HOUSE OF REPRESENTATIVES

H.B. NO.

954

THIRTY-SECOND LEGISLATURE, 2023

H.D. 2

STATE OF HAWAII

S.D. 1

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO TAXATION.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 

     SECTION 1.  Section 235-1, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

     ""Cost-of-living adjustment factor" means a factor calculated by adding 1.0 to the percentage change in the Consumer Price Index for All Urban Consumers, as published by the United States Department of Labor, from July of the preceding calendar year to July of the current calendar year; provided that, if the Consumer Price Index is discontinued, the Chained Consumer Price Index for All Urban Consumers, as published by the United States Department of Labor, shall be used to calculate the cost-of-living adjustment factor."

     SECTION 2.  Section 235-2.4, Hawaii Revised Statutes, is amended as follows:

     1.  By amending subsection (a) to read:

     "(a)  Section 63 (with respect to taxable income defined) of the Internal Revenue Code shall be operative for the purposes of this chapter, subject to the following:

     (1)  Section 63(c)(1)(B) (relating to the additional standard deduction), 63(c)(1)(C) (relating to the real property tax deduction), 63(c)(1)(D) (relating to the disaster loss deduction), 63(c)(1)(E) (relating to the motor vehicle sales tax deduction), 63(c)(4) (relating to inflation adjustments), 63(c)(7) (defining the real property tax deduction), 63(c)(8) (defining the disaster loss deduction), 63(c)(9) (defining the motor vehicle sales tax deduction), and 63(f) (relating to additional amounts for the aged or blind) of the Internal Revenue Code shall not be operative for purposes of this chapter;

     (2)  Section 63(c)(2) (relating to the basic standard deduction) of the Internal Revenue Code shall be operative[, except that the standard deduction amounts provided therein shall instead mean:

          (A)  $4,400 in the case of:

              (i)  A joint return as provided by section 235‑93; or

             (ii)  A surviving spouse (as defined in section 2(a) of the Internal Revenue Code);

          (B)  $3,212 in the case of a head of household (as defined in section 2(b) of the Internal Revenue Code);

          (C)  $2,200 in the case of an individual who is not married and who is not a surviving spouse or head of household; or

          (D)  $2,200 in the case of a married individual filing a separate return;]; provided that:

          (A)  The standard deduction amounts provided therein shall instead mean:

              (i)  $10,000 in the case of a joint return, as provided by section 235-93, or a surviving spouse, as defined in section 2(a) of the Internal Revenue Code;

             (ii)  $7,500 in the case of a head of household, as defined in section 2(b) of the Internal Revenue Code;

            (iii)  $5,000 in the case of an individual who is not married and who is not a surviving spouse or head of household; or

             (iv)  $5,000 in the case of a married individual filing a separate return; and

          (B)  For each taxable year beginning after December 31, 2023, the director, no later than December 15 of the preceding calendar year, shall recompute the standard deduction amounts by multiplying the dollar amounts for the preceding taxable year by the cost-of-living adjustment factor, if the cost-of-living adjustment factor is greater than zero, and rounding off the resulting product to the nearest $1; provided that if the cost‑of‑living adjustment factor is less than or equal to zero in a given year, then no adjustment will occur in the following year;

     (3)  Section 63(c)(5) (limiting the basic standard deduction in the case of certain dependents) of the Internal Revenue Code shall be operative, except that the limitation shall be the greater of $500 or the individual's earned income; and

     (4)  The standard deduction amount for nonresidents shall be calculated pursuant to section 235-5."

      2.  By amending subsection (c) to read:

     "(c)  Section 68 (with respect to the overall limitation on itemized deductions) of the Internal Revenue Code shall be operative; provided that [the]:

     (1)  [Thresholds] The thresholds shall be [those] the applicable amounts under section 68(b)(1) of the Internal Revenue Code that were operative for federal tax year [2009; and] 2013;

     (2)  For each taxable year beginning after December 31, 2023, the director of taxation, no later than December 15 of the preceding calendar year, shall recompute the threshold amounts by multiplying the dollar amounts for the preceding taxable year by the cost-of-living adjustment factor, if the cost‑of‑living adjustment factor is greater than zero, and rounding off the resulting product to the nearest $1; provided that if the cost-of-living adjustment factor is less than or equal to zero in a given year, then no adjustment will occur in the following year; and

    [(2)] (3)  Suspension in section 68(f) shall not be operative for purposes of this chapter."

