One of the primary impacts of SB1209 is the increase in the dollar limit on the amount creditable for employment-related expenses. For instance, the allowable credit increases from $2,400 to $3,000 for one qualifying individual, and from $4,800 to $6,000 for two or more qualifying individuals. This change aims to relieve some of the financial burdens on families who incur expenses for dependent care while being gainfully employed. Additionally, the bill creates a more favorable tax environment for lower-income households, which could result in enhanced economic stability for these families.
Senate Bill 1209 amends Section 235-55.6 of the Hawaii Revised Statutes to update the existing tax credit for employment-related expenses associated with household and dependent care services. The bill allows for a tax credit for each resident taxpayer filing an individual income tax return, provided they maintain a household with one or more qualifying individuals. This aligns Hawaii's tax credit with applicable percentages and limits outlined in the federal tax code, significantly increasing the available credit for certain income brackets.
Despite its intent to support working families, the bill's introduction may prompt discussions regarding fiscal responsibility and the overall impact on state tax revenue. There may be concerns expressed by some lawmakers about the sustainability of increasing tax credits, especially in light of potential budget constraints. Furthermore, some stakeholders might argue that additional support mechanisms for dependent care, such as direct subsidies, could be considered a more effective approach than tax credits, which can be harder to access for populations unaware of how to claim these credits.