The state could start scaling down its tax on groceries under a proposal moving through the state Legislature.
House Bill 1611 would amend the state’s tax codes to begin a series of incremental reduction in the state’s general excise tax on groceries and nonprescription drugs.
While the base GET on groceries is 4% — with each county including their own 0.5% surcharge — beginning in 2027, the tax would be reduced to 3.5%. Each subsequent year would further reduce the tax by 0.5%, finally zeroing out the entire tax in 2034.
As currently written, the county surcharges would also no longer apply to groceries or nonprescription drugs beginning January 2027.
Baybars Karacaovali, tax research and planning officer for the Hawai‘i Department of Taxation, told Aloha State Daily that the proposal would initially only lead to an estimated $17.4 million reduction in tax revenue following the 2027 cut. However, by 2034, he said preliminary estimates put the total lost revenue at a little over $460 million.
“The challenge is that it’s all based on consumption data,” Karacaovali said, explaining that the projected impacts have not been finalized. “We’ve got to make some assumptions based on things like inflation.”
Karacaovali said the state collected over $4.6 billion in GET revenues during the 2025 fiscal year, with the $460 million reduction equaling roughly 10% of those total revenues. However, he added that, in 2034, inflation and other factors will also likely change the state’s GET revenues such that $460 million will be a smaller percentage of the total.
As for how the state could make up that revenue shortfall, Karacaovali said that would be for policymakers to decide. But, he added, this is far from the first time such a policy has been floated.
“I’ve been at the Department of Taxation for eight years, and I’ve seen similar proposals come up I think every year,” Karacaovali said, although he added that the phased reduction in the tax is less common.
Last year, seven bills reducing or eliminating the GET on groceries were introduced in the state Legislature. By the end of February, all of them had been deferred or stalled out.
HB 1611 is still alive, however. It passed second reading in the House on Thursday following a favorable recommendation by the House Committee on Economic Development and Technology.
During that committee hearing, several groups and agencies testified in favor of the measure. The Hawai‘i Food Industry Association wrote that, at the current 4.5% GET rate, a family of four spends an additional $773 in taxes per year on food.
The HFIA and others noted that the GET disproportionately impacts lower-income families, which spend a greater percentage of their income on necessities. Others mentioned that only 11 states still charge taxes on groceries, and two of them — Arkansas and Illinois — are also transitioning to a 0% sales tax on groceries.
The bill is next scheduled to be heard on Feb. 18 before the House Committee on Judiciary and Hawaiian Affairs. It has also been referred to the House Finance Committee, but has not been scheduled for discussion before that committee yet.
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