Hawaii Tackles Housing Crisis With Expanded Tax Credit Programs

Communities across Hawaii continue to face a limited housing supply, prompting the House Committee on Housing to pass several measures in early March aimed at increasing production and reducing regulatory barriers. House Committee on Housing Chair Luke A. Evslin emphasized that the legislation focuses on "increasing housing production, reducing regulatory barriers, and supporting the infrastructure necessary to sustain growth."

Among the bills that passed out of committee ahead of the March 6 deadline were HB1739 HD1, which requires counties to allow more housing near designated transit hubs such as rail stations and bus corridors, and HB1740 HD1, which expands exemptions from state and local regulations for housing projects that include perpetual deed restrictions prioritizing Hawaii residents. These measures are designed to remove duplicative requirements that slow transactions and limit housing mobility.

The state also has existing tax credit programs to encourage affordable housing development. Hawaii maintains a state low-income housing tax credit based on federal low-income housing credit requirements. Additionally, HB2444, introduced this session, seeks to increase the income tax credit for low-income household renters from $50 to $100 per exemption claimed by taxpayers, further supporting renters struggling with housing costs.

However, affordable housing funding faces headwinds. House Bill 1800, the state's supplemental budget bill for fiscal years 2026 and 2027, includes a $8 million cut to the operating budget for the Office of Homelessness and Housing Solutions within the Department of Human Services, even as the state allocates $211 million for insurance claims related to the 2023 Maui wildfire disaster. The competing priorities underscore the tension between immediate disaster recovery and long-term housing solutions.