Bill > HB1261

This bill introduces a comprehensive housing rental tax strategy designed to encourage affordable housing in Hawaii by creating financial incentives and disincentives for landlords. Specifically, the bill establishes a tax credit for landlords who charge below-market rent, defined as rental rates at or below 80% of the median market rent in a given geographic area, allowing these landlords to receive a 10% tax credit on their annual gross rental income. Conversely, the bill also imposes an additional privilege tax on landlords charging above-market rent (defined as rates at or above 120% of median market rent), with a tax rate starting at 5% and increasing by 1% for every additional 10% above the median market rent. The Hawaii Housing Finance and Development Corporation will be responsible for determining median market rent annually using data from sources like the U.S. Department of Housing and Urban Development. To claim the below-market rent tax credit, landlords must provide proof of their rental agreement and receive certification from the housing corporation. The bill's underlying purpose is to address Hawaii's high housing costs and economic inequity by using tax policy to incentivize more affordable rental rates. The tax provisions will apply to taxable years beginning after December 31, 2024, giving landlords time to adjust to the new regulations.

Business and Industry

https://www.capitol.hawaii.gov/session/measure_indiv.aspx?billtype=HB&billnumber=1261&year=2026