HI SB2784

Applies the retail general excise tax rate (4%) instead of the wholesale rate (0.5%) to motor vehicle purchases and imports by rental car companies, effective January 1, 2027

Removes rental car fleet vehicles from the wholesale tax classification, which currently allows rental companies to pay lower rates on vehicles purchased for resale or leasing purposes

Appropriates unspecified funds for fiscal year 2026-2027 to establish one full-time tax inspector position within the Department of Taxation to identify and collect general excise tax from federal contractors working in Hawaii

Responds to projected state revenue shortfalls, including over $7 billion in lost revenue from 2024 income tax cuts over six fiscal years and a mild recession forecast for 2026

Addresses rental car industry practices where companies use wholesale tax rates on fleet purchases and then utilize depreciation to reduce taxable income on what the legislature characterizes as short-term inventory rather than value-generating assets