Hawaii offers tax breaks to landlords who keep rents below market rate

Relating To Taxation.

Introduced· 2025-01-23

Who's it for

Who's it for: Landlords

What it means for you

6/10Mixed

Mixed: some good, some bad ·

Cost shift

Plain‑English summary, cross‑checked against the official bill text.

Landlords who charge 80% or less of the median rent in their area get a 10% tax credit, while those charging 120% or more pay a 5–8% extra tax on that income. This could push down rents for some renters but may shift costs elsewhere.

Our take

What we think, in plain words.

This bill tries to reward landlords for charging affordable rent and punish price-gouging. But here's the catch: the tax credit reduces state revenue, and the extra tax on above-market rents may not make up for it. Landlords might pass the above-market tax onto renters or simply avoid the tax by charging exactly 120%. The real question is whether a 10% credit is enough to change landlords' behavior when the state hasn't fixed land costs, zoning, or construction expenses, the real drivers of Hawaii's housing crisis. This bill is a carrot-and-stick play, but it doesn't address why housing is so expensive in the first place. It's worth watching because it could create perverse incentives: landlords might optimize rents to stay just under or just above the threshold instead of genuinely serving low-income renters.

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The facts

What the bill actually says, no spin.

Landlords charging at or below 80% of median market rent get a 10% tax credit on rental income.
Landlords charging 120% or more of median market rent pay an extra 5% tax, plus 1% for every 10% above that threshold.
The Hawaii Housing Finance and Development Corporation determines the median market rent for each geographic area annually.
The tax credit can roll over to future years if it exceeds the landlord's tax liability in the current year.
Tax credits must be claimed within 12 months of the taxable year end, or the right to claim is forfeited.
The bill applies to taxable years starting after December 31, 2024.