STAND. COM. REP. NO. 2901

Honolulu, Hawaii

RE: S.B. No. 2279

S.D. 2

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Second State Legislature

Regular Session of 2024

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 2279, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

The purpose and intent of this measure is to amend state income tax law with regard to graduate assistants.

More specifically, this measure:

(1) Requires any qualified tuition reduction for graduate assistants enrolled in graduate level coursework to be considered taxable income; and

(2) Restricts the qualified tuition reduction for graduate assistants enrolled in graduate level coursework to be equal to an amount not more than a certain percentage of the resident tuition fee.

Your Committee received written comments on this measure from the Department of the Attorney General, Department of Taxation, University of Hawaii, and Tax Foundation of Hawaii.

Your Committee finds that, to offset the cost of graduate education, universities may provide a tuition waiver of a certain number of credit hours in exchange for work as a graduate assistant, teaching assistant, or research assistant. Your Committee also finds that, under existing law, this added benefit may not be considered taxable income for all graduate assistants. Your Committee further finds that, as a quantifiable benefit, tuition waivers for graduate assistants should be considered taxable income for the purpose of state income taxation.

Your Committee has amended this measure by:

(1) Amending section 235-2.4, Hawaii Revised Statutes, to specifically state that section 117(d) of the federal Internal Revenue Code shall not be operative with respect to qualified tuition reductions provided to graduate assistants; and

(2) Making conforming amendments to the definition of "qualified tuition reduction".

As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2279, S.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2279, S.D. 2, and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

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DONOVAN M. DELA CRUZ, Chair