Hawaii 2024 Regular Session

Hawaii House Bill HB2587 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. 2587 THIRTY-SECOND LEGISLATURE, 2024 STATE OF HAWAII A BILL FOR AN ACT relating to income tax. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
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3	3	HOUSE OF REPRESENTATIVES H.B. NO. 2587
4	4	THIRTY-SECOND LEGISLATURE, 2024
5	5	STATE OF HAWAII
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7	7	HOUSE OF REPRESENTATIVES
8	8
9	9	H.B. NO.
10	10
11	11	2587
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13	13	THIRTY-SECOND LEGISLATURE, 2024
14	14
15	15
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17	17	STATE OF HAWAII
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29	29
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31	31	A BILL FOR AN ACT
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35	35
36	36
37	37	relating to income tax.
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43	43	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
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46	46
47	47	SECTION 1. The legislature finds that Hawaii has one of the highest individual income tax rates in the country. Even a single filer working full time at the minimum wage of $14 an hour, which is about $29,000 a year, must pay $1,363 plus 6.8 per cent of excess over $28,800. According to the United States Department of Housing and Urban Development in 2023, annual income of up to $73,400 qualifies as low income for a single person in urban Honolulu. An individual at this income level is required to pay $4,531 plus 7.9 per cent of anything over $72,000. It is clear that Hawaii's individual income tax structure disproportionately burdens low- and moderate-income households. Furthermore, filers at low- to medium-income levels contribute relatively little to overall individual income tax revenues. While some other states do impose a similar progressive tax, most do not have such high tax rates applied to lower tax brackets. According to the Hawaii state department of taxation: "One of the reasons Hawaii ranks high [in tax burden] across all income levels is that higher rates apply early on the income spectrum and increase rapidly mean[ing] that most taxpayers are taxed at higher rates. Nearly all taxpayers are subjected to a relatively high rate." Hawaii is an unusual among states for imposing this inequitable tax system which highly burdens low- and moderate-income earners. The State can maintain the same level of state revenue by repealing the individual income tax on those making $20,000 or less per year and slowly scaling marginal tax rates for those making $75,000 or less. Revenue loss can be offset by increasing a several taxes by a small amount. Increasing the transient accommodations tax by 0.50 percent will likewise transfer the tax burden away from working residents onto tourists. Finally, the liquor tax has not been increased since 1998, even as Hawaii's economy has grown and visitor industry boomed. Increasing the liquor and cigarette taxes by modest amounts will result in additional revenue from the state without unduly burdening citizens. The purpose of this Act is to repeal the individual income tax for single and heads-of-household filers making less than $20,000 a year or $40,000 a year for joint filers and scale low- and middle-income tax rates more slowly. SECTION 2. Section 235-51, Hawaii Revised Statutes, is amended by amending subsections (a), (b), and (c) to read as follows: "PART III. INDIVIDUAL INCOME TAX §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.] In the case of any taxable year beginning after December 31, 2024: If the taxable income is: The tax shall be: Over $40,000 but $1,008.00 plus 3.6% of not over $48,000 excess over $40,000 Over $48,000 but $1,354.00 plus 4.94% of not over $72,000 excess over $48,000 Over $72,000 but $3,851.00 plus 6.72% of not over $96,000 excess over $72,000 Over $96,000 but $5,784.00 plus 7.5% of not over $300,000 excess over $96,000 Over $300,00 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.] In the case of any taxable year beginning after December 21, 2024: If the taxable income is: The tax shall be: Over $20,000 but $281.00 plus 2.60% of not over $21,600 excess over $20,000 Over $21,600 but $511.00 plus 3.4% of not over $28,800 excess over $21,600 Over $28,800 but $756.00 plus 3.6% of not over $36,000 excess over $28,800 Over $36,000 but $1,320.00 plus 4.90% of not over $54,000 excess over $36,000 Over $54,000 but $2,888.00 plus 6.72% of not over $72,000 excess over $54,000 Over $72,000 but $4,097.00 plus 7.00% 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 but $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.] In the case of any taxable year beginning after December 31, 2024: If the taxable income is: The tax shall be: Over $20,000 but $504.00 plus 3.60% of not over $24,000 excess over $20,000 Over $24,000 but $677.00 plus 3.8% of not over $36,000 excess over $24,000 Over $36,000 but $1,473.00 plus 5.10% of not over $48,000 excess over $36,000 Over $48,000 but $2,411.00 plus 6.20% 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 $200,000 $16,379.00 plus 11.00% of excess over $200,000." SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored. SECTION 4. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2024. INTRODUCED BY: _____________________________
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49	49	SECTION 1. The legislature finds that Hawaii has one of the highest individual income tax rates in the country. Even a single filer working full time at the minimum wage of $14 an hour, which is about $29,000 a year, must pay $1,363 plus 6.8 per cent of excess over $28,800. According to the United States Department of Housing and Urban Development in 2023, annual income of up to $73,400 qualifies as low income for a single person in urban Honolulu. An individual at this income level is required to pay $4,531 plus 7.9 per cent of anything over $72,000. It is clear that Hawaii's individual income tax structure disproportionately burdens low- and moderate-income households.
