HI SB1035

Exempts medical and dental services from Hawaii's general excise tax when provided by hospitals, clinics, health care facilities, pharmacies, or medical/dental practitioners and paid for through Medicare, Medicaid, or TRICARE programs.

Defines covered medical or dental practitioners as physicians, osteopathic physicians, dentists, advanced practice registered nurses, and pharmacists licensed under Hawaii law.

Allows healthcare services to be performed by physician's assistants, nurses, or other employees under a practitioner's direction and still qualify for the exemption.

Addresses an existing incongruity where nonprofit hospital services were already exempt from general excise tax while individual and group medical practices were fully taxable, creating unequal treatment of healthcare providers.

Effective date is January 1, 2026.