A provision in HB2385 lets construction firms reduce GET liability on qualifying county housing projects—but only if you know it exists and act before the sunset date.
Most Hawaii construction and trades owners don't realize that a new exemption from the general excise tax (GET) is coming their way—but only for a limited time and only on specific housing projects.
HB2385, signed into law and relating to housing, contains a provision that extends GET exemption eligibility to contractors, developers, and subcontractors working on housing projects developed under county assistance programs and approved by the Hawaii Housing Finance and Development Corporation (HHFDC). For qualifying firms and projects, this means a direct reduction in GET liability on project revenues.
If you're a general contractor, subcontractor, developer, or construction firm bidding on or working with a county housing program project that has received HHFDC approval, you may be eligible to obtain certification for a GET exemption on that work. The exemption applies to the construction firm's revenues from the project—not the homebuyer or end user.
The key requirement: the housing project must be developed under a county assistance program and must have been approved by HHFDC. Not all housing projects qualify. Your project sponsor or county housing authority can confirm whether a project meets these criteria.
The general excise tax in Hawaii is 4.712% statewide (with county additions in some areas). For a construction firm, that's applied to gross receipts from the project. An exemption directly reduces the amount of GET you owe on those revenues—a meaningful savings on mid-sized and larger projects.
To claim the exemption, a qualified person or firm must obtain certification. The process and application details are not spelled out in the bill itself, so you'll want to contact HHFDC directly for guidance on how to apply and what documentation is required.
The exemption becomes effective on January 1, 2027. However, it is not permanent. The provision sunsets on July 1, 2031. After that date, the exemption is no longer available, even for projects still under construction.
If you have county housing program projects in your pipeline or are considering bidding on them, mark these dates. Projects that qualify and begin work before the sunset will benefit from the exemption during their active construction period, but no new certifications can be issued after July 1, 2031.
The provision is found in Section 3 of HB2385, which amends HRS §201H-36(a), on page 6 of the bill. The statute reference is HRS §201H-36.
If you work in construction or trades and develop housing or bid on county housing projects, confirm with your project sponsor or HHFDC whether your project qualifies. Contact HHFDC early to understand the certification process and timeline. The exemption is real, but it requires proactive steps to claim it—and the window to do so closes in mid-2031.
Source: HB2385, Section 3, amending HRS §201H-36(a).