Hawaii Lawmakers Propose Restructuring Conveyance Tax to Fund Housing

Competing bills aim to increase taxes on high-value real estate sales to support affordable housing and Hawaiian homesteads.

Apr. 5, 2026 at 3:34am

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Lawmakers in Hawaii are considering two bills that would restructure the state's conveyance tax, which is applied to real estate sales. The proposals aim to increase taxes on high-value properties to generate funding for affordable housing development and Hawaiian homesteads, while reducing or maintaining rates on lower-priced homes. The bills have drawn a mix of support and opposition from various stakeholders.

Why it matters

Hawaii's housing crisis has been exacerbated by high home prices, driven in part by investment properties and vacation homes. Restructuring the conveyance tax could provide a new revenue stream to address these issues, but the proposals have raised concerns about the tax's purpose and implementation.

The details

The House bill, HB 2049, would significantly increase tax rates on homes sold for over $1 million, with the top rate reaching up to 4% of the sale price for homes over $10 million. The Senate bill, SB 3028, would raise rates on higher-value properties but to a lesser degree than the House proposal. Both bills aim to channel new revenue to the Department of Hawaiian Home Lands, affordable housing development, and other housing-related programs.

  • The House passed HB 2049 on March 10, 2026, sending it to the Senate for consideration.
  • The Senate passed SB 3028 unanimously on March 10, 2026.
  • On March 18, 2026, the House Committee on Housing amended SB 3028 to include elements from both bills.
  • On March 25, 2026, Senate committees amended HB 2049 to incorporate a mix of elements from both bills.
  • The Senate Committee on Ways and Means is scheduled to take action on HB 2049 on March 27, 2026, and the House Finance Committee is scheduled to consider SB 3028 on March 28, 2026.

The players

Rep. Luke Evslin

Chair of the House Committee on Housing and lead sponsor of HB 2049.

Sen. Chris Lee

Sponsor of SB 3028, which proposes a different approach to restructuring the conveyance tax.

Department of Hawaiian Home Lands (DHHL)

State agency that would receive up to $60 million annually in new revenue under the House bill to develop homesteads for Native Hawaiian beneficiaries.

Hawaii Housing Finance and Development Corporation

State agency that would help finance affordable housing development projects, including infrastructure, using new revenue from the proposed conveyance tax changes.

Tax Foundation of Hawaii

Nonprofit organization that has opposed using the conveyance tax as a revenue-generating tool to fund state agencies, arguing that the tax should remain an administrative fee.

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What they’re saying

“This is the most important bill for us at the Legislature.”

— Kali Watson, Director of the Department of Hawaiian Home Lands

“We have always held that the conveyance tax was never supposed to be a revenue generating (tax). It's supposed to be an administrative fee to cover the cost of the transactions for the (state Bureau of Conveyances).”

— Evan Oue, Representative, Hawaii Chapter of the National Association of Industrial and Office Properties

“If the Legislature deems the programs and purposes funded by this fund to be a high priority, then it should maintain the accountability for these funds by appropriating the funds as it does with other programs. Earmarking revenues merely absolves elected officials from setting priorities.”

— Tax Foundation of Hawaii

What’s next

The Senate Committee on Ways and Means is scheduled to take action on HB 2049 on March 27, 2026, and the House Finance Committee is scheduled to consider SB 3028 on March 28, 2026. Lawmakers will likely need to reach a compromise between the two bills before any final legislation is passed.

The takeaway

The proposed changes to Hawaii's conveyance tax highlight the state's ongoing struggle to address its housing crisis, with lawmakers seeking new revenue sources to fund affordable housing and Hawaiian homesteads. However, the debate over the tax's purpose and implementation will require careful negotiation between the House and Senate to find a balanced solution.