STAND. COM. REP. NO. 1181

Honolulu, Hawaii

RE: H.B. No. 286

H.D. 2

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Sir:

Your Committee on Housing, to which was referred H.B. No. 286, H.D. 2, 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.

Your Committee received testimony in support of this measure from the Maui Chamber of Commerce and six individuals.

Your Committee received testimony in opposition to this measure from one individual.

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

Your Committee finds that housing security and affordability is of paramount importance to the State. Presently, individuals can contribute up to $5,000 per year to an Individual Housing Account, which enables the individuals to deduct from their account to help save up a down payment to purchase a home. However, as current housing prices have significantly increased within the last ten years, increasing the cap for contributions will better reflect the reality of the current housing market and better assist prospective homeowners to achieve homeownership.

Your Committee notes the testimony of the Department of Taxation that more individuals use a Roth individual retirement account (IRA) than an individual housing account to save for a future down payment on a home. A Roth IRA is an account funded with after-tax dollars that can be used to purchase a first home, fund education, or save for retirement. Presently, the maximum annual contribution for a Roth IRA is $7,000. However, the maximum contribution for an individual housing account is currently $5,000, making Roth IRAs a tax-favored option. Therefore, your Committee respectfully requests subsequent Committees who choose to deliberate on this measure to consider inserting a cap of $10,000 for single individuals, and $20,000 for married individuals filing jointly, to make individual housing accounts more beneficial for achieving homeownership.

Your Committee has amended this measure by:

(1) Inserting an effective date of July 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 Housing that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 286, H.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 286, H.D. 2, 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,

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STANLEY CHANG, Chair