HI HB1273

Eliminates the dividends-paid deduction for real estate investment trusts (REITs) for Hawaii state income tax purposes, effective for taxable years beginning after December 31, 2025

Adds Internal Revenue Code Section 857(b)(2)(B) to the list of federal tax provisions that do not apply in Hawaii, specifically targeting the REIT dividends paid deduction

REITs operating before the change could deduct dividends paid to shareholders when calculating taxable income; after 2025, REITs will be taxed on their full income without this deduction

Maintains existing REIT registration and reporting requirements, including notification to the department within 15 days of operation, designation on tax returns, and submission of federal returns with state filings

REITs that fail to comply with reporting requirements continue to face a $50 per day penalty