Hawaii House Bill HB889

Hawaii 2026 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 resident taxpayers who file an individual income tax return. The credit would equal the full amount of transient accommodations taxes paid within the state during the taxable year, effectively reimbursing residents for TAT paid on in-state lodging. The bill states that this is intended to address what it describes as a double-taxation burden on residents who vacation in Hawaii while already contributing to state and county revenues through other taxes. The measure amends chapter 235, Hawaii Revised Statutes, by adding a new income tax credit section. It authorizes the Department of Taxation to create forms, require proof of eligibility, and adopt administrative rules. The credit would be refundable, meaning taxpayers could receive a payment if the credit exceeds their income tax liability, including for taxpayers with no income tax liability, subject to a minimum refund threshold of less than $1 not being paid. Claims would have to be filed by the end of the twelfth month after the taxable year, and the bill would apply to taxable years beginning after December 31, 2024.

Impact

If enacted, HB889 would reduce state income tax revenue by allowing resident taxpayers to offset transient accommodations taxes paid on Hawaii lodging with a refundable credit. It would add a new tax credit provision to chapter 235 and require the Department of Taxation to administer the credit, verify claims, and issue refunds where appropriate. The bill would not change the transient accommodations tax itself, but it would shift the effective burden for resident travelers by reimbursing them through the income tax system.

Sentiment

Based on the bill text and the absence of recorded committee testimony or votes, the available record suggests a policy proposal framed in consumer-relief terms rather than one with documented public debate. The bill’s findings present the measure as a fairness correction for Hawaii residents who pay the transient accommodations tax when vacationing in-state. No committee transcripts or vote history were provided, so there is no evidence in the record of formal support or opposition beyond the bill’s stated rationale.

Contention

The main point of contention inherent in the bill is fiscal and policy-based: supporters would likely view the credit as relief from double taxation for residents, while opponents may argue it undermines a tax designed to help counties fund visitor-related infrastructure and services. Another likely issue is administrative complexity, since the Department of Taxation would need to verify residency, lodging tax payments, and timely claims. The bill also raises equity questions because it would benefit resident taxpayers who travel within the state, while leaving the transient accommodations tax in place for nonresidents and for residents who do not file or cannot substantiate claims.