Bill > HB286

This bill aims to address the affordable housing crisis in Hawaii by modifying the Individual Housing Account (IHA) program to help first-time homebuyers save for a down payment and reduce their tax burden. The bill proposes to increase the maximum annual deduction and account levels for individual housing accounts, though the specific new dollar amounts are left blank in the legislative text. Currently, individuals can deduct up to $5,000 annually (or $10,000 for married couples filing jointly), with a lifetime maximum of $25,000, but the bill suggests updating these limits to reflect current housing prices. The program allows taxpayers to create a special trust account with a financial institution to save for their first principal residence in Hawaii, with the contributions being tax-deductible. Funds can only be withdrawn for purchasing a first home in Hawaii, and if withdrawn early or not used for home purchase, the account is subject to tax penalties. The bill maintains existing protections, such as waiving tax liability in cases of death or total disability, and requires that the funds be used specifically for a first-time home purchase in Hawaii. The changes will take effect on July 1, 2050, and apply to taxable years beginning after December 31, 2025, giving a significant lead time for implementation.

Budget and Finance, Business and Industry, Housing and Urban Affairs

https://www.capitol.hawaii.gov/session/measure_indiv.aspx?billtype=HB&billnumber=286&year=2025