HB2214

SECTION 1. The legislature finds that Hawaii has the highest cost of living in the nation. The general excise tax is levied on nearly every economic activity, which, due to the highly regressive structure of the tax, disproportionately affects low- and middle-income families. This regressive nature makes it difficult for some families to afford basic life necessities, such as diapers. Diapers are a large expense for Hawaii families with small children and are essential to babies' and toddlers' health as they each require about fifty diaper changes per week, or roughly two hundred diaper changes per month. However, according to the National Diaper Bank Network, one in two families struggles to afford clean diapers for their children.

Hawaii children who come from low-income families are at-risk to meet their diaper needs. According to the National Diaper Bank Facts on Hawaii, nine per cent of Hawaii families are recipients of supplemental nutrition assistance program benefits with children under the age of five; twenty-one per cent of Hawaii families are women, infants, and children program benefit recipients with infant children; and twenty-eight per cent of Hawaii families receive temporary assistance for needy families benefits with at least one child under the age of three. The maximum amount a family of one parent and two children can receive in temporary assistance for needy families benefits is $763. It is estimated that ten and a half per cent of this maximum benefit goes toward diaper needs. Additionally, thirty-four per cent of Hawaii families have births covered by medicaid. This data shows that there is a significant number of families who are at risk of not having enough financial resources to provide necessities, such as diapers, for their children.

The legislature further finds that many child care facilities require parents to provide diapers for their children. Families who do not have access to clean diapers cannot access child care and often miss work, reducing their monthly income. Hawaii currently has two National Diaper Bank Network member diaper banks that provide diapers to families; however, this does not meet the needs of all families who struggle to provide clean diapers for their children. According to the National Diaper Bank Network, Hawaii families spend an average monthly cost of $80 to more than $100 on diapers. The State is also the most expensive state to raise a child, requiring approximately $36,000 a year. On average, Hawaii families spend a little more than twenty-five per cent of their income on child-related expenses.

The legislature also finds that dirty diapers put healthy children at risk of various diseases due to parasites, bacteria, and viruses linked to dirty diapers. Dirty diapers can cause diaper rash or diaper dermatitis, including Candida, a type of yeast infection, and Seborrhea, a type of infectious skin condition caused when skin is exposed to moisture, friction, urine, stool, or other skin irritants. Other germs found in dirty diapers are salmonella, listeria, and norovirus, which can cause a healthy child to quickly fall ill. Hepatitis A is the most common viral infection found in dirty diapers, which can lead to other hepatitis-related infections, according to the American Academy of Pediatrics. The American Academy of Pediatrics also notes that certain diaper dermatitis can lead to bladder infections that can cause urinary tract infections, which more commonly affect girls.

Accordingly, the purpose of this Act is to help alleviate the burden on local families and individuals by establishing a refundable diaper income tax credit.

SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to part VI to be appropriately designated and to read as follows:

"§235- Refundable diaper tax credit. (a) There shall be allowed to each eligible taxpayer subject to the taxes imposed by this chapter a refundable tax credit equal to $50 per qualifying child for the taxable year.

(b) The credit allowed under this section shall be claimed against the net income tax liability for the taxable year. If the tax credit claimed by the taxpayer under this section exceeds the amount of the income tax payments due from the taxpayer, the excess of credit over payments due shall be refunded to the taxpayer; provided that the tax credit properly claimed by a taxpayer who has no income tax liability shall be paid to the taxpayer; provided further that no refunds or payments on account of the tax credit allowed by this section shall be made for amounts less than $1.

(c) All claims, including amended claims, for a tax credit under this section shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

(d) The director of taxation:

(1) Shall prepare such forms as may be necessary to claim a credit under this section;

(2) May require proof of the claim for the tax credit; and

(3) May adopt rules pursuant to chapter 91 necessary to carry out the purpose of this section.

(e) For purposes of this section:

"Diaper expenses" means amounts paid by the taxpayer for the purchase of diapers, including disposable diapers, washable diapers, diaper covers, and necessary diapering supplies.

"Eligible taxpayer" means an individual taxpayer who:

(1) Files a:

(A) Head of household return with federal adjusted gross income of less than $90,000; or

(B) Joint return or return of surviving spouse with federal adjusted gross income of less than $120,000;

(2) Has one or more qualifying child; and

(3) Incurred at least $250 in diaper expense during the taxable year for one or more dependent children in the household.

"Eligible taxpayer" does not include a married couple filing separate tax returns for a taxable year for which a joint return could have been filed.

"Qualifying child" means a dependent, as defined by section 152 of the Internal Revenue Code, who is under five years of age at any time during the taxable year and who resides with the eligible taxpayer in the State."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2025.

INTRODUCED BY:

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HOUSE OF REPRESENTATIVES	H.B. NO.	2214
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII