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:
HOUSE OF REPRESENTATIVES H.B. NO. 2587
THIRTY-SECOND LEGISLATURE, 2024
STATE OF HAWAII
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:
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: _____________________________
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: _____________________________
INTRODUCED BY:
_____________________________
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.
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.