HAWAII 
Yield Tax.! 
Optional. Enacted 1963. 
Revised Laws 1955, 1963 Supplement. Title 10, 87D 1-9. 
Classification 
Qualification. Any tract of 30 acres or more 
suited to the raising of trees of commercial species 
in quantity sufficient to establish a business in the 
sale thereof, and not suited for some higher and 
better use, is eligible for classification as tree farm 
property. Land on which the owner is already 
growing trees of commercial species under good 
forest management and which he agrees to manage 
in accordance with regulations of the Board of 
Land and Natural Resources may also be classi- 
fied. In connection with the main acreage, addi- 
tional non-contiguous property of 15 acres or 
more under the same ownership and in the same 
vicinity is eligible for classification. 
No real property held by an owner under a 
lease having an unexpired term of less than 30 
years may be classified. 
Procedure. The owner applies to the Board 
furnishing a description of the property and such 
additional information as may be required; all 
persons having an interest in the property must 
join in the application. If the Board determines 
that the property is suited to tree farm use, it 
notifies the Department of Taxation which makes 
a finding as to the highest and best use of the 
property. Such finding is based upon information 
as to soils, climate, land use trends, watershed 
values, present use as to surrounding similar lands 
and other appropriate criteria. If the highest and 
best use is determined to be the raising of timber, 
the property is classified by the Board and by the 
Department of Taxation as tree farm property. 
Provision is made for appeal in the case of applica- 
tions disapproved. 
Following classification, the Board prepares an 
agreement with the owner under which he agrees 
to develop and maintain trees of commercial 
species either through planting or reproduction in 
accordance with the regulations of the Department 
of Land and Natural Resources. The agreement 
runs for a period of not less than 30 years subject 
to cancellation as outlined below. 
The owner may apply to have additional acreage 
classified. If the new land is less than 500 acres 
and is in the vicinity of the original tree farm, 
it becomes part of such tree farm and is subject to 
the original agreement. 
Conditions governing continued classification. 
Within one year the owner must establish trees 
of designated species upon not less than one- 
fortieth of the acreage classified or upon 5 acres, 
1 Known as the “Tree Farm Law.” 
33 
whichever is greater. On property already ade- 
quately stocked, the owner must carry out such 
forestry measures as the Board requires upon a 
similar area. 
In subsequent years additional equivalent 
acreage must be brought under good forest man- 
agement until the entire property is so managed. 
Following cutting the owner is allowed three 
years in which to restock. 
Declassification 
The property may be declassified by the Board 
if the owner fails to manage it in accordance with 
the agreement. Moreover, when trees become 
suitable for marketing, as determined by the 
Department, they shall be harvested within 5 
years or the property is declassified; no such 
determination may be made within 10 years 
following classification. 
The owner may withdraw all or part of classi- 
fied property at any time upon application to the 
Board. If, upon declassification of a portion of the 
tree farm, the remaining property is less than 30 
acres, it shall also be declassified. 
Upon declassification, property taxes that 
would have been levied but for the exemption 
become payable plus a penalty of 5 percent per 
year. A yield tax of 5 percent of the stumpage 
value of the commercial trees growing on the 
property is also payable. 
Tax treatment 
Land. Exempt from real property tax. 
Timber. Subject to a yield tax of 5 percent of 
stumpage value of merchantable timber cut for 
commercial purposes. 
Exemption. Trees cut for use in the harvesting 
of trees or for other use by the owner are exempt. 
If such trees are sold to others or are transferred 
onto other property, they become subject to yield 
tax. 
Tax administration 
Reports. The owner must report monthly to the 
Department of Taxation showing the total stump- 
age value of trees harvested together with such 
other information as may be required. 
Collection. Yield taxes are paid and collected 
annually in the same manner as general excise 
taxes. 
Use of revenue 
Yield tax revenues are distributed in the same 
manner as general excise taxes. 
