Hawaii 2024 Regular Session

Hawaii House Bill HB232 Compare Versions

Only one version of the bill is available at this time.

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1	1	HOUSE OF REPRESENTATIVES H.B. NO. 232 THIRTY-SECOND LEGISLATURE, 2023 STATE OF HAWAII A BILL FOR AN ACT relating to capital gains. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
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3	3	HOUSE OF REPRESENTATIVES H.B. NO. 232
4	4	THIRTY-SECOND LEGISLATURE, 2023
5	5	STATE OF HAWAII
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7	7	HOUSE OF REPRESENTATIVES
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9	9	H.B. NO.
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11	11	232
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13	13	THIRTY-SECOND LEGISLATURE, 2023
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17	17	STATE OF HAWAII
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31	31	A BILL FOR AN ACT
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37	37	relating to capital gains.
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43	43	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
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47	47	SECTION 1. The legislature finds that Hawaii's taxation system disproportionately impacts working families. According to the Institute on Taxation and Economic Policy, Hawaii places the second-highest tax burden on low-income households, with Hawaii's lowest-income households paying approximately fifteen per cent of their income in state and local taxes. In comparison, Hawaii's highest earning households pay roughly nine per cent of their income in state and local taxes. The legislature further finds that Hawaii has a low capital gains tax rate in comparison to other states. This tax break primarily benefits wealthy individuals, including nonresidents who invest in real estate in the State. According to the department of taxation, taxing capital gains at the same rate as ordinary income could generate over $132,000,000 in the next fiscal year, an amount that would rise to an estimated $187,000,000 within six years. The legislature additionally finds that the revenue generated by taxing capital gains at the same rate as ordinary income could be used to strengthen basic government programs, including public education affordable housing construction, mental health services, public preschool programming, childcare access, tax credits for working families, climate change adaptation and mitigation, regenerative agriculture investment, and homeless service programs. The legislature further finds that because section 55(b)(3) of the Internal Revenue Code, which covers the maximum rate of tax on net capital gain of noncorporate taxpayers, is inoperative for the state, a simple repeal of the applicable provisions of Hawaii's tax laws will impose the ordinary rate to capital gains income. Accordingly, the purpose of this Act is to improve public support for working families by taxing capital gains at the same rate as ordinary income. SECTION 2. Section 235-51, Hawaii Revised Statutes, is amended to read as follows: "§235-51 Tax imposed on individuals; rates. (a) There is hereby imposed on the taxable income of every: (1) Taxpayer who files a joint return under section 235-93; and (2) Surviving spouse, a tax determined in accordance with the following table: In the case of any taxable year beginning after December 31, 2017: If the taxable income is: The tax shall be: Not over $4,800 1.40% of taxable income Over $4,800 but $67.00 plus 3.20% of not over $9,600 excess over $4,800 Over $9,600 but $221.00 plus 5.50% of not over $19,200 excess over $9,600 Over $19,200 but $749.00 plus 6.40% of not over $28,800 excess over $19,200 Over $28,800 but $1,363.00 plus 6.80% of not over $38,400 excess over $28,800 Over $38,400 but $2,016.00 plus 7.20% of not over $48,000 excess over $38,400 Over $48,000 but $2,707.00 plus 7.60% of not over $72,000 excess over $48,000 Over $72,000 but $4,531.00 plus 7.90% of not over $96,000 excess over $72,000 Over $96,000 but $6,427.00 plus 8.25% of not over $300,000 excess over $96,000 Over $300,000 but $23,257.00 plus 9.00% of not over $350,000 excess over $300,000 Over $350,000 but $27,757.00 plus 10.00% of not over $400,000 excess over $350,000 Over $400,000 $32,757.00 plus 11.00% of excess over $400,000. (b) There is hereby imposed on the taxable income of every head of a household a tax determined in accordance with the following table: In the case of any taxable year beginning after December 31, 2017: If the taxable income is: The tax shall be: Not over $3,600 1.40% of taxable income Over $3,600 but $50.00 plus 3.20% of not over $7,200 excess over $3,600 Over $7,200 but $166.00 plus 5.50% of not over $14,400 excess over $7,200 Over $14,400 but $562.00 plus 6.40% of not over $21,600 excess over $14,400 Over $21,600 but $1,022.00 plus 6.80% of not over $28,800 excess over $21,600 Over $28,800 but $1,512.00 plus 7.20% of not over $36,000 excess over $28,800 Over $36,000 but $2,030.00 plus 7.60% of not over $54,000 excess over $36,000 Over $54,000 but $3,398.00 plus 7.90% of not over $72,000 excess over $54,000 Over $72,000 but $4,820.00 plus 8.25% of not over $225,000 excess over $72,000 Over $225,000 but $17,443.00 plus 9.00% of not over $262,500 excess over $225,000 Over $262,500 but $20,818.00 plus 10.00% of not over $300,000 excess over $262,500 Over $300,000 $24,568.00 plus 11.00% of excess over $300,000. (c) There is hereby imposed on the taxable income of (1) every unmarried individual (other than a surviving spouse, or the head of a household) and (2) on the taxable income of every married individual who does not make a single return jointly with the individual's spouse under section 235-93 a tax determined in accordance with the following table: In the case of any taxable year beginning after December 31, 2017: If the taxable income is: The tax shall be: Not over $2,400 1.40% of taxable income Over $2,400 but $34.00 plus 3.20% of not over $4,800 excess over $2,400 Over $4,800 but $110.00 plus 5.50% of not over $9,600 excess over $4,800 Over $9,600 but $374.00 plus 6.40% of not over $14,400 excess over $9,600 Over $14,400 but $682.00 plus 6.80% of not over $19,200 excess over $14,400 Over $19,200 but $1,008.00 plus 7.20% of not over $24,000 excess over $19,200 Over $24,000 but $1,354.00 plus 7.60% of not over $36,000 excess over $24,000 Over $36,000 but $2,266.00 plus 7.90% of not over $48,000 excess over $36,000 Over $48,000 but $3,214.00 plus 8.25% of not over $150,000 excess over $48,000 Over $150,000 but $11,629.00 plus 9.00% of not over $175,000 excess over $150,000 Over $175,000 but $13,879.00 plus 10.00% of not over $200,000 excess over $175,000 Over $200,000 $16,379.00 plus 11.00% of excess over $200,000. (d) The tax imposed by section 235-2.45 on estates and trusts shall be determined in accordance with the following table: In the case of any taxable year beginning after December 31, 2001: If the taxable income is: The tax shall be: Not over $2,000 1.40% of taxable income Over $2,000 but $28.00 plus 3.20% of not over $4,000 excess over $2,000 Over $4,000 but $92.00 plus 5.50% of not over $8,000 excess over $4,000 Over $8,000 but $312.00 plus 6.40% of not over $12,000 excess over $8,000 Over $12,000 but $568.00 plus 6.80% of not over $16,000 excess over $12,000 Over $16,000 but $840.00 plus 7.20% of not over $20,000 excess over $16,000 Over $20,000 but $1,128.00 plus 7.60% of not over $30,000 excess over $20,000 Over $30,000 but $1,888.00 plus 7.90% of not over $40,000 excess over $30,000 Over $40,000 $2,678.00 plus 8.25% of excess over $40,000. (e) Any taxpayer, other than a corporation, acting as a business entity in more than one state who is required by this chapter to file a return may elect to report and pay a tax of .5 per cent of the taxpayer's annual gross sales if the: (1) Taxpayer's only activities in this State consist of sales; (2) Taxpayer does not own or rent real estate or tangible personal property; and (3) Taxpayer's annual gross sales in or into this State during the tax year is not in excess of $100,000. [(f) If a taxpayer has a net capital gain for any taxable year to which this subsection applies, then the tax imposed by this section shall not exceed the sum of: (1) The tax computed at the rates and in the same manner as if this subsection had not been enacted on the greater of: (A) The taxable income reduced by the amount of net capital gain, or (B) The amount of taxable income taxed at a rate below 7.25 per cent, plus (2) A tax of 7.25 per cent of the amount of taxable income in excess of the amount determined under paragraph (1). This subsection shall apply to individuals, estates, and trusts for taxable years beginning after December 31, 1986.]" SECTION 3. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date. SECTION 4. Statutory material to be repealed is bracketed and stricken. SECTION 5. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2022. INTRODUCED BY: _____________________________
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49	49	SECTION 1. The legislature finds that Hawaii's taxation system disproportionately impacts working families. According to the Institute on Taxation and Economic Policy, Hawaii places the second-highest tax burden on low-income households, with Hawaii's lowest-income households paying approximately fifteen per cent of their income in state and local taxes. In comparison, Hawaii's highest earning households pay roughly nine per cent of their income in state and local taxes.
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51	51	The legislature further finds that Hawaii has a low capital gains tax rate in comparison to other states. This tax break primarily benefits wealthy individuals, including nonresidents who invest in real estate in the State. According to the department of taxation, taxing capital gains at the same rate as ordinary income could generate over $132,000,000 in the next fiscal year, an amount that would rise to an estimated $187,000,000 within six years.
