Grassroot helps defeat major tax hikes, push more housing reforms to finish line

from Grassroot Institute

Ted Kefalas of the Grassroot Institute explained in a radio interview how this year’s legislative session wound up going better than expected for Hawaii’s cost of living

The biggest takeaway from Hawaii’s 2026 legislative session is that state lawmakers appear to still be focused on addressing Hawaii’s affordability crisis, especially when it comes to passing housing reforms and turning down major tax increases, according to Ted Kefalas, Grassroot Institute of Hawaii director of strategic campaigns.

Kefalas joined H. Hawaii Media radio host Johnny Miro on Sunday, May 10, to discuss the outcome of the session, which ended May 8. He characterized the legislative session as “mixed,” but ultimately better than expected, especially considering all the “aggressive tax-hike proposals” that Grassroot helped to defeat.

Among the failed tax-hike proposals, he said, were increases to state’s capital gains tax, a new state-level property tax, higher conveyance taxes on real estate transactions, and even taxes on concert tickets.

Kefalas said preserving the 2024 income tax cuts for 98% of Hawaii taxpayers was of course the most important accomplishment. He noted, however, that lawmakers also created a new top tax bracket of 13% for income over $1 million, which he said will put Hawaii’s top marginal rate just behind California for highest in the country.

Kefalas expressed concern that increasing income taxes on higher earners could drive away “business owners, entrepreneurs, doctors, people that we really need in our state.”

On the positive side, Kefalas praised lawmakers for making “a lot of meaningful progress” on housing reform.

“For years, Hawaii in general has talked about housing primarily through things like subsidies and mandates,” he said. “But the past few sessions have included more of a focus on the actual barriers that have prevented housing from being built.”

Still, Kefalas said, there is “a tremendous amount of work left to do if we want to reverse the long-term trends that have continued to drive local people away.”

You can read a full summary and listen to the 21-minute conversation here.