     3.  By amending subsection (k) to read:

     "(k)  Section 164 (with respect to taxes) of the Internal Revenue Code shall be operative for the purposes of this chapter, except that:

     (1)  Section 164(b)(6)(B) (limiting the deduction for state and local taxes) shall not be operative for the purposes of this chapter;

     (2)  The deductions under section 164(a)(3) and (b)(5) shall not be operative for corporate taxpayers [and shall be operative only for the following individual taxpayers:

          (A)  A taxpayer filing a single return or a married person filing separately with a federal adjusted gross income of less than $100,000;

          (B)  A taxpayer filing as a head of household with a federal adjusted gross income of less than $150,000; and

          (C)  A taxpayer filing a joint return or as a surviving spouse with a federal adjusted gross income of less than $200,000]; and

     (3)  Section 164(a)(3) shall not be operative for any amounts for which the credit under section 235-55 has been claimed."

     SECTION 3.  Section 235-51, Hawaii Revised Statutes, is amended to read as follows:

     "§235-51  Tax imposed on individuals; rates.  (a)  There is hereby imposed on the taxable income of every:

     (1)  Taxpayer who files a joint return under section 235‑93; and

     (2)  Surviving spouse,

a tax determined in accordance with the following table:

     [In the case of any taxable year beginning after December 31, 2017:

          If the taxable income is:     The tax shall be:

          Not over $4,800              1.40% of taxable income

          Over $4,800 but              $67.00 plus 3.20% of

            not over $9,600              excess over $4,800

          Over $9,600 but              $221.00 plus 5.50% of

            not over $19,200              excess over $9,600

          Over $19,200 but             $749.00 plus 6.40% of

            not over $28,800              excess over $19,200

          Over $28,800 but             $1,363.00 plus 6.80% of

            not over $38,400             excess over $28,800

          Over $38,400 but             $2,016.00 plus 7.20% of

            not over $48,000             excess over $38,400

          Over $48,000 but             $2,707.00 plus 7.60% of

            not over $72,000             excess over $48,000

          Over $72,000 but             $4,531.00 plus 7.90% of

            not over $96,000             excess over $72,000

          Over $96,000 but             $6,427.00 plus 8.25% of

            not over $300,000             excess over $96,000

          Over $300,000 but             $23,257.00 plus 9.00% of

            not over $350,000             excess over $300,000

          Over $350,000 but             $27,757.00 plus 10.00% of

            not over $400,000             excess over $350,000

          Over $400,000                $32,757.00 plus 11.00% of

                                         excess over $400,000.]

     In the case of any taxable year beginning after December 31, 2022:

          If the taxable income is:     The tax shall be:

          Not over $5,126              1.40% of taxable income

          Over $5,126 but              $72.00 plus 3.20% of

            not over $10,253             excess over $5,126

          Over $10,253 but             $236.00 plus 5.50% of

            not over $20,506             excess over $10,253

          Over $20,506 but             $800.00 plus 6.40% of

            not over $30,758             excess over $20,506

          Over $30,758 but             $1,456.00 plus 6.80% of

            not over $41,011             excess over $30,758

          Over $41,011 but             $2,153.00 plus 7.20% of

            not over $51,264             excess over $41,011

          Over $51,264 but             $2,891.00 plus 7.60% of

            not over $76,896              excess over $51,264

          Over $76,896 but             $4,839.00 plus 7.90% of

            not over $102,528             excess over $76,896

          Over $102,528 but             $6,864.00 plus 8.25% of

            not over $320,400             excess over $102,528

          Over $320,400 but             $24,838.00 plus 9.00% of

            not over $373,800             excess over $320,400

          Over $373,800 but             $29,644.00 plus 10.00% of

            not over $427,200             excess over $373,800

          Over $427,200                $34,984.00 plus 11.00% of

                                         excess over $427,200.

     (b)  There is hereby imposed on the taxable income of every head of a household a tax determined in accordance with the following table:

     [In the case of any taxable year beginning after December 31, 2017:

          If the taxable income is:     The tax shall be:

          Not over $3,600              1.40% of taxable income

          Over $3,600 but              $50.00 plus 3.20% of

            not over $7,200              excess over $3,600

          Over $7,200 but              $166.00 plus 5.50% of

            not over $14,400                excess over $7,200

          Over $14,400 but             $562.00 plus 6.40% of

            not over $21,600             excess over $14,400

          Over $21,600 but             $1,022.00 plus 6.80% of

            not over $28,800             excess over $21,600

          Over $28,800 but             $1,512.00 plus 7.20% of

            not over $36,000             excess over $28,800

          Over $36,000 but             $2,030.00 plus 7.60% of

            not over $54,000             excess over $36,000

          Over $54,000 but             $3,398.00 plus 7.90% of

            not over $72,000             excess over $54,000

          Over $72,000 but             $4,820.00 plus 8.25% of

            not over $225,000             excess over $72,000

          Over $225,000 but             $17,443.00 plus 9.00% of

            not over $262,500             excess over $225,000

          Over $262,500 but             $20,818.00 plus 10.00% of

            not over $300,000             excess over $262,500

          Over $300,000                $24,568.00 plus 11.00% of

                                         excess over $300,000.]

     In the case of any taxable year beginning after December 31, 2022:

          If the taxable income is:     The tax shall be:

          Not over $3,845              1.40% of taxable income

          Over $3,845 but              $54.00 plus 3.20% of

            not over $7,690              excess over $3,845

          Over $7,690 but              $177.00 plus 5.50% of

            not over $15,379             excess over $7,690

          Over $15,379 but             $600.00 plus 6.40% of

            not over $23,069             excess over $15,379

          Over $23,069 but             $1,092.00 plus 6.80% of

            not over $30,758             excess over $23,069

          Over $30,758 but             $1,615.00 plus 7.20% of

            not over $38,448             excess over $30,758

          Over $38,448 but             $2,169.00 plus 7.60% of

            not over $57,672              excess over $38,448

          Over $57,672 but             $3,630.00 plus 7.90% of

            not over $76,896             excess over $57,672

          Over $76,896 but             $5,149.00 plus 8.25% of

            not over $240,300             excess over $76,896

          Over $240,300 but             $18,630.00 plus 9.00% of

            not over $280,350             excess over $240,300

          Over $280,350 but             $22,234.00 plus 10.00% of

            not over $320,400             excess over $280,350

          Over $320,400                $26,239.00 plus 11.00% of

                                         excess over $320,400.

     (c)  There is hereby imposed on the taxable income of (1) every unmarried individual (other than a surviving spouse, or the head of a household) and (2) on the taxable income of every married individual who does not make a single return jointly with the individual's spouse under section 235-93 a tax determined in accordance with the following table:

     [In the case of any taxable year beginning after December 31, 2017:

          If the taxable income is:     The tax shall be:

          Not over $2,400              1.40% of taxable income

          Over $2,400 but              $34.00 plus 3.20% of

            not over $4,800              excess over $2,400

          Over $4,800 but              $110.00 plus 5.50% of

            not over $9,600              excess over $4,800

          Over $9,600 but              $374.00 plus 6.40% of

            not over $14,400             excess over $9,600

          Over $14,400 but             $682.00 plus 6.80% of

            not over $19,200             excess over $14,400

          Over $19,200 but             $1,008.00 plus 7.20% of

            not over $24,000             excess over $19,200

          Over $24,000 but             $1,354.00 plus 7.60% of

            not over $36,000             excess over $24,000

          Over $36,000 but             $2,266.00 plus 7.90% of

            not over $48,000             excess over $36,000

          Over $48,000 but             $3,214.00 plus 8.25% of

            not over $150,000             excess over $48,000

          Over $150,000 but             $11,629.00 plus 9.00% of

            not over $175,000             excess over $150,000

          Over $175,000 but             $13,879.00 plus 10.00% of

            not over $200,000             excess over $175,000

          Over $200,000                $16,379.00 plus 11.00% of

                                         excess over $200,000.]

