HB1335 makes two main tax changes in Hawaii. First, it creates a general excise tax exemption for the gross proceeds or income from the manufacture, production, packaging, and sale of diapers in the state. The bill defines “diaper” to include washable or disposable absorbent garments, and for disposable diapers it adds standards related to allergens and product quality such as absorbency, waterproofing, leg openings, and refastening closures.
Second, the bill imposes a new surcharge on luxury motor vehicles under both the general excise tax chapter and the use tax chapter. The surcharge would equal 50 percent of the applicable tax on sales or importation of luxury motor vehicles, including used vehicles, with specified exclusions for certain trucks, vans, motorhomes, emergency vehicles, and vehicles adapted for passengers with disabilities. The bill also requires the Department of Taxation to revise tax forms and creates special filing rules for fiscal-year taxpayers. The luxury vehicle surcharge portion is set to take effect later than the diaper exemption, on January 1, 2026, while the rest of the act would take effect July 1, 2025.
Impact
If enacted, HB1335 would amend chapters 237, 238, and 286 of the Hawaii Revised Statutes. It would remove diaper-related manufacturing, packaging, and sales activity from the general excise tax base, reducing tax liability for diaper producers and sellers in Hawaii. It would also increase the tax burden on purchasers and importers of luxury motor vehicles by adding a surcharge to existing general excise and use taxes, and it would require proof of payment of the use tax and any applicable surcharge before vehicle registration is issued for out-of-state vehicles subject to the tax.
Sentiment
No committee transcripts or recorded votes were provided, so there is no direct evidence of debate or formal support/opposition in the available materials. Based on the bill text alone, the measure appears to combine a consumer-oriented tax exemption for diapers with a revenue-raising surcharge on high-end vehicles, suggesting an attempt to pair relief for a basic necessity with increased taxation on luxury purchases. The absence of recorded committee action or votes means overall sentiment cannot be reliably characterized from the available record.
Contention
The most likely points of contention are the policy choice to exempt diapers from taxation and the decision to impose a new surcharge on luxury motor vehicles. Supporters of the diaper exemption would likely emphasize affordability for families and caregivers, while critics may focus on the revenue loss or the breadth of the exemption. The luxury vehicle surcharge may draw opposition from auto dealers, importers, and high-income purchasers, particularly because it applies to both new and used vehicles and is tied to existing tax obligations. The bill’s undefined MSRP threshold for “luxury motor vehicle” in the text also suggests a potential issue for later clarification or amendment.