STAND. COM. REP. NO. 3332

Honolulu, Hawaii

RE: H.B. No. 2007

H.D. 3

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2026

State of Hawaii

Sir:

Your Committee on Health and Human Services, to which was referred H.B. No. 2007, H.D. 3, entitled:

"A BILL FOR AN ACT RELATING TO THE HOUSEHOLD AND DEPENDENT CARE SERVICES TAX CREDIT,"

begs leave to report as follows:

The purpose and intent of this measure is to:

(1) Increase a taxpayer's applicable percentage of employment-related expenses that is used to calculate the household and dependent care services tax credit;

(2) Establish certain disallowance periods following a final decision that a claim for the credit was due to fraud and that the claim was disallowed; and

(3) Extend the sunset date of the temporary increase in maximum employment-related expenses that are used to calculate the household and dependent care services tax credit, established by Act 163, Session Laws of Hawaii 2023, to June 30, 2030.

Your Committee received testimony in support of this measure from the Office of Hawaiian Affairs, one member of the Hawaii County Council, Hawaiʻi Public Health Institute, Hawaiʻi Children's Action Network Speaks!, Hawaii Appleseed Center for Law & Economic Justice, AlohaCare, AARP Hawaiʻi, AAUW of Hawaii, Prince Kūhiō Hawaiian Civic Club, Kona Indivisible & Matriarchy Rising, and twenty-nine individuals.

Your Committee received comments on this measure from the Department of Taxation.

Your Committee finds that Act 163, Session Laws of Hawaii 2023 (Act 163), partially strengthened the Household and Dependent Care Services Tax Credit by raising the amount of the employment-related expenses incurred during any taxable year that may be taken into account for the purposes of the credit. However, Act 163 did not increase the maximum percentage of household and dependent care expenses that may be claimed for the purposes of the tax credit. Your Committee further finds that without adjusting the maximum percentage of expenses that taxpayers can claim, the increases to the claimable amounts of the tax credit provide limited benefit to working families. By increasing eligible expenses and adjusting thresholds under the Household and Dependent Care Services Tax Credit, this measure provides meaningful relief to working families caring for keiki and kupuna.

Your Committee has amended this measure by:

(1) Inserting an effective date of January 1, 2050, to encourage further discussion; and

(2) Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

As affirmed by the record of votes of the members of your Committee on Health and Human Services that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2007, H.D. 3, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2007, H.D. 3, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Health and Human Services,

________________________________

JOY A. SAN BUENAVENTURA, Chair