SB2746 would create a new Hawaii state individual income tax credit for residents who incur out-of-pocket medical travel expenses that are not covered by insurance. The bill is aimed at patients who must travel to another island or outside the state because medically necessary care is not reasonably available in Hawaii or in the patient’s county of residence. It defines qualified expenses to include airfare, lodging, ground transportation, medically required incidentals, and parking, and allows one accompanying caregiver’s travel costs to be included.
The credit is income-tiered. Taxpayers with household income at or below 300% of area median income could claim 100% of qualified expenses up to specified caps, while those between 300% and 500% of area median income could claim 50% of qualified expenses up to the same caps. Households above 500% of area median income would not qualify. The bill also requires medical necessity certification, documentation submission to the Department of Business, Economic Development, and Tourism, and annual reporting to the Legislature by the Department of Taxation in consultation with DBEDT. The credit would apply to taxable years beginning after December 31, 2025, and would sunset on January 1, 2031.
Impact
The bill would add a new section to chapter 235, Hawaii Revised Statutes, creating a refundable-style carryforward income tax credit structure for medical travel expenses, while also assigning administrative and verification duties to DBEDT and the Department of Taxation. It would affect resident individual income tax filings by allowing eligible taxpayers to reduce tax liability for qualifying travel costs, subject to certification, documentation, and filing deadlines. It also establishes reporting requirements that would generate data on usage, fiscal impact, and access-to-care outcomes before the program expires in 2031.
Sentiment
The bill’s stated purpose and structure suggest a generally supportive policy approach focused on helping residents access necessary care and reducing financial hardship, especially for rural, low-income, senior, and chronically ill populations. However, the committee history shows the measure was deferred by the Senate Committee on Economic Development and Technology (EDT), indicating that while the concept may have policy appeal, it did not advance at that stage. No vote record or transcript is available here to show broader support or opposition.
Contention
Likely points of contention include the fiscal cost of the credit, the administrative burden of certifying claims, and the potential for disputes over what qualifies as medically necessary travel or unavailable care. The income thresholds and caps may also be debated, particularly whether the benefit is targeted appropriately and whether households above 500% of area median income should be excluded entirely. Another possible issue is the involvement of DBEDT in certifying tax claims and the bill’s requirement for detailed reporting on claimants’ demographics and care locations, which could raise privacy or implementation concerns.