HB2030

SECTION 1. The legislature finds that Hawaii's dependency on imported fossil fuels for ground transportation is a crisis of affordability and economic security. According to statistics from the department of business, economic development, and tourism, Hawaii residents consume four hundred fifty million gallons of imported gasoline and diesel fuel for their cars and trucks every year, spending more than $2,300,000,000 in 2024 alone.

The legislature further finds that rural communities and lower-income families are particularly overburdened by the high and rising costs of fossil fuel vehicles. A recent study revealed that rural and lower-income households are disproportionately represented among those that consume and spend the most on gasoline. Households having the highest reliance on gasoline spend an average of $13,700 on their gasoline bills per year, accounting for fourteen per cent of their incomes. Switching to electric vehicles could save these households $5,300 annually, a thirty-eight per cent savings.

The legislature also finds that Hawaii's dependency on fossil fuels for ground transportation is a climate injustice. Rural, underserved, and disadvantaged communities are disproportionately burdened and threatened by the harms and costs of climate change, including sea-level rise, heatwaves, wildfires, floods, droughts, extreme weather events, and ecological collapse. Based on publicly reported data, gasoline consumption by light-duty vehicles alone accounts for almost a quarter of the State's climate pollution. However, current technology can eliminate this pollution while saving money for local families. If the highest seven per cent of gasoline users in Hawaii were to convert to electric vehicles, they would save more than $220,000,000 per year on fuel. They would also avoid more than 680,000 metric tons of carbon emissions, amounting to almost four per cent of Hawaii's total emissions and more than the entire commercial sector's emissions. Market trends data show that prices of zero-emission electric vehicles continue to decline, and that electric vehicles are on average thousands of dollars cheaper than their fossil-fueled counterparts in the total cost of ownership, including fuel and maintenance costs over the vehicles' lifetimes. For low- to moderate-income households, however, the upfront investment for a new vehicle remains a significant barrier to accessing these savings opportunities. The legislature finds that financial support for investments in new and used electric vehicles is necessary to expand savings opportunities for low- and moderate-income families and ensure that no one will be left behind in the transition to a clean and climate-safe transportation system.

The legislature additionally finds that in 2021, Hawaii became the first state in the nation to declare a "climate emergency" and passed Senate Concurrent Resolution No. 44, calling for a statewide commitment and mobilization of resources, including "[f]acilitation of investments in beneficial projects and infrastructure such as zero emissions energy [and] electric vehicles." Yet, unlike many other states, Hawaii currently has no programs in place to support consumer adoption of electric vehicles, particularly for low- and moderate-income consumers. Now that the federal government has abandoned the federal electric vehicle tax credits, the legislature finds that the State must push forward with programs to reduce Hawaii's dependence on imported fossil fuels and mitigate the continual financial drain from the local economy and oppressive burdens on everyday household budgets.

The legislature believes that a clean vehicle rebate program offers a key mechanism to support the shift to more affordable transportation options, which can reduce the cost of living for Hawaii families. A clean vehicle rebate program can be supported by revenues from a fee on purchases of new fossil fuel vehicles. The "2025 Energy Security and Waste Reduction Plan" that the Hawaii department of transportation developed under the landmark settlement agreement in the Navahine case recommends a rebate program as part of its multifaceted approach to support clean vehicle choices, pollution reductions, and transportation savings.

The legislature further finds that the benefits of a clean vehicle rebate program include:

(1) Promoting affordability and equity by expanding access to clean vehicles and unlocking opportunities to save on gas bills and reduce harmful pollution from transportation. Studies have shown that a rebate program can especially help reduce the cost of living for lower-income households, who also currently bear the brunt of the economic and environmental burdens of the legacy transportation system;

(2) Enabling a market-based solution by providing the right market signals for consumers to shift to cleaner and more affordable vehicles, and for manufacturers to offer consumers more clean vehicle choices; and

(3) Serving as a revenue-neutral mechanism that does not require state government revenues and taxpayer support through funding appropriations or tax credits. Instead, it redistributes revenues within the consumer market and returns funds back to the industry to support clean vehicles. It offers a flexible model that can complement a comprehensive suite of incentives and can be adjusted over time to optimize its scope and impact.

Accordingly, the purpose of this Act is to establish a market-based clean vehicle rebate program that will reduce the cost of living and cost of transportation, particularly for lower-income households. The overall intent and approach is for the program to be self-financing and revenue-neutral so as not to increase expenditures from or reduce revenues into the general fund.

SECTION 2. Chapter 196, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:

"§196-A Clean vehicle rebate program; third-party administrator. (a) The department of transportation shall administer a rebate program that incentivizes the purchase or lease of new and used clean vehicles, as provided in this section. The department of transportation may contract with a third-party administrator pursuant to subsection (i) to operate and manage the rebate program.

(b) Rebates shall be distributed for purchases or leases of eligible clean vehicles as follows:

(1) Each eligible purchase or lease of a new zero-emission vehicle shall receive a rebate of $5,000;

(2) Each eligible purchase or lease of a new plug-in hybrid electric vehicle shall receive a rebate of $2,500;

(3) Each eligible purchase or lease of a used zero‑emission vehicle shall receive a rebate of $2,000; and

(4) Each eligible purchase or lease of a used plug-in hybrid electric vehicle shall receive a rebate of $1,000.

The rebate shall be applied at the point of sale by participating dealers.

