THE SENATE	S.B. NO.	567
THIRTY-THIRD LEGISLATURE, 2025
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO TAXATION.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that Hawaii faces unique geographical challenges that limit access to specialized medical care, requiring many residents to travel to other islands or outside the State for essential medical services. The high costs associated with medical travel, including airfare, lodging, transportation, and meals, impose a significant financial burden on individuals and families, particularly those from rural or underserved areas. These expenses disproportionately affect vulnerable populations, including seniors, low-income residents, and those with chronic conditions, further exacerbating health inequities in the State.

The legislature also finds that access to timely and appropriate healthcare is a fundamental right and is essential for improving public health outcomes and reducing long-term healthcare costs. Existing federal tax deductions may not fully alleviate the financial burden on Hawaii residents due to the limitations on eligibility and coverage under current tax laws. The legislature further finds that a state income tax credit for medical travel expenses would provide targeted relief and help to ensure equitable access to healthcare and strengthen the overall well-being of Hawaii's communities by reducing the financial burdens and barriers to care.

Accordingly, the purpose of this Act is to establish an income tax credit for medical travel expenses incurred by residents to alleviate financial hardships, improve access to critical healthcare services, and promote healthier medical outcomes for residents across the State.

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

"§235- Income tax credit; medical travel expenses. (a) Each resident taxpayer who is not eligible to be claimed by another as a dependent for federal or state income taxes; who paid for certain travel expenses, not covered by insurance, for the purpose of obtaining medical care for the taxpayer's own person, or for obtaining medical care for a dependent of the resident taxpayer; and who files an individual net income tax return for a taxable year, may claim a tax credit under this section against the resident taxpayer's Hawaii state individual net income tax, subject to the requirements of this section.

(b) Each taxpayer having an adjusted gross income of less than $ who paid for travel expenses, not covered or compensated by insurance or otherwise, for the purpose of obtaining medical care for the taxpayer's own person, or for obtaining medical care for a dependent of the resident taxpayer, during the taxable year for which the credit is claimed, may claim a tax credit in an amount equal to per cent of the travel expenses paid that were primarily for, and essential to, medical care.

(c) The tax credits shall be deductible from the taxpayer's individual net income tax for the tax year in which the credits are properly claimed; provided that spouses filing separate returns for a taxable year for which a joint return could have been made by the spouses shall claim only the tax credits to which they would have been entitled had a joint return been filed. If the allowed tax credits exceed the amount of the income tax payments due from the taxpayer, the excess of credits over payments due shall be refunded to the taxpayer; provided that allowed tax credits properly claimed by an individual who has no income tax liability shall be paid to the individual; and provided further that no refunds or payments on account of the tax credits allowed by this section shall be made for amounts less than $1.

(d) All of the provisions relating to assessments and refunds under this chapter and under section 231-23(c)(1) shall apply to the tax credits hereunder.

(e) Claims for tax credits under this section, including any amended claims thereof, shall be filed on or before the end of the twelfth month following 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.

(f) 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.

(g) For the purposes of this section:

"Dependent" has the same meaning as in section 152 of the Internal Revenue Code, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof.

"Medical care" has the same meaning as in sections 213(d)(1)(A) and 213(d)(9) of the Internal Revenue Code."

SECTION 3. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 4. New statutory material is underscored.

SECTION 5. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2024.

INTRODUCED BY:

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Report Title:

Income Taxation; Individuals; Medical Travel; Tax Credit

Description:

Establishes an income tax credit for medically-related travel expenses not covered by insurance.

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