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53	53	The legislature additionally finds that the revenue generated by taxing capital gains at the same rate as ordinary income could be used to strengthen basic government programs, including public education affordable housing construction, mental health services, public preschool programming, childcare access, tax credits for working families, climate change adaptation and mitigation, regenerative agriculture investment, and homeless service programs.
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55	55	The legislature further finds that because section 55(b)(3) of the Internal Revenue Code, which covers the maximum rate of tax on net capital gain of noncorporate taxpayers, is inoperative for the state, a simple repeal of the applicable provisions of Hawaii's tax laws will impose the ordinary rate to capital gains income.
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57	57	Accordingly, the purpose of this Act is to improve public support for working families by taxing capital gains at the same rate as ordinary income.
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59	59	SECTION 2. Section 235-51, Hawaii Revised Statutes, is amended to read as follows:
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61	61	"§235-51 Tax imposed on individuals; rates. (a) There is hereby imposed on the taxable income of every:
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63	63	(1) Taxpayer who files a joint return under section 235-93; and
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65	65	(2) Surviving spouse,
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67	67	a tax determined in accordance with the following table:
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71	71	In the case of any taxable year beginning after December 31, 2017:
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73	73	If the taxable income is: The tax shall be:
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75	75	Not over $4,800 1.40% of taxable income
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77	77	Over $4,800 but $67.00 plus 3.20% of
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79	79	not over $9,600 excess over $4,800
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81	81	Over $9,600 but $221.00 plus 5.50% of
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83	83	not over $19,200 excess over $9,600
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85	85	Over $19,200 but $749.00 plus 6.40% of
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87	87	not over $28,800 excess over $19,200
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89	89	Over $28,800 but $1,363.00 plus 6.80% of
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91	91	not over $38,400 excess over $28,800
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93	93	Over $38,400 but $2,016.00 plus 7.20% of
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95	95	not over $48,000 excess over $38,400
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97	97	Over $48,000 but $2,707.00 plus 7.60% of
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99	99	not over $72,000 excess over $48,000
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101	101	Over $72,000 but $4,531.00 plus 7.90% of
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103	103	not over $96,000 excess over $72,000
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105	105	Over $96,000 but $6,427.00 plus 8.25% of
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107	107	not over $300,000 excess over $96,000
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109	109	Over $300,000 but $23,257.00 plus 9.00% of
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111	111	not over $350,000 excess over $300,000
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113	113	Over $350,000 but $27,757.00 plus 10.00% of
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115	115	not over $400,000 excess over $350,000
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117	117	Over $400,000 $32,757.00 plus 11.00% of
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119	119	excess over $400,000.
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123	123	(b) There is hereby imposed on the taxable income of every head of a household a tax determined in accordance with the following table:
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127	127	In the case of any taxable year beginning after December 31, 2017:
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129	129	If the taxable income is: The tax shall be:
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131	131	Not over $3,600 1.40% of taxable income
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133	133	Over $3,600 but $50.00 plus 3.20% of
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135	135	not over $7,200 excess over $3,600
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137	137	Over $7,200 but $166.00 plus 5.50% of
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139	139	not over $14,400 excess over $7,200
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141	141	Over $14,400 but $562.00 plus 6.40% of
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143	143	not over $21,600 excess over $14,400
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145	145	Over $21,600 but $1,022.00 plus 6.80% of
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147	147	not over $28,800 excess over $21,600
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149	149	Over $28,800 but $1,512.00 plus 7.20% of
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151	151	not over $36,000 excess over $28,800
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153	153	Over $36,000 but $2,030.00 plus 7.60% of
154	154
155	155	not over $54,000 excess over $36,000
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157	157	Over $54,000 but $3,398.00 plus 7.90% of
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159	159	not over $72,000 excess over $54,000
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161	161	Over $72,000 but $4,820.00 plus 8.25% of
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163	163	not over $225,000 excess over $72,000
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165	165	Over $225,000 but $17,443.00 plus 9.00% of
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167	167	not over $262,500 excess over $225,000
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169	169	Over $262,500 but $20,818.00 plus 10.00% of
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171	171	not over $300,000 excess over $262,500
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173	173	Over $300,000 $24,568.00 plus 11.00% of
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175	175	excess over $300,000.
