HI SB3149

Updates Hawaii's conformity to the federal Internal Revenue Code from December 31, 2024, to December 31, 2025, for purposes of determining gross income, adjusted gross income, and taxable income under state tax law.

Adds several new federal IRC provisions to the list of sections that are inoperative for Hawaii tax purposes, including Section 139K (scholarships for elementary/secondary education), Section 139L (interest on rural/agricultural property loans), Section 174A (domestic research expenditures), Section 225 (qualified overtime compensation), and Section 1062 (gain from farmland sales to qualified farmers).

Phases in significant increases to Hawaii's standard deduction amounts over multiple years: for joint filers, rising from $8,800 (tax years after 2023) to $16,000 (after 2025), $18,000 (after 2027), $20,000 (after 2029), and $24,000 (after 2030), with proportional increases for other filing statuses.

Removes the previously operative Section 67 (2-percent floor on miscellaneous itemized deductions) and streamlines the overall limitation on itemized deductions under Section 68 by eliminating references to expired federal suspension provisions.

Makes several additional technical conformity changes, including making Section 163(h)(4) (qualified passenger vehicle loan interest) inoperative for Hawaii purposes and updating provisions related to fringe benefits under Section 132.