Bill > HB1273

This bill modifies Hawaii's tax treatment of Real Estate Investment Trusts (REITs), a type of company that owns, operates, or finances income-producing real estate. Specifically, the bill eliminates the dividends-paid deduction for REITs starting in tax years beginning after December 31, 2025. Currently, REITs can deduct dividends paid to shareholders from their taxable income, which reduces their tax liability. Under the new law, REITs will no longer be able to claim this deduction for tax years starting in 2026. The bill also updates two sections of Hawaii's tax code to reflect this change: Section 235-2.3, which lists which federal tax code provisions are not applicable in Hawaii, and Section 235-71, which governs taxation of REITs. Additionally, the bill requires REITs to notify the state tax department of their operations, properly designate themselves on tax returns, complete returns according to department instructions, and submit copies of their federal tax returns. REITs that fail to comply with these requirements will be assessed a penalty of $50 per day.

Business and Industry

https://www.capitol.hawaii.gov/session/measure_indiv.aspx?billtype=HB&billnumber=1273&year=2026