HI SB2725

Reduces the pass-through entity level tax rate from eleven percent (the highest individual income tax rate) to nine percent on electing pass-through entities' distributive shares and guaranteed payments of Hawaii taxable income.

Excludes corporations, partnerships, S corporations, tax-exempt entities, and other department-designated taxpayers from the pass-through entity tax.

Allows members to carry forward excess tax credits to subsequent tax years instead of losing them when credits exceed tax liability in the current year.

Permits net losses at the entity level to be carried forward to subsequent tax years while the entity maintains its election to be subject to the tax.

Applies to taxable years beginning after December 31, 2023, with an effective date of July 1, 3000.