
State.
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The rates of the additional tax
imposed are as follows:
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(1)
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For each gallon of diesel oil sold or
used in the city and county of Honolulu, or sold in any other county for
ultimate use in the city and county of Honolulu, [
15 cents state tax, and in
addition thereto
] an amount, to be known as the "city and county of
Honolulu fuel tax", as shall be levied pursuant to section 243-5;
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(2)
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For each gallon of diesel oil sold or
used in the county of Hawaii, or sold in any other county for ultimate use in
the county of Hawaii, [
15 cents state tax, and in addition thereto
] an
amount, to be known as the "county of Hawaii fuel tax", as shall be
levied pursuant to section 243-5;
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(3)
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For each gallon of diesel oil sold or
used in the county of Maui, or sold in any other county for ultimate use in the
county of Maui, [
15 cents state tax, and in addition thereto
] an amount,
to be known as the "county of Maui fuel tax", as shall be levied
pursuant to section 243-5; and
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(4)
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For each gallon of diesel oil sold or
used in the county of Kauai, or sold in any other county for ultimate use in
the county of Kauai, [
15 cents state tax, and in addition thereto
] an
amount, to be known as the "county of Kauai fuel tax", as shall be
levied pursuant to section 243-5.
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If
any user of diesel oil furnishes a certificate, in a form that the department
shall prescribe, to the distributor or if the distributor who uses diesel oil
signs the certificate, certifying that the diesel oil is for use in operating a
motor vehicle or motor vehicles in areas other than upon the public highways of
the State, the tax as provided in paragraphs (1) to (4) shall not be
applicable.
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If a certificate is not or
cannot be furnished and the diesel oil is in fact for use for operating a motor
vehicle or motor vehicles in areas other than upon public highways of the
State, the user thereof may obtain a refund of all taxes thereon imposed by the
foregoing paragraphs.
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The department
shall adopt rules to administer the refunding of such taxes."
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SECTION
3.
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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
4.
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This Act, upon its approval, shall
apply to taxable years beginning after December 31, 2026.
INTRODUCED BY:
_____________________________
Report Title:
Tax;
Fuel; Gasoline; Cost of Living; Affordability
Description:
Eliminates
state taxes on gasoline and diesel fuel for motor vehicles.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.