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51	51	Furthermore, filers at low- to medium-income levels contribute relatively little to overall individual income tax revenues. While some other states do impose a similar progressive tax, most do not have such high tax rates applied to lower tax brackets. According to the Hawaii state department of taxation: "One of the reasons Hawaii ranks high [in tax burden] across all income levels is that higher rates apply early on the income spectrum and increase rapidly mean[ing] that most taxpayers are taxed at higher rates. Nearly all taxpayers are subjected to a relatively high rate." Hawaii is an unusual among states for imposing this inequitable tax system which highly burdens low- and moderate-income earners.
52	52
53	53	The State can maintain the same level of state revenue by repealing the individual income tax on those making $20,000 or less per year and slowly scaling marginal tax rates for those making $75,000 or less. Revenue loss can be offset by increasing a several taxes by a small amount. Increasing the transient accommodations tax by 0.50 percent will likewise transfer the tax burden away from working residents onto tourists. Finally, the liquor tax has not been increased since 1998, even as Hawaii's economy has grown and visitor industry boomed. Increasing the liquor and cigarette taxes by modest amounts will result in additional revenue from the state without unduly burdening citizens.
54	54
55	55	The purpose of this Act is to repeal the individual income tax for single and heads-of-household filers making less than $20,000 a year or $40,000 a year for joint filers and scale low- and middle-income tax rates more slowly.
56	56
57	57	SECTION 2. Section 235-51, Hawaii Revised Statutes, is amended by amending subsections (a), (b), and (c) to read as follows:
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59	59	"PART III. INDIVIDUAL INCOME TAX
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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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69	69	[In the case of any taxable year beginning after December 31, 2017:
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71	71	If the taxable income is: The tax shall be:
72	72
73	73	Not over $4,800 1.40% of taxable income
74	74
75	75	Over $4,800 but $67.00 plus 3.20% of
76	76
77	77	not over $9,600 excess over $4,800
78	78
79	79	Over $9,600 but $221.00 plus 5.50% of
80	80
81	81	not over $19,200 excess over $9,600
82	82
83	83	Over $19,200 but $749.00 plus 6.40% of
84	84
85	85	not over $28,800 excess over $19,200
86	86
87	87	Over $28,800 but $1,363.00 plus 6.80% of
88	88
89	89	not over $38,400 excess over $28,800
90	90
91	91	Over $38,400 but $2,016.00 plus 7.20% of
92	92
93	93	not over $48,000 excess over $38,400
94	94
95	95	Over $48,000 but $2,707.00 plus 7.60% of
96	96
97	97	not over $72,000 excess over $48,000
98	98
99	99	Over $72,000 but $4,531.00 plus 7.90% of
100	100
101	101	not over $96,000 excess over $72,000
102	102
103	103	Over $96,000 but $6,427.00 plus 8.25% of
104	104
105	105	not over $300,000 excess over $96,000
106	106
107	107	Over $300,000 but $23,257.00 plus 9.00% of
108	108
109	109	not over $350,000 excess over $300,000
110	110
111	111	Over $350,000 but $27,757.00 plus 10.00% of
112	112
113	113	not over $400,000 excess over $350,000
114	114
115	115	Over $400,000 $32,757.00 plus 11.00% of
116	116
117	117	excess over $400,000.]
