STAND. COM. REP. NO. 2402

Honolulu, Hawaii

RE: S.B. No. 2552

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 Housing, to which was referred S.B. No. 2552 entitled:

"A BILL FOR AN ACT RELATING TO THE INDIVIDUAL HOUSING ACCOUNT PROGRAM,"

begs leave to report as follows:

The purpose and intent of this measure is to increase the maximum annual deduction for contributions to, and maximum account levels for, individual housing accounts for taxable years beginning January 1, 2027.

Your Committee received testimony in support of this measure from the Office of Hawaiian Affairs, one member of the Kauaʻi County Council, Hawaiʻi Association of REALTORS, Housing Hawaiʻi's Future, and three individuals.

Your Committee received comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

Your Committee finds that saving for a downpayment remains a significant challenge for many residents of the State, especially for first-time homebuyers. The Individual Housing Account (IHA) program was designed to help first-time homebuyers make downpayments. However, with the current median single-family home priced at over $1 million and the median condominium priced at over $600,000, a twenty percent downpayment would be over $200,000 and over $125,000, respectively, making existing maximum annual deductions for the IHA program insufficient. Notably, the IHA program has experienced minimal adoption, with only one hundred one participants in 2006. This measure increases the maximum annual deduction for the IHA program to help first-time homebuyers afford a downpayment.

Your Committee has amended this measure by:

(1) Inserting the following maximum annual deduction amounts for contributions and maximum account levels:

(A) $17,200 paid to an individual housing account for an individual for each taxable year or to each taxpayer for a married couple filing separate returns;

(B) $34,400 paid to an individual housing account for a married couple filing jointly for each taxable year; and

(C) $86,000 for the maximum allowable deduction for an individual for all taxable years;

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

(3) Making a technical, nonsubstantive amendment for the purposes of clarity and consistency.

As affirmed by the record of votes of the members of your Committee on Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2552, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2552, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Housing,

________________________________

STANLEY CHANG, Chair