HI HB1261

Establishes a tax credit equal to 10% of annual gross rental income for landlords who lease dwelling units at or below 80% of median market rent, with credits exceeding tax liability carried forward to future years.

Imposes an additional privilege tax on landlords charging at or above 120% of median market rent, calculated at 5% of gross rental income plus an additional 1% for every 10% above the 120% threshold.

Requires landlords claiming the below-market rent credit to submit proof of rental agreement, certification from Hawaii Housing Finance and Development Corporation that rent is at or below 80% of median market rent, and other documentation as required.

Directs Hawaii Housing Finance and Development Corporation to annually determine median market rent by geographic area using data from the U.S. Department of Housing and Urban Development and other reliable sources to administer both tax provisions.

Takes effect upon approval, with the below-market rent tax credit applying to taxable years beginning after December 31, 2024.