HB234 Summary

• Disallows the dividends paid deduction for real estate investment trusts (REITs) for taxable years beginning after December 31, 2023 through December 31, 2026.

• Requires REITs doing business in Hawaii to pay state income tax on all taxable income without the federal deduction for dividends distributed to shareholders.

• Directs 50% of tax revenues collected from the REIT dividend deduction disallowance to the dwelling unit revolving fund and 50% to the rental housing revolving fund.

• Applies only temporarily, with the bill repealing on December 31, 2026, after which prior REIT tax treatment is restored.

• Requires REITs to notify the department of operations in Hawaii, properly designate REIT status on tax returns, and submit federal tax returns with state filings.