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179	179	(c) There is hereby imposed on the taxable income of (1) every unmarried individual (other than a surviving spouse, or the head of a household) and (2) on the taxable income of every married individual who does not make a single return jointly with the individual's spouse under section 235-93 a tax determined in accordance with the following table:
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183	183	In the case of any taxable year beginning after December 31, 2017:
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185	185	If the taxable income is: The tax shall be:
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187	187	Not over $2,400 1.40% of taxable income
188	188
189	189	Over $2,400 but $34.00 plus 3.20% of
190	190
191	191	not over $4,800 excess over $2,400
192	192
193	193	Over $4,800 but $110.00 plus 5.50% of
194	194
195	195	not over $9,600 excess over $4,800
196	196
197	197	Over $9,600 but $374.00 plus 6.40% of
198	198
199	199	not over $14,400 excess over $9,600
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201	201	Over $14,400 but $682.00 plus 6.80% of
202	202
203	203	not over $19,200 excess over $14,400
204	204
205	205	Over $19,200 but $1,008.00 plus 7.20% of
206	206
207	207	not over $24,000 excess over $19,200
208	208
209	209	Over $24,000 but $1,354.00 plus 7.60% of
210	210
211	211	not over $36,000 excess over $24,000
212	212
213	213	Over $36,000 but $2,266.00 plus 7.90% of
214	214
215	215	not over $48,000 excess over $36,000
216	216
217	217	Over $48,000 but $3,214.00 plus 8.25% of
218	218
219	219	not over $150,000 excess over $48,000
220	220
221	221	Over $150,000 but $11,629.00 plus 9.00% of
222	222
223	223	not over $175,000 excess over $150,000
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225	225	Over $175,000 but $13,879.00 plus 10.00% of
226	226
227	227	not over $200,000 excess over $175,000
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229	229	Over $200,000 $16,379.00 plus 11.00% of
230	230
231	231	excess over $200,000.
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235	235	(d) The tax imposed by section 235-2.45 on estates and trusts shall be determined in accordance with the following table:
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239	239	In the case of any taxable year beginning after December 31, 2001:
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241	241	If the taxable income is: The tax shall be:
242	242
243	243	Not over $2,000 1.40% of taxable income
244	244
245	245	Over $2,000 but $28.00 plus 3.20% of
246	246
247	247	not over $4,000 excess over $2,000
248	248
249	249	Over $4,000 but $92.00 plus 5.50% of
250	250
251	251	not over $8,000 excess over $4,000
252	252
253	253	Over $8,000 but $312.00 plus 6.40% of
254	254
255	255	not over $12,000 excess over $8,000
256	256
257	257	Over $12,000 but $568.00 plus 6.80% of
258	258
259	259	not over $16,000 excess over $12,000
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261	261	Over $16,000 but $840.00 plus 7.20% of
262	262
263	263	not over $20,000 excess over $16,000
264	264
265	265	Over $20,000 but $1,128.00 plus 7.60% of
266	266
267	267	not over $30,000 excess over $20,000
268	268
269	269	Over $30,000 but $1,888.00 plus 7.90% of
270	270
271	271	not over $40,000 excess over $30,000
272	272
273	273	Over $40,000 $2,678.00 plus 8.25% of
274	274
275	275	excess over $40,000.
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279	279	(e) Any taxpayer, other than a corporation, acting as a business entity in more than one state who is required by this chapter to file a return may elect to report and pay a tax of .5 per cent of the taxpayer's annual gross sales if the:
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281	281	(1) Taxpayer's only activities in this State consist of sales;
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283	283	(2) Taxpayer does not own or rent real estate or tangible personal property; and
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285	285	(3) Taxpayer's annual gross sales in or into this State during the tax year is not in excess of $100,000.
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287	287	[(f) If a taxpayer has a net capital gain for any taxable year to which this subsection applies, then the tax imposed by this section shall not exceed the sum of:
288	288
289	289	(1) The tax computed at the rates and in the same manner as if this subsection had not been enacted on the greater of:
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291	291	(A) The taxable income reduced by the amount of net capital gain, or
292	292
293	293	(B) The amount of taxable income taxed at a rate below 7.25 per cent, plus
294	294
295	295	(2) A tax of 7.25 per cent of the amount of taxable income in excess of the amount determined under paragraph (1).
296	296
297	297	This subsection shall apply to individuals, estates, and trusts for taxable years beginning after December 31, 1986.]"
298	298
299	299	SECTION 3. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.
300	300
301	301	SECTION 4. Statutory material to be repealed is bracketed and stricken.
302	302
303	303	SECTION 5. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2022.
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307	307	INTRODUCED BY: _____________________________
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309	309	INTRODUCED BY:
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311	311	_____________________________
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317	317	Report Title: Capital Gains Tax; Rate; Repeal Description: Taxes capital gains income at the same rate as ordinary income. The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
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323	323	Report Title:
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325	325	Capital Gains Tax; Rate; Repeal
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329	329	Description:
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331	331	Taxes capital gains income at the same rate as ordinary income.
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339	339	The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.