Hawai'i Tax Fairness Coalition Urges Progressive Tax Reforms at State Capitol

Six bills targeting wealthy investors, real estate trusts, and high-value property transactions have cleared the halfway mark of Hawai'i's 2026 legislative session, giving the Hawai'i Tax Fairness Coalition its strongest foothold in years as the May 8 deadline approaches.

About 50 supporters gathered Thursday at the State Capitol, moving their demonstration indoors to a conference room after rain forced the group away from their planned outdoor location. The coalition, formed in 2017 and comprising several nonprofit community organizations, pressed lawmakers on four fronts: changes to Hawai'i's income tax, capital gains tax, real estate conveyance tax, and a new tax on income distributed by real estate investment trusts.

Tanya Yamanaka of the Chamber of Sustainable Commerce kept her message blunt on the REIT question. "The status quo has to go," she said. "It's time to tax the REITs." REITs currently pay no income tax on profits distributed to shareholders, with those shareholders, many living outside Hawai'i, bearing the tax liability instead. Coalition bill SB 2362, originally written to end that deduction outright, was amended in the Senate to study the change rather than implement it and now awaits a House hearing. Similar bills have been introduced at the Legislature for more than a decade without passing.

On housing, 'Alihilani Katoa, a community organizer with coalition member Our Hawaii, urged passage of SB 2362 and HB 2049, two bills that would sharply raise conveyance tax rates on higher-value property sales and direct a portion of that new revenue toward affordable housing development. "Housing costs are skyrocketing, and the gap between the ultra wealthy and working people keeps growing, especially for Native Hawaiian communities and working families who are being priced out of our ancestral lands," Katoa said. "If investors and corporations are profiting off of Hawaii's housing market, they should be giving back to communities they're benefiting from."

The income tax fight centers on a 2024 law that reduces Hawai'i income taxes in eight annual steps through 2031. Gov. Josh Green introduced HB 2306 and SB 3125 to repeal the final five years of that relief, citing anticipated losses in federal funding. Lawmakers have since drafted revised versions that would roll back only part of the remaining relief while adding higher tax rates specifically for upper-income households.

Will White, executive director of the Hawai'i Appleseed Center for Law & Economic Justice, framed the coalition's broader argument in direct terms. "When we talk about a fairer tax code, what we really mean is that we want to create a system where everyone pays their fair share," White said. "We need to make sure that the wealthiest among us are paying what they owe and contributing to our collective future."

The coalition also points to Hawai'i's capital gains tax as a structural inequity: the state is one of only nine in the country that taxes profits from selling stocks and other investment assets at a lower rate than ordinary wage income. Coalition members argue the revenue raised through all four reform areas should fund housing, education, health care, and climate resilience programs that have faced persistent shortfalls.

With the session closing May 8, the six bills that have passed the midpoint face continued amendment pressure and committee votes before any of the coalition's proposals could reach the governor's desk.