STAND. COM. REP. NO. 677

Honolulu, Hawaii

RE: S.B. No. 430

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 Ways and Means, to which was referred S.B. No. 430 entitled:

"A BILL FOR AN ACT RELATING TO TAXATION,"

begs leave to report as follows:

The purpose and intent of this measure is to require the Department of Taxation to provide refunds to taxpayers for state tax overpayments at the same interest rate as those provided by the federal government.

Your Committee received testimony in support of this measure from the Grassroot Institute of Hawaii.

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

Your Committee finds that, under current state law, interest on refunds for tax overpayments is paid at a rate of one-third of one per cent per month, which equates to four per cent per year. Your Committee also finds that the Internal Revenue Service pays interest on refunds at a rate that is compounded daily and based on the federal short-term interest rate.

Your Committee has amended this measure by:

(1) Clarifying that the applicable interest rate shall be set on an annual basis; and

(2) Changing the effective date to July 1, 2050, to facilitate further discussion on the measure.

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. 430, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 430, S.D. 1, 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