Hawaii House Bill HB825

Hawaii 2024 Regular Session

• Introduced: 1/25/23
• Refer: 1/30/23
• Report Pass: 2/15/23
• Refer: 2/15/23

Caption

Relating To Taxation.

Impact

If enacted, HB 825 will significantly alleviate the tax burden on low to moderate income seniors who rely on retirement plans. By exempting deferred compensation income from taxation, the law would help improve the financial stability of this demographic, potentially increasing their disposable income. It may also have broader economic implications, as increased disposable income among retirees can stimulate local economies through increased consumer spending. Additionally, the amendment is expected to provide a more equitable taxation framework that acknowledges the unique challenges faced by senior citizens in Hawaii.

Summary

House Bill 825 is a legislative proposal aimed at amending the taxation of retirement income in Hawaii. It seeks to exclude income received from deferred compensation retirement plans from the state income tax. This benefit will be available to taxpayers who meet specified federal adjusted gross income thresholds: $30,000 for single filers, $45,000 for heads of household, and $60,000 for joint filers or surviving spouses. The bill reflects the legislature's recognition of the financial challenges facing many seniors in Hawaii, addressing concerns over the inequity in the current taxation system for retirement income.

Contention

Notably, the bill may face scrutiny and debate regarding its income thresholds and eligibility criteria. There may be concerns over whether the specified income limits are appropriate or whether they adequately serve the most vulnerable seniors. Critics might also argue about the effectiveness of the tax exemption in genuinely improving the lives of senior citizens versus the potential loss of state revenue. The balancing act of providing necessary financial relief for retirees while ensuring sufficient funding for state services will likely be a key point of contention as discussions around HB 825 progress.