SB 2362 Hawaii Senate · 2026 Regular Session

RELATING TO TAXATION.

SB 2362 would eliminate a specific tax deduction for real estate investment trusts (REITs), requiring them to pay taxes on dividends they distribute to shareholders instead of deducting those payments. This change directly affects REITs, which are companies that own and operate real estate properties and typically rely on this deduction to reduce taxable income. The key provision removes the "dividends paid deduction" from the tax code, meaning REITs would no longer be able to subtract their dividend payments from their taxable earnings. This policy change would increase the tax burden on REITs without altering their operational structure.

Issues: ✓ Budget & Taxes

Bill status passed 3 of 5 stages cleared

Introduction

Jan 2026

Committee Review

Mar 2026

Senate Passage

Mar 2026

House Passage

Governor

Introduced Jan 16, 2026 Last action Mar 10, 2026

Maddy AI version diff · 1 comparison

What changed between versions

SB2362 → SB2362_SD1 · 6 edits

MODERATE

This bill was significantly rewritten to replace an immediate tax change with a study requirement. Instead of immediately disallowing the dividends paid deduction for real estate investment trusts (REITs), the bill now mandates the Department of Business, Economic Development, and Tourism to study the economic impacts of such a change and report back to the legislature by early 2027. The bill also appropriates funds for this study and sets a future effective date of July 1, 2050, likely as a placeholder.

Scope change

The bill's scope shifted from an immediate tax policy change to a research and analysis project. It no longer imposes new tax rules on REITs but instead requires the state to evaluate whether those rules should be changed in the future.

REQUIREMENT

Removed the immediate disallowance of the dividends paid deduction for REITs, which previously would have increased taxes on these entities.

Added a requirement for the Department of Business, Economic Development, and Tourism to conduct a study on the economic impacts of eliminating the dividends paid deduction.

TIMELINE

Set a deadline for the study report to be submitted to the legislature no later than twenty days prior to the convening of the 2027 regular session.

Changed the effective date of the Act to July 1, 2050, indicating the study results will determine future action rather than immediate implementation.

FISCAL

Appropriated funds from general revenues to cover the cost of conducting the required study.

SCOPE

Replaced the legislative finding that REITs are underpaying taxes with a new finding that disallowing the deduction might negatively affect the state economy.

Floor votes

How they voted

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

Full legislative history

Actions timeline

Total actions

Key actions

Committee

Mar 10, 2026

Committee

Referred to ECD, FIN, referral sheet 16

lower

Mar 6, 2026

Introduced

Received from Senate (Sen. Com. No. 53) in amended form (SD 1).

lower

Mar 6, 2026

Upper · Passed

Report Adopted; Passed Third Reading. Ayes, 24; Aye(s) with reservations: none. Noes, 0 (none). Excused, 1 (Senator(s) Ihara). Transmitted to House.

upper

Mar 2, 2026

Upper · Passed

The committee(s) on WAM recommend(s) that the measure be PASSED, UNAMENDED. The votes in WAM were as follows: 13 Aye(s): Senator(s) Dela Cruz, Moriwaki, DeCoite, Elefante, Hashimoto, Inouye, Kanuha, Kidani, Kim, Lee, C., Richards, Wakai, Fevella; Aye(s) with reservations: none ; 0 No(es): none; and 0 Excused: none.

upper

Feb 27, 2026

Upper · Passed

The committee on WAM has rescheduled its decision making to 03-02-26 10:02AM; CR 211 & Videoconference.

upper

Feb 23, 2026

Upper · Passed

The committee(s) on WAM will hold a public decision making on 03-02-26 10:31AM; Conference Room 211 & Videoconference.

upper

Feb 20, 2026

Upper · Passed

Report adopted; Passed Second Reading, as amended (SD 1) and referred to WAM.

upper

Feb 20, 2026

Committee

Reported from EDT/CPN (Stand. Com. Rep. No. 2630) with recommendation of passage on Second Reading, as amended (SD 1) and referral to WAM.

upper

Feb 18, 2026

Upper · Passed

The committee(s) on CPN recommend(s) that the measure be PASSED, WITH AMENDMENTS. The votes in CPN were as follows: 4 Aye(s): Senator(s) Keohokalole, Fukunaga, Lamosao, Awa; Aye(s) with reservations: none ; 0 No(es): none; and 1 Excused: Senator(s) McKelvey.

upper

Feb 18, 2026

Upper · Passed

The committee(s) on EDT recommend(s) that the measure be PASSED, WITH AMENDMENTS. The votes in EDT were as follows: 5 Aye(s): Senator(s) DeCoite, Wakai, Fukunaga, Kim, Fevella; Aye(s) with reservations: none ; 0 No(es): none; and 0 Excused: none.

upper

Feb 12, 2026

Upper · Passed

The committee(s) on EDT/CPN has scheduled a public hearing on 02-18-26 10:05AM; Conference Room 229 & Videoconference.

upper

Jan 26, 2026

Committee

Referred to EDT/CPN, WAM.

upper

Jan 21, 2026

Introduced

Introduced and passed First Reading.

upper

Jan 16, 2026

Introduced

Pending Introduction.

upper

4 primary · 2 co-sponsors