HawaiiHawaii allows optional tax withholding on certain payouts beginning in 2027
For tax years beginning after December 31, 2026, taxpayers can choose Hawaii income tax withholding on taxable retirement and similar payments reported on Form 1099-R.
What it does
For tax years beginning after December 31, 2026, taxpayers can choose withholding on taxable payments reported on Form 1099-R. Payment providers must withhold the chosen amount after written notice.
Recipients still report these payments on their tax returns. For tax years beginning after December 31, 2026, withheld money counts toward their tax bill, and excess withholding must be refunded.
Argument forChoosing withholding could help people pay taxes as they receive payments and avoid a large tax bill when they file.
Argument againstPayment providers may need to adjust their systems to handle taxpayers’ written requests and send withheld taxes to Hawaii.
More detail
Payment providers must withhold the taxpayer’s chosen amount and send it to Hawaii’s Department of Taxation. This covers taxable payments reported as distributions on Internal Revenue Service Form 1099-R, including payments from individual retirement accounts and tax-deferred annuities. A taxpayer must give the payment provider written notice choosing withholding. Withholding uses an applicable rate under Hawaii income tax law and the amount the taxpayer designates. The requirement does not apply to providers whose distributions are not subject to Hawaii income tax. The director of taxation must adopt rules for choosing withholding and provide the needed forms. The law takes effect upon approval. Its withholding section applies to tax years beginning after December 31, 2026.
Recipients must report the income on their tax returns, and withheld taxes count toward the Hawaii income tax they owe. This covers people whose payments have tax withheld through this voluntary option. Any withheld amount above the tax owed for the year must be refunded under Hawaii’s tax refund law. These reporting, tax-payment, and refund provisions apply to tax years beginning after December 31, 2026.
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Where it stands
- Introduced
- Passed Senate
- Passed House
- To Governor
- Became Law
Looking ahead
No hearings or votes scheduled.
History
- 2026
- Jun 9Act 118, 06/08/2026 (Gov. Msg. No. 1218).Latest
- Jun 9Act 118, on 06/08/2026 (Gov. Msg. No. 1218).Became Law
- May 8Received notice of passage on Final Reading in House (Hse. Com. No. 888).Minor
- May 8Enrolled to Governor.To Governor
- May 6Passed Final Reading, as amended (CD 1). Ayes, 25; Aye(s) with reservations: none . 0 No(es): none. 0 Excused: none.Major
- Vote recorded Passed Final Reading as amended in CD 1. Result: pass.Lower
- May 6Passed Final Reading as amended in CD 1 with none voting aye with reservations; none voting no (0) and none excused (0).Major
- May 6Received notice of Final Reading (Sen. Com. No. 816).Minor
- May 1Reported from Conference Committee as amended CD 1 (Conf. Com. Rep. No. 109-26).
- May 148 Hrs. Notice (as amended CD 1) 05-06-26.
- May 1Reported from Conference Committee (Conf Com. Rep. No. 109-26) as amended in (CD 1).
- May 1Forty-eight (48) hours notice Wednesday, 05-06-26.
- Apr 30The Conference committee recommends that the measure be PASSED, WITH AMENDMENTS. The votes of the Senate Conference Managers were as follows: 3 Aye(s): Senator(s) Kim, Moriwaki, Fevella; Aye(s) with reservations: none ; 0 No(es): none; and 0 Excused: none.Minor
- Vote recorded The Conference committee recommends that the measure be PASSED, WITH AMENDMENTS. Result: pass.Upper
- Vote recorded The Conference Committee recommends that the measure be Passed, with Amendments. Result: pass.Lower
- Apr 30The Conference Committee recommends that the measure be Passed, with Amendments. The votes were as follows: 3 Ayes: Representative(s) Takenouchi, Kitagawa, Gedeon; Ayes with reservations: none; 0 Noes: none; and 0 Excused: none.Minor
- Apr 29Conference committee meeting scheduled for 04-30-26 11:00AM; Conference Room 309.
- Apr 21Senate Conferees Appointed: Kim Chair; Moriwaki, Fevella.
- Apr 21Received notice of Senate conferees (Sen. Com. No. 718).Minor
- Apr 20House Conferees Appointed: Takenouchi Chair; Kitagawa, Gedeon.
- Apr 20Received notice of appointment of House conferees (Hse. Com. No. 787).Minor
- Apr 16Received from House (Hse. Com. No. 712).Minor
- Apr 16Senate disagrees with House amendments.Minor
- Apr 16Received notice of disagreement (Sen. Com. No. 710).Minor
- Apr 14Passed Third Reading with none voting aye with reservations; none voting no (0) and none excused (0). Transmitted to Senate.Passed House
- Vote recorded Passed Third Reading. Result: pass.Lower
- Apr 9Reported from FIN (Stand. Com. Rep. No. 1984-26) as amended in HD 1, recommending passage on Second Reading and placement on the calendar for Third Reading.
- Vote recorded Passed Second Reading as amended in HD 1; placed on the calendar for Third Reading. Result: pass.Lower
- Apr 9Passed Second Reading as amended in HD 1; placed on the calendar for Third Reading with none voting aye with reservations; none voting no (0) and Representative(s) Cochran excused (1).
- Apr 7The committee on FIN recommend that the measure be PASSED, WITH AMENDMENTS. The votes were as follows: 16 Ayes: Representative(s) Todd, Takenouchi, Hartsfield, Hussey, Keohokapu-Lee Loy, Kitagawa, Kusch, Lee, M., Miyake, Morikawa, Perruso, Templo, Yamashita, Alcos, Gedeon, Reyes Oda; Ayes with reservations: none; 0 Noes: none; and 0 Excused: none.Minor
- Vote recorded The committee on FIN recommend that the measure be PASSED, WITH AMENDMENTS. Result: pass.Lower
- Apr 2Bill scheduled to be heard by FIN on Tuesday, 04-07-26 2:00PM in House conference room 308 VIA VIDEOCONFERENCE.
- Mar 12Pass First ReadingMinor
- Mar 12Referred to FIN, referral sheet 17Minor
- Mar 10Passed Third Reading, as amended (SD 1). Ayes, 25; Aye(s) with reservations: none . Noes, 0 (none). Excused, 0 (none). Transmitted to House.Passed Senate
- Vote recorded Passed Third Reading, as amended (SD 1). Result: pass.Upper
- Mar 10Received from Senate (Sen. Com. No. 313) in amended form (SD 1).Minor
- Mar 5Reported from WAM (Stand. Com. Rep. No. 2876) with recommendation of passage on Second Reading, as amended (SD 1) and placement on the calendar for Third Reading.
- Mar 5Report adopted; Passed Second Reading, as amended (SD 1).Minor
- Mar 548 Hrs. Notice 3/10/2026.
- Mar 2The committee(s) on WAM recommend(s) that the measure be PASSED, WITH AMENDMENTS. The votes in WAM were as follows: 13 Aye(s): Senator(s) Dela Cruz, Moriwaki, DeCoite, Elefante, Hashimoto, Inouye, Kanuha, Kidani, Kim, Lee, C., Wakai, Fevella; Aye(s) with reservations: Senator(s) Richards ; 0 No(es): none; and 0 Excused: none.Minor
- Vote recorded The committee(s) on WAM recommend(s) that the measure be PASSED, WITH AMENDMENTS. Result: pass.Upper
- Feb 27The committee(s) on WAM has scheduled a public hearing on 03-02-26 10:00AM; Conference Room 211 & Videoconference.
- Jan 30Referred to WAM.Minor
- Jan 26Passed First Reading.Minor
- Jan 23Introduced.Introduced
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