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
SECTION 1. The legislature finds that the State is facing fiscal difficulties that significantly impact the general fund. 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. The State's general fund is essential to maintaining programs that benefit state residents, including social services, infrastructure maintenance, and education services. The legislature recognizes the potential burdens that may fall on residents should general fund revenues be at risk.
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. 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.
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. 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
SECTION 2. Section 247-7, Hawaii Revised Statutes, is amended to read as follows:
"§247-7 Disposition of taxes. 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[[Struck through: :]][Underlined: ,]
[[Struck through: (1)] [Struck through: Ten]] [Underlined: ten] per cent or $5,100,000, whichever is less, shall be paid into the land conservation fund established pursuant to section 173A-5[[Struck through: ; and]
[Struck through: (2)] [Struck through: 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
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:
Hawaii Revised Statutes Subject Matter
(1) §235-12.5 Renewable Energy Technologies
Tax Credit;
(2) §235-110.7 Capital Goods Excise Tax
Credit;
(3) §235-110.9 High Technology Business
Investment Tax Credit;
(4) §235-110.32 Renewable Fuels Production Tax
Credit;
(5) §235-110.51 Technology Infrastructure
Renovation Tax Credit;
(6) §235-110.65 Ship Repair Industry Tax
Credit;
(7) §235-110.91 Tax Credit for Research
Activities.
PART IV
SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 5. 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. 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.