Bill > SB1465

This bill modifies Hawaii's tax law regarding pass-through entity taxation, specifically focusing on how qualified members of electing pass-through entities (businesses like partnerships or S corporations where business income "passes through" to individual owners' tax returns) handle tax credits. Under the proposed change, when a qualified member claims a tax credit for their share of taxes paid by a pass-through entity, they must now add their proportional share of those entity-paid taxes to their own taxable income. This means that while members can still receive a credit for taxes paid by the pass-through entity, they must also include those tax amounts as income, potentially offsetting the benefit of the credit. The bill is set to take effect on July 1, 3000 (which appears to be a typographical error and likely means July 1, 2023 or 2024), and will apply to taxable years beginning after December 31, 2024, giving taxpayers and businesses advance notice of the new tax treatment.

Budget and Finance

https://www.capitol.hawaii.gov/session/measure_indiv.aspx?billtype=SB&billnumber=1465&year=2026