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Senate committee advances HB 916 to let low‑income housing credits offset local transient‑accommodation taxes
Summary
A Senate committee voted to pass HB 916 with amendments that delay implementation to taxable years after Dec. 31, 2027 and add a compliance/liability clarification after testimony raised administrative verification and fiscal-efficiency concerns.
The Economic Development and Tourism Committee and the Committee on Housing voted to advance HB 916 HD1 on March 24, 2026, proposing that low‑income housing tax credits may be used to offset state transient accommodations taxes (TAT) imposed in the same county where a qualifying rental building is located.
Committee members adopted the chair’s recommendation to pass the bill with amendments that would postpone its application until taxable years beginning after Dec. 31, 2027, to give the Department of Taxation time to update forms, instructions and systems. The amendment also inserts a notwithstanding clause (including a citation to section 237‑41.5, HRS) clarifying that credits applied under the act are not subject to personal liability for key individuals and are deemed compliant if used according to the statute.
Tom Yaga of the Tax Foundation of Hawaii testified with concerns about operational and administrative challenges, including verification and tracking of credits when used to offset TAT. Yaga said his organization could not estimate the revenue loss precisely; committee members noted testimony indicating the existing credit program costs the state roughly $20 million to $40 million annually and that HB 916 would not increase the total credit but would change how it is applied.
The committee directed staff to note DOTax’s concerns about administrative verification and tracking, and to record consumer‑protection and fiscal‑efficiency points in the committee report (including that the state presently recovers roughly $0.60 on the dollar when issuing the credit and that a direct appropriation might be more fiscally efficient). The committee adopted the recommendation to pass HB 916 with amendments by recorded voice roll call: the chair and vice chair voted yes; several members recorded ayes while at least one member registered "reservations," and one member was excused.
The committee report will document DOTax’s suggested alternatives and administrative comments, including possible alternatives such as making the credit refundable. There was no formal final budget estimate included in testimony; the committee expects DOTax to provide implementation details before the credit becomes effective.
The measure was advanced to the next stage with the noted amendments and a delayed effective date.
