HI SB2881

Establishes voluntary withholding of Hawaii state income tax from distributions reported on IRS Form 1099-R, including individual retirement arrangements and tax-deferred annuities

Taxpayers may elect to have entities making distributions withhold state income tax at applicable rates and remit payments to the Department of Taxation

Withheld amounts are credited against the taxpayer's income tax liability, with any excess refunded

Requires the Director of Taxation to adopt rules under Chapter 91 and prescribe necessary forms for implementing the voluntary withholding election

Applies to taxable years beginning after December 31, 2026