118	118
119	119	In the case of any taxable year beginning after December 31, 2024:
120	120
121	121	If the taxable income is: The tax shall be:
122	122
123	123	Over $40,000 but $1,008.00 plus 3.6% of
124	124
125	125	not over $48,000 excess over $40,000
126	126
127	127	Over $48,000 but $1,354.00 plus 4.94% of
128	128
129	129	not over $72,000 excess over $48,000
130	130
131	131	Over $72,000 but $3,851.00 plus 6.72% of
132	132
133	133	not over $96,000 excess over $72,000
134	134
135	135	Over $96,000 but $5,784.00 plus 7.5% of
136	136
137	137	not over $300,000 excess over $96,000
138	138
139	139	Over $300,00 but $23,257.00 plus 9.00% of
140	140
141	141	not over $350,000 excess over $300,000
142	142
143	143	Over $350,000 but $27,757.00 plus 10.00% of
144	144
145	145	not over $400,000 excess over $350,000
146	146
147	147	Over $400,000 $32,757.00 plus 11.00% of
148	148
149	149	excess over $400,000.
150	150
151	151	(b) There is hereby imposed on the taxable income of every head of a household a tax determined in accordance with the following table:
152	152
153	153	[In the case of any taxable year beginning after December 31, 2017:
154	154
155	155	If the taxable income is: The tax shall be:
156	156
157	157	Not over $3,600 1.40% of taxable income
158	158
159	159	Over $3,600 but $50.00 plus 3.20% of
160	160
161	161	not over $7,200 excess over $3,600
162	162
163	163	Over $7,200 but $166.00 plus 5.50% of
164	164
165	165	not over $14,400 excess over $7,200
166	166
167	167	Over $14,400 but $562.00 plus 6.40% of
168	168
169	169	not over $21,600 excess over $14,400
170	170
171	171	Over $21,600 but $1,022.00 plus 6.80% of
172	172
173	173	not over $28,800 excess over $21,600
174	174
175	175	Over $28,800 but $1,512.00 plus 7.20% of
176	176
177	177	not over $36,000 excess over $28,800
178	178
179	179	Over $36,000 but $2,030.00 plus 7.60% of
180	180
181	181	not over $54,000 excess over $36,000
182	182
183	183	Over $54,000 but $3,398.00 plus 7.90% of
184	184
185	185	not over $72,000 excess over $54,000
186	186
187	187	Over $72,000 but $4,820.00 plus 8.25% of
188	188
189	189	not over $225,000 excess over $72,000
190	190
191	191	Over $225,000 but $17,443.00 plus 9.00% of
192	192
193	193	not over $262,500 excess over $225,000
194	194
195	195	Over $262,500 but $20,818.00 plus 10.00% of
196	196
197	197	not over $300,000 excess over $262,500
198	198
199	199	Over $300,000 $24,568.00 plus 11.00% of
200	200
201	201	excess over $300,000.]
202	202
203	203	In the case of any taxable year beginning after December 21, 2024:
204	204
205	205	If the taxable income is: The tax shall be:
206	206
207	207	Over $20,000 but $281.00 plus 2.60% of
208	208
209	209	not over $21,600 excess over $20,000
210	210
211	211	Over $21,600 but $511.00 plus 3.4% of
212	212
213	213	not over $28,800 excess over $21,600
214	214
215	215	Over $28,800 but $756.00 plus 3.6% of
216	216
217	217	not over $36,000 excess over $28,800
218	218
219	219	Over $36,000 but $1,320.00 plus 4.90% of
220	220
221	221	not over $54,000 excess over $36,000
222	222
223	223	Over $54,000 but $2,888.00 plus 6.72% of
224	224
225	225	not over $72,000 excess over $54,000
226	226
227	227	Over $72,000 but $4,097.00 plus 7.00% of
228	228
229	229	not over $225,000 excess over $72,000
230	230
231	231	Over $225,000 but $17,443.00 plus 9.00% of
232	232
233	233	not over $262,500 excess over $225,000
234	234
235	235	Over $262,500 but $20,818.00 plus 10.00% of
236	236
237	237	not over $300,000 excess over $262,500
238	238
239	239	Over $300,000 but $24,568.00 plus 11.00% of
240	240
241	241	excess over $300,000.
