Bill > HB947

This bill modifies Hawaii's tax code to disallow the dividends paid deduction for Real Estate Investment Trusts (REITs), which are companies that own, operate, or finance income-generating real estate. Specifically, the bill amends Section 235-2.3 of the Hawaii Revised Statutes to add Section 857(b)(2)(B) to the list of Internal Revenue Code provisions that are not operative for state tax purposes. This means that REITs will no longer be able to deduct dividends paid to shareholders when calculating their state tax liability, effectively subjecting them to the same tax treatment as other corporations. The change will apply to taxable years beginning after December 31, 2025, giving businesses time to prepare for the new tax treatment. The purpose of the bill is to eliminate a tax advantage that REITs currently enjoy, which could potentially increase state tax revenue from these investment vehicles.

Business and Industry

https://www.capitol.hawaii.gov/session/measure_indiv.aspx?billtype=HB&billnumber=947&year=2026