Relating To Conformity To The Internal Revenue Code.
If enacted, SB3173 would have significant implications for taxpayers in Hawaii, particularly concerning income and estate taxation. The bill includes provisions that would ensure certain federal public laws related to disaster relief and pandemic recovery assistance are operable within state tax calculations. This alignment aims to provide tax relief by exempting specific amounts received under federal disaster assistance programs from being included in the state gross income, potentially benefiting individuals and businesses that received such aid during recent crises.
Senate Bill 3173 (SB3173) is a legislative proposal aimed at aligning Hawaii's income tax and estate tax laws with the federal Internal Revenue Code (IRC) as it stands on December 31, 2023. The bill seeks to modernize Hawaii's tax framework by incorporating updates from the IRC that would affect the determination of gross income, adjusted gross income, and taxable income among individuals and for estate taxation. It is designed to ensure that Hawaii taxpayers are treated consistently under state and federal tax regulations, providing clarity and simplifying the tax process.
There are several points of contention surrounding SB3173. Critics may express concern over the implications of continually conforming state tax laws to federal updates, as this could limit the state’s ability to tailor its tax system to local needs. Some lawmakers and stakeholders argue that while such conformity could simplify compliance for taxpayers, it could also mean the loss of potential state revenue and diminish local authority to enact tax regulations that address unique Hawaiian economic and social challenges. Additionally, there are concerns about the obscure nature of legislative language and the complexity it introduces for average taxpayers who might struggle to navigate the full implications of such changes.