Hawaii Senate Bill SB2104

Hawaii 2026 Regular Session

• Introduced: 1/21/26
• Refer: 1/22/26

Caption

Relating To The General Excise Tax.

Impact

The bill outlines a gradual reduction of the general excise tax on groceries beginning with a 0% rate until the end of 2026 and decreasing rates for subsequent years until a complete exemption is achieved by January 1, 2034. It would also prohibit counties from establishing surcharges on these taxes, ensuring uniformity across Hawaii. The estimated reduction in state revenues could amount to about $184 million annually as groceries and nonprescription drugs achieve tax exemption status. However, lawmakers emphasize that the state’s budget forecasts show surpluses, indicating an ability to absorb this reduction while still meeting financial obligations.

Summary

Senate Bill 2104 seeks to implement a phased repeal of the general excise tax on groceries and nonprescription drugs in Hawaii, addressing the high cost of living that many residents face. The proposed legislation acknowledges that about 32% of households in Hawaii reported being food insecure in 2024, and that existing taxes on essential goods disproportionately affect low- and moderate-income households. By phasing out the personnel tax for groceries over a period that begins in January 2027, the bill aims to improve affordability for residents while maintaining fiscal stability for the state.

Contention

Despite the anticipated benefits, the bill might face challenges. Opponents of grocery tax reductions could argue that maintained tax revenues are crucial for funding public services and programs. Opponents might express apprehension about potential impacts on state budgets once the associated revenues decrease. Additionally, there could be contention regarding the equity implications of tax repeals that primarily benefit more affluent residents as the phased approach begins to allow for increases in consumption of goods without tax burdens.