RELATING TO THE GENERAL EXCISE TAX.

SB389

THE SENATE

S.B. NO.

389

THIRTY-THIRD LEGISLATURE, 2025

STATE OF HAWAII

A BILL FOR AN ACT

RELATING
TO THE GENERAL EXCISE TAX
.

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 Act 47, Session Laws of Hawaii 2024 (Act 47), scheduled
to take effect on January 1, 2026, exempts from general excise tax, amounts
received by licensed physicians, osteopathic physicians, dentists, advanced
practice registered nurses, and pharmacists for healthcare-related goods or
services under the medicare, medicaid, and TRICARE programs to encourage
cost-effective patient outcomes.

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The purpose of this Act is to expand this
general excise tax exemption to licensed optometrists, audiologists, and
chiropractors to further encourage cost-effective patient outcomes.

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SECTION
2.
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Act 47,
Session Laws of Hawaii 2024, is amended by amending section 2 to read as
follows:

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"
SECTION

2
.
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Section
237-24.3, Hawaii Revised Statutes, is amended to read as follows:

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"
�237-24.3
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Additional amounts not taxable.
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In addition to the amounts not taxable
under section 237-24, this chapter shall not apply to:

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(1)
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Amounts received from the loading,
transportation, and unloading of agricultural commodities shipped for a
producer or produce dealer on one island of this State to a person, firm, or
organization on another island of this State.
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The terms "agricultural commodity", "producer", and
"produce dealer" shall be defined in the same manner as they are
defined in section 147-1; provided that agricultural commodities need not have
been produced in the State;

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(2)
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Amounts received by the manager,
submanager, or board of directors of:

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(A)
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An association of a condominium
property regime established in accordance with chapter 514B or any predecessor
thereto; or

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(B)
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A nonprofit homeowners or community
association incorporated in accordance with chapter 414D or any predecessor
thereto and existing pursuant to covenants running with the land,

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in
reimbursement of sums paid for common expenses;

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(3)
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Amounts received or accrued from:

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(A)
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The loading or unloading of cargo from
ships, barges, vessels, or aircraft, including stevedoring services as defined
in section 382-1, whether or not the ships, barges, vessels, or aircraft travel
between the State and other states or countries or between the islands of the
State;

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(B)
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Tugboat services including pilotage
fees performed within the State, and the towage of ships, barges, or vessels in
and out of state harbors, or from one pier to another;

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(C)
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The transportation of pilots or
governmental officials to ships, barges, or vessels offshore; rigging gear;
checking freight and similar services; standby charges; and use of moorings and
running mooring lines; and

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(D)
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Wharfage and demurrage imposed under
chapter 266 that is paid to the department of transportation;

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(4)
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Amounts received by an employee benefit
plan by way of contributions, dividends, interest, and other income; and
amounts received by a nonprofit organization or office, as payments for costs
and expenses incurred for the administration of an employee benefit plan;
provided that this exemption shall not apply to any gross rental income or
gross rental proceeds received after June 30, 1994, as income from
investments in real property in this State; and provided further that gross
rental income or gross rental proceeds from investments in real property
received by an employee benefit plan after June 30, 1994, under written
contracts executed prior to July 1, 1994, shall not be taxed until the
contracts are renegotiated, renewed, or extended, or until after December 31,
1998, whichever is earlier.
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For the
purposes of this paragraph, "employee benefit plan" means any plan as
defined in title 29 United States Code section 1002(3), as amended;

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(5)
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Amounts received for purchases made
with United States Department of Agriculture food coupons under the federal
food stamp program, and amounts received for purchases made with United States
Department of Agriculture food vouchers under the Special Supplemental Foods
Program for Women, Infants and Children;

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(6)
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Amounts received by a hospital,
infirmary, medical clinic, health care facility, pharmacy, or a practitioner
licensed to administer the drug to an individual for selling prescription drugs
or prosthetic devices to an individual; provided that this paragraph shall not
apply to any amounts received for services provided in selling prescription
drugs or prosthetic devices.
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As used in
this paragraph:

