HB269

HOUSE OF REPRESENTATIVES	H.B. NO.	269
THIRTY-THIRD LEGISLATURE, 2025
STATE OF HAWAII

A BILL FOR AN ACT

relating to taxation.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. Section 235-51, Hawaii Revised Statutes, is amended by amending subsection (f) to read as follows:

"(f) If a taxpayer has a net capital gain for any taxable year to which this subsection applies, then:

(1) For a resident taxpayer, the tax imposed by this section shall not exceed the sum of:

[~~(1)~~] (A) The tax computed at the rates and in the same manner as if this subsection had not been enacted on the greater of:

[~~(A)~~] (i) The taxable income reduced by the amount of net capital gain, or

[~~(B)~~] (ii) The amount of taxable income taxed at a rate below 7.25 per cent, plus

[~~(2)~~] (B) A tax of 7.25 per cent of the amount of taxable income in excess of the amount determined under [~~paragraph (1).~~] subparagraph (A);

(2) For a nonresident taxpayer, the tax imposed by this section shall not exceed the sum of:

(A) The tax computed at the rates and in the same manner as if this subsection had not been enacted on the greater of:

(i) The taxable income reduced by the amount of net capital gain, or

(ii) The amount of taxable income taxed at a rate below 29 per cent, plus

(B) A tax of 29 per cent of the amount of taxable income in excess of the amount determined under subparagraph (A); and

(3) For a foreign taxpayer, the tax imposed by this section shall not exceed the sum of:

(A) The tax computed at the rates and in the same manner as if this subsection had not been enacted on the greater of:

(i) The taxable income reduced by the amount of net capital gain, or

(ii) The amount of taxable income taxed at a rate below 150 per cent, plus

(B) A tax of 150 per cent of the amount of taxable income in excess of the amount determined under subparagraph (A).

This subsection shall apply to individuals, estates, and trusts for taxable years beginning after December 31, 1986."

SECTION 2. Section 235-71.5, Hawaii Revised Statutes, is amended to read as follows:

"§235-71.5 Alternative tax for corporations. (a) Section 1201 (with respect to alternative tax for corporations) of the Internal Revenue Code of 1986, as amended as of December 31, 1996, shall be operative for the purposes of this chapter and shall be applied as set forth in this section.

(b) If for any taxable year a resident corporation, regulated investment company, or real estate investment trust has a net capital gain, then, in lieu of the tax imposed by section 235-71, there is hereby imposed a tax (if such tax is less than the tax imposed under section 235-71) which shall consist of the sum of:

(1) A tax computed on the taxable income reduced by the amount of the net capital gain, at the rates and in the manner as if this section had not been enacted, plus

(2) The sum of:

(A) 3.08 per cent of the lesser of:

(i) The net capital gain determined by including only the gain or loss which is properly taken into account for the portion of the taxable year before April 1, 1987 (i.e., the amount in paragraph (1)), or

(ii) The net capital gain for the taxable year, plus

(B) 4 per cent of the excess (if any) of:

(i) The net capital gain for the taxable year, over

(ii) The amount of the net capital gain taken into account under subparagraph (A).

(c) If for any taxable year a nonresident corporation, regulated investment company, or real estate investment trust has a net capital gain, then, in lieu of the tax imposed by section 235-71, there is hereby imposed a tax (if the tax is less than the tax imposed under section 235-71) that shall consist of the sum of:

(1) A tax computed on the taxable income reduced by the amount of the net capital gain, at the rates and in the manner as if this section had not been enacted, plus

(2) The sum of:

(A) 3.08 per cent of the lesser of:

(i) The net capital gain determined by including only the gain or loss that is properly taken into account for the portion of the taxable year before April 1, 1987 (i.e., the amount in paragraph (1)), or

(ii) The net capital gain for the taxable year, plus

(B) 16 per cent of the excess (if any) of:

(i) The net capital gain for the taxable year, over

(ii) The amount of the net capital gain taken into account under subparagraph (A).

(d) If for any taxable year a foreign corporation, regulated investment company, or real estate investment trust has a net capital gain, then, in lieu of the tax imposed by section 235-71, there is hereby imposed a tax (if the tax is less than the tax imposed under section 235-71) that shall consist of the sum of:

(1) A tax computed on the taxable income reduced by the amount of the net capital gain, at the rates and in the manner as if this section had not been enacted, plus

(2) The sum of:

(A) 3.08 per cent of the lesser of:

(ii) The net capital gain for the taxable year, plus

(B) 150 per cent of the excess (if any) of:

(i) The net capital gain for the taxable year, over

(ii) The amount of the net capital gain taken into account under subparagraph (A)."

SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 4. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2025.

INTRODUCED BY:	_____________________________

Report Title:

Capital Gains Tax; Income Tax; Nonresident; Foreign Taxpayers

Description:

Increases the capital gains tax for nonresident and foreign taxpayers. Increases the alternative capital gains tax for corporations for nonresident and foreign corporations.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

HB 269: RELATING TO TAXATION.

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