Hawaii House Bill HB1611

Hawaii 2026 Regular Session

• Introduced: 1/21/26
• Refer: 1/26/26
• Report Pass: 2/12/26
• Refer: 2/12/26

Caption

RELATING TO TAXATION.

Summary

HB1611 would phase down Hawaii’s general excise tax (GET) on groceries and nonprescription drugs over seven years, starting January 1, 2027, and ending with a full exemption on January 1, 2034. The bill sets a tiered rate schedule for retail sales of those items, beginning at 3.5 percent in 2027 and decreasing by 0.5 percentage points each year until the tax is eliminated for those sales. It also defines “groceries,” “nonprescription drug,” and “wholesale transaction” for purposes of the exemption. In addition to the retail rate reduction, the bill would bar counties from imposing their GET surcharge on groceries, nonprescription drugs, and wholesale transactions beginning January 1, 2027. It would also exempt wholesale sales of groceries and nonprescription drugs from the GET beginning January 1, 2028. The measure is framed as a cost-of-living and food-security bill, with findings emphasizing Hawaii’s high grocery costs, food insecurity, and the regressive effect of taxing necessities.

Impact

The bill would amend Chapter 237 of the Hawaii Revised Statutes, which governs the general excise tax, by creating a new reduced-rate category for groceries and nonprescription drugs, revising the county surcharge rules in section 237-8.6, and modifying section 237-13 to create a wholesale exemption for those items. It would also add statutory definitions that clarify which food items qualify, excluding alcohol, tobacco, and hot prepared foods. If enacted, the measure would reduce state and county tax revenue from grocery and drug sales while lowering the tax burden on consumers and wholesalers in those markets.

Sentiment

The bill’s stated purpose and findings reflect strong support for reducing taxes on basic necessities, especially for low- and moderate-income households. The legislative findings emphasize food insecurity, the regressive nature of food taxes, and the limited practical value of existing tax credits, suggesting a policy rationale centered on affordability and equity. However, the committee history provided shows the measure was deferred by the House Judiciary and Hawaiian Affairs committee, indicating at least some institutional hesitation or unresolved concerns despite the bill’s consumer-relief framing.

Contention

The main points of contention are likely fiscal and administrative rather than definitional: the bill would reduce GET collections for both the state and counties, and it would remove county surcharge authority over these items. That creates potential concern for revenue replacement, especially because the GET is a broad-based tax that supports general government funding. Another likely issue is implementation complexity, including how to distinguish groceries from prepared foods and how to administer the phased schedule and wholesale exemptions across retailers, wholesalers, and counties. The committee deferral suggests these revenue and implementation questions may have outweighed the bill’s consumer-relief arguments at this stage.