HI HB1850

Capital gains for individuals, estates, and trusts would be taxed as ordinary income rather than at the current preferential 7.25% rate, with one exception for principal home sales.

Net capital gains from the sale of a principal home that qualifies for a county homeowner's exemption would continue to be taxed at the reduced 7.25% rate.

Repeals Section 235-71.5, which provides an alternative lower capital gains tax rate (3.08% to 4%) for corporations, regulated investment companies, and real estate investment trusts.

Applies to taxable years beginning after December 31, 2026, with a stated effective date of July 1, 3000 (appears to be a placeholder date).