HI SB3345

Conforms Hawaii estate tax exclusion amounts to the federal applicable exclusion amount under the Internal Revenue Code, removing the state's independent $5.49 million cap that has been in effect since 2018.

Establishes a new estate tax deduction for qualified family-owned business interests, allowing estates to deduct the full value of closely held businesses meeting specified criteria from the taxable estate.

Requires decedent to have material participation in the business for at least five of the eight years preceding death, business value must represent at least 35% of adjusted gross estate, and at least 51% of voting stock must be owned by members of two or more families related by blood, marriage, or adoption.

Applies to decedents dying or taxable transfers occurring after December 31, 2024, though the act takes effect on July 1, 2040.

Aims to reduce tax burden on family businesses and prevent forced business sales or closures due to estate tax obligations while increasing Department of Taxation efficiency through alignment with federal determinations.