Hawaii House Bill HB889

Hawaii 2025 Regular Session

• Introduced: 1/23/25
• Refer: 1/23/25

Caption

Relating To The Transient Accommodations Tax.

Summary

HB889 would create a refundable transient accommodations tax credit for Hawaii individual income taxpayers equal to the amount of transient accommodations tax (TAT) they paid on accommodations within the state during the taxable year. In practical terms, a resident who pays TAT on a hotel, vacation rental, or similar stay in Hawaii could claim that amount as a credit against state income tax, and if the credit exceeds the taxpayer’s income tax liability, the excess would be refunded. Taxpayers with no income tax liability could still receive the credit as a payment, subject to a minimum refund threshold of more than $1. The bill amends chapter 235, Hawaii Revised Statutes, by adding a new section establishing the credit and directing the Department of Taxation to create forms, verify claims, and adopt rules. It also applies existing assessment and refund procedures to the new credit and requires claims, including amended claims, to be filed within 12 months after the end of the taxable year. The measure would apply to taxable years beginning after December 31, 2024.

Impact

HB889 would add a new refundable individual income tax credit to Hawaii tax law and effectively offset TAT paid by state residents who vacation in Hawaii. The bill does not repeal the transient accommodations tax itself; instead, it shifts part of the tax burden back to resident taxpayers through the income tax system. If enacted, it would require administrative implementation by the Department of Taxation and could reduce net state revenue from resident-paid TAT while increasing refund activity under chapter 235.

Sentiment

The bill text reflects a favorable view toward residents who pay transient accommodations tax while vacationing in-state, framing the measure as relief from what the sponsor describes as double taxation. No committee transcripts or vote records were provided, so there is no recorded legislative debate or voting history to indicate broader support or opposition. Based on the bill’s purpose statement alone, the sentiment appears supportive of taxpayer relief, especially for Hawaii residents.

Contention

The main policy tension is between providing tax relief to resident travelers and preserving revenue from the transient accommodations tax, which was originally intended to help counties offset visitor-related infrastructure and service costs. Supporters would likely emphasize fairness and relief from double taxation for residents, while opponents may argue that the credit could undermine county revenue or complicate administration by requiring proof of TAT paid and refund processing. Because no hearing testimony or votes are available, the specific positions of legislators, counties, or the tourism industry are not documented in the provided materials.