Late last month, tax legislation introduced in the Hawaii State Legislature, Senate Bill 1532 and House Bill 1270, poses a significant threat to Hawaii families, businesses and employees that rely on life insurers’ products for financial security. As part of broader legislation designed to address the state’s projected $800 million budget deficit, these bills —which will be considered for hearings at any time—include a provision that would impose a tax on death benefits and disability income insurance benefits.

Currently, no other state imposes such a tax on its most vulnerable citizens or penalizes businesses that act responsibly to protect jobs and employee benefits.

Specifically, Senate Bill 1532 proposes a 4 percent general excise tax on life insurance and disability income benefits. In effect, this legislation would impose a tax on crucial benefits provided to families and persons with disabilities at a time when they are most vulnerable. While a hearing has yet to be scheduled, this bill has been referred to the Senate Ways and Means Committee and could be up for consideration with little notice.

Likewise, the companion bill introduced in the House, House Bill 1270, could be up for consideration by the House Finance Committee at anytime.

If you do business with agents or producers in Hawaii, it is imperative that you notify them of these developments.

Questions? Contact Mark Valentini, Manager of Government Affairs at mvalentini@nailba.org or 703-383-3073.