Bill > SB2656

This bill aims to increase tax revenue for Hawaii by disallowing the dividends paid deduction for most real estate investment trusts (REITs), which are companies that own, operate, or finance income-producing real estate. Currently, REITs can deduct dividends paid to shareholders from their taxable income, which often results in little to no state income tax being paid on income generated within Hawaii. The bill proposes to amend existing law to prevent this deduction for REITs, except for those that have specific investments or are classified as community development financial institutions, which are entities that invest in low-income communities. This change is intended to ensure that income generated from state resources by REITs is taxed in Hawaii, as studies have shown that the majority of taxes on REIT dividends are paid to other states by out-of-state shareholders. The provisions of this bill will take effect for taxable years beginning after December 31, 2025.

Budget and Finance, Business and Industry

https://www.capitol.hawaii.gov/session/measure_indiv.aspx?billtype=SB&billnumber=2656&year=2026