Relating To The Earned Income Tax Credit.
If implemented, this bill would officially establish a higher EITC rate at the state level while reinforcing the linkage to the federal EITC. The application of this bill will begin for taxable years after December 31, 2024. Moreover, its provisions are set to be in place until December 31, 2027, at which point sections of the act may be repealed unless further legislation is enacted. Thus, the EITC adjustment will yield immediate benefits to qualifying taxpayers during this period, enhancing their financial capability and potential for economic contribution.
House Bill 182 seeks to amend Section 235-55.75 of the Hawaii Revised Statutes by increasing the state's earned income tax credit (EITC) permanently to 50% of the federal EITC. This change is designed to provide financial relief to eligible individual taxpayers, particularly those from low-income households, by allowing them to claim a refundable tax credit based on the federal income tax refund they receive. The bill signifies a shift towards strengthening state support for working individuals and promoting economic stability among lower-income families in Hawaii.
While the increase of the EITC is generally viewed positively, potential points of contention may emerge, particularly concerning fiscal impacts and budget prioritization. Opponents may argue that establishing a higher tax credit could strain the state budget or divert funds from other critical programs. However, supporters strongly advocate that the benefits to low-income families justify the adjustments and that increased disposable income could stimulate local economies as recipients spend their tax credits on essential goods and services.