SB1133 SD2

SECTION 1. The legislature finds that housing affordability has reached critical levels in many areas, disproportionately impacting working families, seniors, and vulnerable populations. Rising rental costs outpace income growth, placing substantial financial strain on households and contributing to housing insecurity and homelessness.

The legislature further finds that rent stabilization policies have been successfully implemented in other jurisdictions, such as California and Oregon, to curb excessive rental increases while maintaining incentives for property owners. Studies show these measures can mitigate displacement, preserve community stability, and promote equitable housing opportunities.

The legislature additionally finds that many tenants were displaced by predatory rent increases following the 2023 Maui wildfires. Regulating rental price increases based on transparent, data-driven metrics, such as the Consumer Price Index for rent of primary residences, can help these communities address the growing housing shortage in a way that balances tenant protections with the rights of landlords, fostering a fair and sustainable rental housing market. Furthermore, encouraging landlords to offer stable, affordable housing options through long-term leases will help ensure security for tenants and financial predictability for landlords. The legislature believes that by combining these measures, the State can create a housing environment that supports economic stability, community well-being, and a thriving rental market for communities impacted by disasters.

Accordingly, the purpose of this Act is to:

(1) Authorize a county in which over one per cent of housing stock was destroyed or rendered uninhabitable by a disaster to establish by ordinance a rental unit price ceiling that prohibits a landlord from increasing the rental price of a dwelling unit at a rate that exceeds the percentage calculated and published by the county based on changes in the applicable Consumer Price Index; and

(2) Establish a long-term residential lease tax credit for taxpayers who own and lease a dwelling unit to a person as the person's principal residence in a county that has adopted such an ordinance, pursuant to a lease agreement of a term of one year or longer.

SECTION 2. Chapter 46, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§46- County rental unit price ceiling; computation. (a) Beginning , a county in which over one per cent of housing stock was destroyed or rendered uninhabitable by a disaster may establish by ordinance a rental unit price ceiling that prohibits a landlord from increasing the rental price of a dwelling unit at a rate that exceeds the percentage calculated and published by the county pursuant to subsection (b); provided that the increase in the rental price for each dwelling unit shall be calculated based on the lowest rental price charged for that dwelling unit at any time during the twelve-month period immediately before the effective date of the increase.

(b) Beginning August 1, 2025, and every year thereafter, a county that has adopted an ordinance pursuant to subsection (a) shall calculate and publish the maximum rate at which a landlord may increase the rental price of a dwelling unit during the immediately succeeding twelve-month period, computed based on changes in the applicable Consumer Price Index for rent of primary residence, or a successor index, for the twelve-month period immediately before July 1 of that year as reported by the United States Bureau of Labor Statistics; provided that, if in any year the change in the Consumer Price Index for rent of primary residence, or a successor index, for the twelve-months period immediately before July 1 of that year is at or lower than zero per cent, the maximum rate of rental price increase for the calendar year shall be zero.

"Dwelling unit" and "landlord" have the same meaning as defined in section 521-8.

"Rental price" means the amount paid in cash for the occupancy of a dwelling unit that is used by a person as the principal residence in this State. "Rental price" includes charges for utilities, parking stalls, storage of goods, yard services, furniture, and furnishings; provided that the amount or rates to be charged are under the control of the landlord."

SECTION 3. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235- Long-term residential lease tax credit. (a) There shall be allowed to each taxpayer subject to the tax imposed by this chapter, a long-term residential lease tax credit that shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed.

(b) The amount of the credit shall be equal to $ per dwelling unit to which the taxpayer has title and leases to a person as the person's principal residence; provided that:

(1) The lease shall be pursuant to a lease agreement of a term of one year or longer;

(2) The dwelling unit is located in a county that has adopted a rental unit price ceiling ordinance pursuant to section 46- ; and

(3) The lessee shall not be an immediate family member of any taxpayer that owns the dwelling unit;

provided further that if a dwelling unit is owned by multiple taxpayers, the tax credit may be claimed by only one of the taxpayers in a taxable year.

In the case of a partnership, S corporation, estate, trust, or other pass-through entity, the tax credit allowable is for every dwelling unit to which the entity has title and leases to a person pursuant to this subsection. The tax credit shall be determined at the entity level. Distribution and share of the tax credit shall be determined pursuant to administrative rule.

(c) If the tax credit claimed by the taxpayer under this section exceeds the taxpayer's income tax liability, the excess credit over liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted; provided that no credit shall be carried forward after the third taxable year in which the credit is originally claimed. All claims for the tax credit under this section, including any amended claims, 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 any claim to the credit.

(d) The director of taxation:

(1) Shall prepare any forms that may be necessary to claim a tax credit under this section;

(2) May require the taxpayer to furnish reasonable information to ascertain the validity of the claim for the tax credit made under this section; and

(3) May adopt rules under chapter 91 necessary to effectuate the purposes of this section.

(e) For the purposes of this section, "dwelling unit" has the same meaning as defined in section 521-8."

SECTION 4. New statutory material is underscored.

SECTION 5. This Act shall take effect on July 1, 2050; provided that section 3 shall apply to taxable years beginning after December 31, 2025.

Report Title:

Counties; Ordinance; Rental Unit Price Control; Income Tax Credit; Residential Landlords; Long-Term Lease

Description:

Authorizes certain counties to establish a rental unit price ceiling ordinance that prohibits a landlord from increasing the rental price of a dwelling unit at a rate that exceeds the percentage calculated and published by the county based on changes in the applicable Consumer Price Index. Beginning 8/1/2025, requires certain counties to annually calculate and publish the maximum rate at which a landlord may increase the rental price of a dwelling unit during the immediately succeeding twelve-month period. Establishes a nonrefundable Long-Term Residential Lease Tax Credit for taxpayers who own and lease a dwelling unit located in a county that has adopted a rental unit price ceiling ordinance to a person as the person's principal residence in the State pursuant to a lease agreement of a term of one year or longer. Allows the tax credit to be carried forward for up to three taxable years. Applies to taxable years beginning after 12/31/2025. Effective 7/1/2050. (SD2)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

THE SENATE	S.B. NO.	1133
THIRTY-THIRD LEGISLATURE, 2025		S.D. 2
STATE OF HAWAII