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"Prescription
drugs" are those drugs defined under section 328-1 and dispensed by
filling or refilling a written or oral prescription by a practitioner licensed
under law to administer the drug and sold by a licensed pharmacist under
section 328-16 or practitioners licensed to administer drugs; provided that
"prescription drugs" shall not include cannabis or manufactured
cannabis products authorized pursuant to chapters 329 and 329D; and

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"Prosthetic
device" means any artificial device or appliance, instrument, apparatus,
or contrivance, including their components, parts, accessories, and
replacements thereof, used to replace a missing or surgically removed part of
the human body, which is prescribed by a licensed practitioner of medicine,
osteopathy, or podiatry and that is sold by the practitioner or that is
dispensed and sold by a dealer of prosthetic devices; provided that
"prosthetic device" shall not mean any auditory, ophthalmic, dental,
or ocular device or appliance, instrument, apparatus, or contrivance;

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(7)
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Taxes on transient accommodations
imposed by chapter 237D and passed on and collected by operators holding
certificates of registration under that chapter;

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(8)
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Amounts received as dues by an
unincorporated merchants association from its membership for advertising media,
promotional, and advertising costs for the promotion of the association for the
benefit of its members as a whole and not for the benefit of an individual
member or group of members less than the entire membership;

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(9)
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Amounts received by a labor
organization for real property leased to:

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(A)
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A labor organization; or

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(B)
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A trust fund established by a labor
organization for the benefit of its members, families, and dependents for
medical or hospital care, pensions on retirement or death of employees,
apprenticeship and training, and other membership service programs.

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As
used in this paragraph, "labor organization" means a labor
organization exempt from federal income tax under section 501(c)(5) of the
Internal Revenue Code, as amended;

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(10)
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Amounts received from foreign diplomats
and consular officials who are holding cards issued or authorized by the United
States Department of State granting them an exemption from state taxes; [
and
]

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(11)
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Amounts received as rent for the rental
or leasing of aircraft or aircraft engines used by the lessees or renters for
interstate air transportation of passengers and goods.
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For purposes of this paragraph, payments made
pursuant to a lease shall be considered rent regardless of whether the lease is
an operating lease or a financing lease.
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The definition of "interstate air transportation" is the same
as in
title
49 [
U.S.C.
]
United States Code
section 40102[
.
]
;
and

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(12)
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Amounts received by a hospital,
infirmary, medical clinic, health care facility, or pharmacy, or a medical or
dental practitioner,

for healthcare-related goods or services purchased
under the medicare, medicaid, or TRICARE programs.
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For the purposes of this paragraph, the
healthcare-related services need not be performed by a medical or dental practitioner
but may be performed by a physician's assistant, nurse, or other employee under
the medical or dental practitioner's direction.
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As used in this paragraph:

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"Medicaid" means the
program established under Title XIX of the Social Security Act of 1935, as
amended;

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"Medical or dental
practitioner" means a physician or osteopathic physician licensed pursuant
to chapter 453; a dentist licensed under chapter 448; an advanced practice
registered nurse licensed pursuant to chapter 457; a pharmacist licensed pursuant
to chapter 461; an optometrist licensed pursuant to chapter 459; an audiologist
licensed pursuant to chapter 468E; or a chiropractor licensed pursuant to
chapter 442.

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"Medicare" means the
program established under Title XVIII of the Social Security Act of 1935, as
amended; and

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"TRICARE" means the
program of the Department of Defense military health system managed by the
Defense Health Agency, or any successor program.
""

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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 shall take effect upon its approval.

INTRODUCED BY:

_____________________________

Report Title:

General
Excise Tax;

Exemption;
Medicaid; Medicare; TRICARE; Optometrists; Audiologists; Chiropractors; Act 47
(2024)

Description:

Expands the
general excise tax exemption established by Act 47, Session Laws of Hawaii
2024, to include amounts received by optometrists, audiologists, and
chiropractors, for healthcare-related goods or services purchased under the
Medicare, Medicaid, and TRICARE programs
.

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