A provision buried in HB2385 creates a new path to GET exemptions for contractors and developers on county-assisted housing—but only if you know it exists.
Most construction and trades owners in Hawaii don't realize that HB2385—a housing bill that takes effect in phases starting January 1, 2027—quietly created a new eligibility category for general excise tax (GET) exemptions. And if your firm works on the right kind of housing project, it could matter to your bottom line.
HB2385, through Section 3, amended Hawaii Revised Statutes §201H-36(a) and (b) to add a new subsection (a)(6). This provision allows the Hawaii Housing Finance and Development Corporation (HHFDC) to certify GET exemptions for qualified persons and firms—including contractors, subcontractors, and developers—who work on housing projects developed under a county assistance program.
In plain terms: if you're hired to build or improve housing as part of a county-run or county-assisted housing initiative, you may now qualify for a GET exemption on materials and services related to that project. Previously, this exemption category didn't exist.
The exemption applies to contractors, subcontractors, and developers working on qualifying county-program housing. The key word is "county"—these are housing projects developed or assisted through a county program, not state or private initiatives alone.
If you're bidding on or already working on affordable housing, workforce housing, or other county-supported housing developments, this provision may open a door to tax relief you didn't have before. The exemption must be certified by HHFDC, so the project itself needs to meet their qualification standards.
There's one important detail: projects using this exemption are subject to a 15-year regulatory compliance term. This is shorter than the standard 30-year compliance period for other HHFDC-certified housing projects. A 15-year term means lower long-term compliance costs, but it's still a meaningful obligation. You'll need to understand what compliance means for your firm before claiming the exemption.
Sections 2 and 3 of HB2385—which contain this provision—take effect on January 1, 2027. However, the entire Act sunsets (expires) on July 1, 2031. This means the exemption is available for a limited window: roughly four and a half years. If you're planning work on county-program housing, timing matters.
If your firm regularly bids on or works with county housing initiatives, start tracking which projects might qualify. Once January 2027 arrives, reach out to HHFDC to understand the certification process and what documentation you'll need. Ask your county partners whether their housing programs fall under this category. And review the compliance requirements carefully before committing to a project.
This isn't a massive windfall, but for trades and contractors working in Hawaii's affordable and workforce housing space, it's a real tax benefit that didn't exist before—as long as you know to look for it.
Source: Hawaii HB2385, Relating to Housing; Section 3 (amending HRS §201H-36(a) and (b)); effective January 1, 2027; sunsets July 1, 2031.