HB2429 establishes a formal tax expenditure evaluation process for Hawaii. The bill requires the Department of Business, Economic Development, and Tourism (DBEDT), working with the Department of Taxation, to study the effectiveness of tax expenditures, prepare summary descriptive statistics, and submit annual reports to the Legislature by September 1 each year. It also directs the departments to develop the necessary tax return schedules and forms to collect information needed to evaluate tax credits and exemptions.
The measure is aimed at improving oversight of income tax credits and general excise and use tax exemptions, which the Legislature describes as a form of public spending that should be reviewed like other budget items. The bill’s findings emphasize data-driven policymaking, accountability, fair competition, and the possibility of continuing, modifying, phasing out, or replacing tax incentives based on their actual performance. It takes effect July 1, 2026, and applies to taxable years beginning after December 31, 2026.
Impact
HB2429 amends Hawaii law by adding a new tax expenditure evaluation section to chapter 201 and by revising confidentiality provisions in sections 235-116 and 237-34 to allow DBEDT staff conducting tax expenditure evaluations to access otherwise confidential tax return information. In practical terms, the bill creates a recurring reporting and data-collection framework for evaluating tax incentives and expands authorized access to tax return data for a limited governmental purpose. It affects the Department of Business, Economic Development, and Tourism, the Department of Taxation, taxpayers claiming credits or exemptions, and the handling of confidential tax return information.
Sentiment
The bill appears to have been received positively and with little opposition. It passed the Senate Economic Development and Technology Committee, Senate Ways and Means, and both conference votes unanimously, and it was enacted as Act 160. The voting history suggests broad agreement that tax expenditures should be reviewed more systematically and that the state needs better data to assess their effectiveness.
Contention
There is little evidence of major controversy in the available record, but the main policy tension inherent in the bill is between stronger oversight and taxpayer confidentiality. The bill addresses that tension by expressly authorizing DBEDT staff to access certain return information for evaluation purposes while keeping the information otherwise confidential and subject to felony penalties for unauthorized disclosure. Another potential point of concern is the administrative burden of creating new reporting schedules and forms, though no recorded committee opposition or debate is available in the provided materials.