(c) In determining eligibility for the clean vehicle rebate program, the department of transportation shall also apply the following:

(1) Rebates shall be offered to applicants with household incomes of up to two hundred per cent of the area median income as determined by the United States Department of Housing and Urban Development;

(2) Rebates for new vehicles shall be offered for vehicles that have a manufacturer's suggested retail price of not more than $60,000;

(3) Rebates for used vehicles shall be offered for vehicles that:

(A) Are purchased from a dealer;

(B) Have a sale price of not less than $3,000 and not more than $25,000 before the application of the rebate but after any trade-in value;

(D) Have not previously received a rebate for a used vehicle purchase or lease under this section; and

(E) Meet minimum reliability metrics developed by the department of transportation in implementing the clean vehicle rebate program;

Upon request by a dealer, the department of transportation shall disclose whether a vehicle has previously received a rebate for a used vehicle purchase or lease under this section.

(4) Rebates for leased vehicles shall be offered for vehicles that:

(A) Are leased by dealers or retailers to consumers; and

(B) Have not previously received a rebate for a vehicle lease under this section;

provided that the dealer or retailer shall clearly show the calculated lease price before and after the application of the rebate; and

(5) Rebates for plug-in hybrid vehicles shall be offered for vehicles that have an electric range of not less than forty miles.

(d) An additional rebate of $1,000, in addition to the rebate for eligible clean vehicle types in subsection (b), shall be offered to purchasers and lessees in low- and moderate-income households. The department shall provide outreach to low- and moderate-income households and communities to increase consumer awareness of the rebate program.

(e) The program administrator may provide guidelines and conditions in addition to those specified in this section and shall have the flexibility to make programmatic adjustments due to market changes, technological advancements, and levels of participation to ensure the prudent use of program funds and to effectively manage the program budget.

(f) This section shall apply to clean vehicles purchased from dealers after the date that the department of transportation initiates the clean vehicle rebate program. The department of transportation shall develop a plan by December 31, 2026, to initiate and implement the clean vehicle rebate program using the proceeds from the clean vehicle special fund established under section 196-B. To the extent possible, the department of transportation shall seek to ensure continuity and avoid interruption in the availability of rebates under the program.

(g) The department of transportation shall:

(1) Prepare any forms that may be necessary for an applicant to claim a rebate pursuant to this section; and

(2) Require each applicant to furnish reasonable information to ascertain the validity of the claim, including documentation necessary to demonstrate the legitimate purchase of an eligible clean vehicle under subsection (b), compliance with the applicable guidelines and conditions under subsections (c) and (e), and verification of eligibility for the additional rebate under subsection (d).

(h) Nothing in this section shall alter taxes due on the original purchase of the clean vehicle before the application of the rebate. Any rebate received pursuant to this section shall not be considered income for the purposes of state or county taxes.

(i) The department of transportation may contract with a third-party administrator to operate and manage the clean vehicle rebate program. The third-party administrator shall not be deemed to be a "governmental body" as defined in section 103D-104; provided that all moneys transferred to the third‑party administrator shall be comprised of funds collected pursuant to section 237- , appropriated by the legislature, or provided by the federal government or private funding sources. The third-party administrator shall not expend more than ten per cent of the amounts deposited in the clean vehicle special fund established under section 196-B in any fiscal year, or any other reasonable percentage determined by the department of transportation, for the administrative costs of the clean vehicle rebate program.

(j) The department of transportation shall review the clean vehicle rebate program on an annual basis and submit a report to the legislature no later than twenty days prior to the convening of each regular session, beginning with the regular session after the program is initiated. The report shall include:

(1) Data on the numbers and dollar amounts of rebates issued;

(2) Data on revenues received under section 237- ;

(3) The total program budget, including administrative costs;

(4) Analysis of total consumer savings, including the total cost of ownership;

(5) Analysis of low- and moderate-income consumer participation and benefits;

(6) Analysis of emission reduction benefits, and

(7) Any proposed legislation.

The director of transportation shall furnish information obtained through the administration of the program in response to any request from the chief energy officer of the Hawaii state energy office to fulfill the duties under sections 225P‑8 and 196-71.

(k) The department of transportation may adopt rules, pursuant to chapter 91, to effectuate the purposes of this section.

(l) For the purposes of this section:

"Dealer" shall have the same meaning as in section 437-1.1.

"Low- and moderate-income household" shall have the same meaning as in section 196-111.

"Plug-in hybrid electric vehicle" shall have the same meaning as in section 103D-412.

"Zero-emission vehicle" shall have the same meaning as in section 196-9.

§196-B Clean vehicle special fund. (a) There is established a clean vehicle special fund into which shall be deposited:

(1) The revenues from the transportation affordability and energy security tax under section 237- ;

(2) All other funds received by the department of transportation and available for the purposes of the clean vehicle special fund; and

(3) Interest earnings on all amounts in the clean vehicle special fund.

(b) The clean vehicle special fund shall not be subject to section 37-53.

(c) The department of transportation shall expend moneys in the special fund for the purposes of funding the clean vehicle rebate program established under section 196-A."

SECTION 3. Chapter 237, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§237- Transportation affordability and energy security tax. (a) In addition to the tax levied in section 237-13(2), there shall be an additional tax levied on the gross proceeds of the sale of a light-duty motor vehicle that is powered solely by gasoline, diesel, or gasoline or diesel blends, with or without a battery, as follows:

(1) per cent if the vehicle obtains less than thirty miles per gallon based on federal Environmental Protection Agency combined ratings;

(2) per cent if the vehicle obtains at least thirty but not more than fifty miles per gallon based on federal Environmental Protection Agency combined ratings; and

(3) per cent if the vehicle obtains more than fifty miles per gallon based on federal Environmental Protection Agency combined ratings.

(b) The tax shall be collected and deposited into the clean vehicle special fund established under section 196-B and shall be used to provide rebates under the clean vehicle rebate program established under section 196-A.

SECTION 4. In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 5. New statutory material is underscored.

SECTION 6. This Act shall take effect on July 1, 2026.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	2030
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII