Bill > HB1273

This bill modifies Hawaii's tax treatment of Real Estate Investment Trusts (REITs), specifically eliminating the dividends-paid deduction for REITs starting in tax years beginning after December 31, 2025. Currently, REITs can deduct dividends paid that are attributable to income taxable in Hawaii, but under this new legislation, no dividends-paid deduction will be allowed for tax years after 2025. The bill also makes a technical amendment to Section 235-2.3 of Hawaii Revised Statutes by adding Section 857(b)(2)(B) to the list of Internal Revenue Code provisions that are not operative for state tax purposes, which specifically relates to the dividends-paid deduction for REITs. Additionally, the bill maintains existing requirements for REITs operating in Hawaii, such as notifying the department of their operation, designating themselves as a REIT on tax returns, and submitting federal tax return copies. REITs that fail to comply with these administrative requirements will continue to be subject to a $50 per day penalty.

Business and Industry

https://www.capitol.hawaii.gov/session/measure_indiv.aspx?billtype=HB&billnumber=1273&year=2025