242	242
243	243	(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:
244	244
245	245	[In the case of any taxable year beginning after December 31, 2017:
246	246
247	247	If the taxable income is: The tax shall be:
248	248
249	249	Not over $2,400 1.40% of taxable income
250	250
251	251	Over $2,400 but $34.00 plus 3.20% of
252	252
253	253	not over $4,800 excess over $2,400
254	254
255	255	Over $4,800 but $110.00 plus 5.50% of
256	256
257	257	not over $9,600 excess over $4,800
258	258
259	259	Over $9,600 but $374.00 plus 6.40% of
260	260
261	261	not over $14,400 excess over $9,600
262	262
263	263	Over $14,400 but $682.00 plus 6.80% of
264	264
265	265	not over $19,200 excess over $14,400
266	266
267	267	Over $19,200 but $1,008.00 plus 7.20% of
268	268
269	269	not over $24,000 excess over $19,200
270	270
271	271	Over $24,000 but $1,354.00 plus 7.60% of
272	272
273	273	not over $36,000 excess over $24,000
274	274
275	275	Over $36,000 but $2,266.00 plus 7.90% of
276	276
277	277	not over $48,000 excess over $36,000
278	278
279	279	Over $48,000 but $3,214.00 plus 8.25% of
280	280
281	281	not over $150,000 excess over $48,000
282	282
283	283	Over $150,000 but $11,629.00 plus 9.00% of
284	284
285	285	not over $175,000 excess over $150,000
286	286
287	287	Over $175,000 but $13,879.00 plus 10.00% of
288	288
289	289	not over $200,000 excess over $175,000
290	290
291	291	Over $200,000 $16,379.00 plus 11.00% of
292	292
293	293	excess over $200,000.]
294	294
295	295	In the case of any taxable year beginning after December 31, 2024:
296	296
297	297	If the taxable income is: The tax shall be:
298	298
299	299	Over $20,000 but $504.00 plus 3.60% of
300	300
301	301	not over $24,000 excess over $20,000
302	302
303	303	Over $24,000 but $677.00 plus 3.8% of
304	304
305	305	not over $36,000 excess over $24,000
306	306
307	307	Over $36,000 but $1,473.00 plus 5.10% of
308	308
309	309	not over $48,000 excess over $36,000
310	310
311	311	Over $48,000 but $2,411.00 plus 6.20% of
312	312
313	313	not over $150,000 excess over $48,000
314	314
315	315	Over $150,000 but $11,629.00 plus 9.00% of
316	316
317	317	not over $175,000 excess over $150,000
318	318
319	319	Over $200,000 $16,379.00 plus 11.00% of
320	320
321	321	excess over $200,000."
322	322
323	323	SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
324	324
325	325	SECTION 4. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2024.
326	326
327	327
328	328
329	329	INTRODUCED BY: _____________________________
330	330
331	331	INTRODUCED BY:
332	332
333	333	_____________________________
334	334
335	335
336	336
337	337
338	338
339	339	Report Title: Income Tax Rates; Reduce Cost of Living; Taxation; Affordability Description: Eliminates the income tax for single and heads-of-household filers making less than $20,000 a year or $40,000 a year for joint filers and scale low- and middle-income tax rates more slowly. The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
340	340
341	341
342	342
343	343
344	344
345	345	Report Title:
346	346
347	347	Income Tax Rates; Reduce Cost of Living; Taxation; Affordability
348	348
349	349
350	350
351	351	Description:
352	352
353	353	Eliminates the income tax for single and heads-of-household filers making less than $20,000 a year or $40,000 a year for joint filers and scale low- and middle-income tax rates more slowly.
354	354
355	355
356	356
357	357
358	358
359	359
360	360
361	361	The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.