Background
On June 3, 2024, House Bill 2404, H.D. 1, S.D. 1, C.D. 1, was enacted into law as Act 46, Session Laws of Hawaii 2024. Act 46 provides significant income tax relief and is touted to be the largest income tax cut in Hawaii’s history by increasing the standard deduction and adjusting the income tax brackets.
Increased Standard Deduction (Hawaii Revised Statutes §235-2.4(a))
The following table summarizes the standard deduction increases that Act 46 provides by filing status:
Tax Year | Joint/Surviving | Head of | Single/Married |
2023 (previous year) | $4,400 | $3,212 | $2,200 |
2024 and 2025 | $8,800 | $6,424 | $4,400 |
2026 and 2027 | $16,000 | $12,000 | $8,000 |
2028 and 2029 | $18,000 | $13,500 | $9,000 |
2030 | $20,000 | $15,000 | $10,000 |
2031 and after | $24,000 | $18,000 | $12,000 |
Adjusted Income Tax Brackets (Hawaii Revised Statutes §235-51)
Act 46 also amends the income tax brackets by increasing the income limits in each bracket, with amendments taking effect in tax years 2025, 2027, and 2029. The following table illustrates the effect of the Act 46 tax bracket changes on joint filers who have taxable income of $96,000, $250,000, and $550,000:
| Hawaii Income Tax Liability | |||
Taxable Income | 2024 | 2025 | 2027 | 2029 |
$96,000 | $6,427 | $5,078 | $4,406 | $3,701 |
$250,000 | $19,132 | $16,782 | $15,494 | $14,173 |
$550,000 | $49,257 | $41,932 | $39,244 | $36,873 |
What should you do now?
We encourage you to think about how Act 46 may benefit you and whether changes to your Hawaii employee withholdings and estimated income tax payments are appropriate.
Resources
For more information please, including the tax bracket schedules, see Department of Taxation Announcement No. 2024-03.
If you have questions regarding how this measure may affect you, please don’t hesitate to contact us.
The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice. This communication may not be applicable to your specific circumstances and may require consideration of non-tax and other tax factors if any action is to be contemplated. Please contact your tax professional prior to taking any action based on this information. Accuity assumes no obligation to the reader of any changes in tax laws or other factors that could affect the information contained herein.