HB 1850 Hawaii House · 2026 Regular Session

RELATING TO CAPITAL GAINS TAX.

Summary

Taxes capital gains tax for individuals, estates, and trusts as ordinary income, except for capital gains that are eligible for a county homeowner's exemption. Repeals the alternative capital gains tax for corporations. Applies to taxable years beginning after 12/31/2026. Effective 7/1/3000. (HD2)

Issues: ✓ Budget & Taxes

Bill status passed 3 of 5 stages cleared

Introduction

Jan 2026

Committee Review

Mar 2026

House Passage

Mar 2026

Senate Passage

Governor

Introduced Jan 23, 2026 Last action Mar 12, 2026

Maddy AI version diff · 2 comparisons

What changed between versions

HB1850_HD1 → HB1850_HD2 · 4 edits

MODERATE

This bill shifts the capital gains tax policy for individuals, estates, and trusts by exempting gains from the sale of a principal home that qualify for a county homeowner's exemption from the new 7.25% tax rate. Simultaneously, it repeals the previous alternative capital gains tax for corporations and replaces it with a new electronic filing requirement for specific high-liability taxpayers across various tax chapters.

Scope change

The scope of the capital gains tax was narrowed for individuals to exclude principal residence sales eligible for exemptions, while the scope for corporations changed from a specific tax rate to a general filing mandate.

ELIGIBILITY

Modified the capital gains tax rules for individuals to exclude gains from the sale of a principal home eligible for a county homeowner's exemption.

REQUIREMENT

Removed the alternative capital gains tax rate for corporations.

Added a requirement for electronic filing for employers with high withholding tax liability, income tax filers subject to specific sections, general excise tax filers over $4,000, transient accommodations tax operators over $4,000, and all taxpayers under chapters 236E, 239, 241, 243, 244D, 245, and 251.

DEFINITION

Updated the list of chapters subject to electronic filing requirements to include specific new chapters not previously listed.

Floor votes

How they voted

This bill passed the House by voice vote (no roll call recorded).

Full legislative history

Actions timeline

Total actions

Key actions

Committee

Mar 12, 2026

Committee

Referred to WAM.

upper

Mar 12, 2026

Introduced

Received from House (Hse. Com. No. 299).

upper

Mar 10, 2026

Lower · Passed

Passed Third Reading as amended in HD 2 with Representative(s) Reyes Oda, Souza voting aye with reservations; Representative(s) Alcos, Amato, Garcia, Gedeon, Kong, Matsumoto, Muraoka, Shimizu voting no (8) and Representative(s) Pierick excused (1). Transmitted to Senate.

lower

Mar 3, 2026

Lower · Passed

The committee on FIN recommend that the measure be PASSED, WITH AMENDMENTS. The votes were as follows: 15 Ayes: Representative(s) Todd, Takenouchi, Hartsfield, Hussey, Keohokapu-Lee Loy, Kitagawa, Kusch, Lee, M., Miyake, Morikawa, Perruso, Templo, Yamashita; Ayes with reservations: Representative(s) Gedeon, Reyes Oda; 1 Noes: Representative(s) Alcos; and Excused: none.

lower

Feb 17, 2026

Committee

Reported from ECD (Stand. Com. Rep. No. 294-26) as amended in HD 1, recommending passage on Second Reading and referral to FIN.

lower

Feb 4, 2026

Lower · Passed

The committee on ECD recommend that the measure be PASSED, WITH AMENDMENTS. The votes were as follows: 6 Ayes: Representative(s) Ilagan, Hussey, Holt, Tam, Templo, Yamashita; Ayes with reservations: none; 1 Noes: Representative(s) Gedeon; and Excused: none.

lower

Jan 26, 2026

Committee

Referred to ECD, FIN, referral sheet 2

lower

Jan 26, 2026

Introduced

Introduced and Pass First Reading.

lower

Jan 23, 2026

Introduced

Pending introduction.

lower

3 primary · 0 co-sponsors