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HB 1850

RELATING TO CAPITAL GAINS TAX.

2026 Regular Session Introduced by Greggor Ilagan and 2 co-sponsors

Hawaii bill HB 1850 establishes a capital gains tax to generate state revenue from investment and asset sale profits, advancing from committee with amendments in February 2026.

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.
#capitalgainstax #increase
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Bill Summary · HB 1850

Legislative bill overview

HB 1850 proposes to establish a capital gains tax in Hawaii, a state that currently does not have one. The bill was introduced by Representatives Takayama, Sayama, and Ilagan, and recently advanced out of the Economic Development Committee with amendments on February 4, 2026.

Why is this important

A capital gains tax would create a new revenue stream for the state by taxing profits from the sale of investments, real estate, and other assets. This could significantly impact Hawaii's budget capacity for education, infrastructure, and services, while also affecting investment decisions and wealth accumulation patterns for residents and businesses operating in the state.

Potential points of contention

  • Economic competitiveness: Critics may argue that a capital gains tax could drive investment and high-net-worth individuals away from Hawaii, or discourage business expansion in the state
  • Regressivity concerns: Depending on the tax rate and structure, the tax could disproportionately affect middle-class retirees and those with investment portfolios while potentially being avoided by those with sophisticated tax planning
  • Definition and scope ambiguity: Questions likely exist about what constitutes taxable gains, exemptions (primary residence, retirement accounts, etc.), and whether the tax applies to Hawaii residents' out-of-state investments or non-residents' Hawaii property sales

Compiled from official sources — confirm details with the bill’s official record.

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