SB 3196: DOTAX; DLIR; Refundable Tax Credit; Construction Workers; Labor Day

THE SENATE	S.B. NO.	3196
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII

A BILL FOR AN ACT

 

 

RELATING TO LABOR DAY.

 

 

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

 

     SECTION 1.  The legislature finds that Labor Day is a federal and state holiday dedicated to recognizing the workers who contribute to the strength, prosperity, and well-being of the nation and the State.  The construction industry plays a vital role in the economic and infrastructural development of the State.  The legislature recognizes that construction workers often perform physically demanding and hazardous work.  It is fitting that these workers be afforded a paid day of rest and recognition on Labor Day.

     However, the legislature also recognizes that imposing the cost of this paid holiday solely on private employers may create an undue financial burden.  Therefore, the legislature finds that it is in the State's best interest to facilitate funding to compensate construction workers for the Labor Day holiday.

     Accordingly, the purpose of this Act is to:

     (1)  Establish a Labor Day tax credit for employers of construction workers; and

     (2)  Require any employer of a construction worker to pay the construction worker at a rate that is twice the worker's regular rate of pay for any work performed on Labor Day.

     SECTION 2.  Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to part I to be appropriately designated and to read as follows:

     "§235-     Labor Day tax credit for employers of construction workers.  (a)  Notwithstanding any other law to the contrary, there shall be allowed to each taxpayer that employs at least one construction worker and is subject to the tax imposed by this chapter a refundable tax credit.  The tax credit shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed.

     (b)  The taxpayer shall be eligible for a separate tax credit for each construction worker employed by the taxpayer on the Labor Day holiday recognized by the State pursuant to section 8-1, regardless of whether the construction worker actually works on Labor Day.

     (c)  For each construction worker employed by the taxpayer, the amount of the tax credit shall be calculated based on the construction worker's average daily wage for an eight hour day for the four weeks preceding Labor Day.

     (d)  If the Labor Day tax credit allowed under this section exceeds the taxpayer's net income tax liability, the excess of credit over liability shall be refunded to the taxpayer; provided that no refunds or payment on account of the tax credit allowed by this section shall be made for amounts less than $1.

     (e)  All claims for tax credits under this section, including any amended claims, must be filed on or before the end of the twelfth month following the close of the taxable year for which the credits may be claimed.  Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

     (f)  The director of taxation shall coordinate with the department of labor and industrial relations to:

     (1)  Establish a process for employers to submit employees' job titles and wage information; and

     (2)  Prepare any forms that may be necessary for a taxpayer to claim a credit under this section.

     (g)  The director of taxation may require any taxpayer to furnish information to ascertain the validity of the claim for credit made under this section.

     (h)  No later than twenty days prior to each regular session, the director of taxation shall submit proposed legislation to the legislature for any appropriations necessary to subsidize the tax credit authorized by this section.

     (i)  The director of taxation may adopt rules, pursuant to chapter 91, necessary for the purposes of this section.

     (j)  For the purpose of this section, "construction worker" means any individual employed in the private construction industry, including:

     (1)  Ironworkers;

     (2)  Plumbers;

     (3)  Carpenters;

     (4)  Electricians;

     (5)  Mason workers;

     (6)  Roofers;

     (7)  Laborers;

     (8)  Operators of construction equipment;

     (9)  Sheet metal workers;

    (10)  Elevator workers;

    (11)  Any member of:

          (A)  The International Association of Heat and Frost Insulators and Allied Workers;

          (B)  International Union of Bricklayers and Allied Craftworkers;

          (C)  Hawaii Teamsters and Allied Workers;

          (D)  The International Brotherhood of Boilermakers;

          (E)  International Union of Painters and Allied Trades; or

          (F)  United Union of Roofers, Waterproofers and Allied Workers; and

    (12)  Any other individuals whose primary duties involve the on-site construction, alteration, or repair of buildings, structures, or infrastructure.

     "Construction worker" does not include any individual employed by the State or its political subdivisions."

     SECTION 3.  Chapter 388, Hawaii Revised Statutes, is amended by adding a new section to part I to be appropriately designated and to read as follows:

     "§388-     Labor Day; construction workers; double pay.  (a)  Any employer of a construction worker, as defined in section 235-   (j); shall pay the construction worker at a rate that is twice the worker's regular rate of pay for any work performed on the Labor Day holiday established pursuant to section 8-1.  The employer may also claim the tax credit established pursuant to section 235-   .

     (b)  The department of labor and industrial relations shall adopt rules, pursuant to chapter 91, necessary for the purposes of this section."

     SECTION 4.  There is appropriated out of the general revenues of the State of Hawaii the sum of $           or so much thereof as may be necessary for fiscal year 2026-2027 for to subsidize the refundable tax credit established pursuant to section 2 of this Act.

     The sum appropriated shall be expended by the department of taxation for the purposes of this Act.

     SECTION 5.  There is appropriated out of the general revenues of the State of Hawaii the sum of $           or so much thereof as may be necessary for fiscal year 2026-2027 to enforce statutory requirements pursuant to section 3 of this Act.

     The sum appropriated shall be expended by the department of labor and industrial relations for the purposes of this Act.

     SECTION 6.  This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

     SECTION 7.  New statutory material is underscored.

     SECTION 8.  This Act shall take effect on July 1, 2026; provided that section 2 shall apply to taxable years beginning after December 31, 2025.

 

INTRODUCED BY:	_____________________________

 

 

 

Report Title:

DOTAX; DLIR; Refundable Tax Credit; Construction Workers; Labor Day

 

Description:

Establishes a Labor Day tax credit for employers of construction workers.  Requires any employer of a construction worker to pay the construction worker at a rate that is twice the worker's regular rate of pay for any work performed on Labor Day.

 

 

 

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