Vehicle purchasers in Hawaiʻi have to pay the state's 4.5% general excise tax.
But since 1970, rental car companies have not had to pay the tax when buying cars for their fleets. Instead, those companies pay a wholesale tax rate of 0.5%.
The state House of Representatives passed a law that would subject rental car fleet purchases to the full general excise tax. The measure will next be heard by the Senate.
House Transportation Committee Chair Darius Kila spoke in support of the measure.
"At the Legislature, it is our job to revisit and look at tax code. And I would say today, the industry that was given that exemption in the 1970s is a much different playing field today in 2026. There are legislatures across the country that are reviewing their policies and examining this very same instance," Kila said.
"So to the point, if the rental car industry is going to pass off the GET onto the consumer, where they operate on a system of writing off depreciation that our local Hawaiʻi residents do not have the same opportunity to do — I would say I'm very disappointed."
If enacted into law, the measure is expected to generate about $25 million a year for the state.
