Senate committee advances SB 1133, enabling county rent‑increase limits and creating a long‑term residential lease tax credit with restrictions

The Senate Committee on Housing voted Feb. 6 to pass SB 1133, a measure that would authorize each county to enact a rental unit price control ordinance that caps annual rent increases at a percentage calculated from a county‑level consumer price index, and would create a long‑term residential lease tax credit for taxpayers who lease dwelling units in a county that has adopted such an ordinance.

The committee adopted a series of amendments during decision making based on the Department of Taxation’s (DOTAX) recommendations and committee discussion. Key changes recorded in the transcript include making the tax credit nonrefundable while allowing unused credits to be carried forward for up to three years, limiting credit claims to one taxpayer per property when multiple owners exist, prohibiting claims where the unit is leased to an immediate family member of any owner, and requiring claims be filed within 12 months after the close of the taxable year for which the credit is claimed. The committee applied the credit to taxable years beginning after Dec. 31, 2025 and included an application where the credit could apply to counties that suffered housing stock losses of more than 1% from a disaster (with the committee to define the effective date).

DOTAX submitted comments and noted administration challenges, including new reporting requirements to track property ownership and lease details. Evan Oye, testifying on behalf of a real estate association (NIAAP Hawaii), opposed the bill, citing concerns that rent control can create unintended consequences such as disincentives for maintenance, reduced quality, and fewer rental units if owners leave the market. “We do respectfully oppose this measure… we are concerned with rent control measures, as there's a lot of unintended consequences,” Evan Oye said in testimony.

Grassroot Institute of Hawaii provided testimony; public testimony included concerns about sudden, unjustified rent increases in local neighborhoods as part of the rationale for the measure. Committee discussion referenced Maui’s rental market and federal rental assistance impacts following the Lahaina fire; the committee report will note DOTAX’s administrative challenges and testimony concerns that rent control can shrink rental supply and quality.

Outcome: Passed with amendments. The committee’s recommended changes address administration, limits on credits, and filing deadlines.

Next steps: The measure advances with committee amendments recorded for floor consideration and further review by DOTAX on reporting and administration requirements.