HB1085 amends Hawaii’s tobacco tax law to raise the excise tax on cigarettes and little cigars beginning January 1, 2026. The bill replaces the current 16-cent-per-unit rate with a new rate to be filled in by the legislature, and it keeps in place the existing percentage-based taxes on other tobacco products, large cigars, electronic smoking devices, and e-liquids. It also removes obsolete historical rate language from the statute.
The bill further revises how tobacco tax revenues are distributed. Beginning in fiscal year 2025-2026, it directs specified portions of tobacco tax collections to the Hawaii cancer research special fund, trauma system special fund, community health centers special fund, and emergency medical services special fund, with the remaining amounts going to the general fund. It also expands the revenue-disposition framework so that the earmarking applies to all tobacco product taxes, not just cigarette taxes, and requires the department to provide an annual accounting to the legislature.
Impact
HB1085 would amend sections 245-3 and 245-15 of the Hawaii Revised Statutes, changing the cigarette and little cigar excise tax structure and updating the allocation of tobacco tax revenues among state special funds and the general fund. The bill affects wholesalers and dealers of cigarettes, little cigars, tobacco products, electronic smoking devices, and e-liquids by increasing tax liability and by broadening the scope of revenue earmarks. It also updates statutory text by repealing outdated historical tax-rate provisions and adding annual reporting requirements for the Department of Taxation.
Sentiment
The available legislative history suggests generally favorable treatment of the bill, with the House reporting it out of committee and referring it to Finance as amended in HD 2 without any recorded opposition or reservations. No committee transcript is provided, but the absence of dissent in the recorded action indicates little visible procedural resistance at that stage. The bill’s framing as a public-health and revenue measure is consistent with support from committees concerned with health, finance, and state revenue.
Contention
The main policy issues likely involve the size and timing of the cigarette and little cigar tax increase, the use of tobacco-tax revenue for dedicated special funds, and the expansion of earmarking to all tobacco products. Potentially affected parties include tobacco wholesalers and dealers, consumers of tobacco and nicotine products, and the state funds that receive the revenue. The bill text also leaves key tax-rate and distribution percentages blank in the version provided, which suggests those figures were still being negotiated or finalized in the amendment process.