     In the case of any taxable year beginning after December 31, 2022:

          If the taxable income is:     The tax shall be:

          Not over $2,563              1.40% of taxable income

          Over $2,563 but              $36.00 plus 3.20% of

            not over $5,126              excess over $2,563

          Over $5,126 but              $118.00 plus 5.50% of

            not over $10,253             excess over $5,126

          Over $10,253 but             $400.00 plus 6.40% of

            not over $15,379             excess over $10,253

          Over $15,379 but             $728.00 plus 6.80% of

            not over $20,506             excess over $15,379

          Over $20,506 but             $1,077.00 plus 7.20% of

            not over $25,632             excess over $20,506

          Over $25,632 but             $1,446.00 plus 7.60% of

            not over $38,448              excess over $25,632

          Over $38,448 but             $2,420.00 plus 7.90% of

            not over $51,264             excess over $38,448

          Over $51,264 but             $3,432.00 plus 8.25% of

            not over $160,200             excess over $51,264

          Over $160,200 but             $12,419.00 plus 9.00% of

            not over $186,900             excess over $160,200

          Over $186,900 but             $14,822.00 plus 10.00% of

            not over $213,600             excess over $186,900

          Over $213,600                $17,492.00 plus 11.00% of

                                         excess over $213,600.

     (d)  The tax imposed by section 235-2.45 on estates and trusts shall be determined in accordance with the following table:

     In the case of any taxable year beginning after December 31, 2001:

          If the taxable income is:     The tax shall be:

          Not over $2,000              1.40% of taxable income

          Over $2,000 but              $28.00 plus 3.20% of

            not over $4,000              excess over $2,000

          Over $4,000 but              $92.00 plus 5.50% of

            not over $8,000              excess over $4,000

          Over $8,000 but              $312.00 plus 6.40% of

            not over $12,000             excess over $8,000

          Over $12,000 but             $568.00 plus 6.80% of

            not over $16,000             excess over $12,000

          Over $16,000 but             $840.00 plus 7.20% of

            not over $20,000             excess over $16,000

          Over $20,000 but             $1,128.00 plus 7.60% of

            not over $30,000             excess over $20,000

          Over $30,000 but             $1,888.00 plus 7.90% of

            not over $40,000             excess over $30,000

          Over $40,000                 $2,678.00 plus 8.25% of

                                         excess over $40,000.

     (e)  Any taxpayer, other than a corporation, acting as a business entity in more than one state who is required by this chapter to file a return may elect to report and pay a tax of .5 per cent of the taxpayer's annual gross sales if the:

     (1)  Taxpayer's only activities in this State consist of sales;

     (2)  Taxpayer does not own or rent real estate or tangible personal property; and

     (3)  Taxpayer's annual gross sales in or into this State during the tax year is not in excess of $100,000.

     (f)  If a taxpayer has a net capital gain for any taxable year to which this subsection applies, then the tax imposed by this section shall not exceed the sum of:

     (1)  The tax computed at the rates and in the same manner

as if this subsection had not been enacted on the greater of:

          (A)  The taxable income reduced by the amount of net capital gain, or

          (B)  The amount of taxable income taxed at a rate below 7.25 per cent, plus

     (2)  A tax of 7.25 per cent of the amount of taxable income in excess of the amount determined under paragraph (1).

     This subsection shall apply to individuals, estates, and trusts for taxable years beginning after December 31, 1986.

     (g)  For each taxable year beginning after December 31, 2023, the director, no later than December 15 of the preceding calendar year, shall recompute the taxable income amounts within each of the income brackets in subsections (a), (b), and (c) by multiplying the taxable income amounts within each income bracket for the preceding taxable year by the cost-of-living adjustment factor, if the cost-of-living adjustment factor is greater than zero, and rounding off the resulting product to the nearest $1.  If the cost-of-living adjustment factor is less than or equal to zero in a given year, then no adjustment will occur in the following year.  Nothing in this subsection shall be construed as permitting an adjustment to the rates of tax in subsections (a), (b), and (c)."

     SECTION 4.  Section 235-54, Hawaii Revised Statutes, is amended to read as follows:

     "§235-54  Exemptions.  (a)  In computing the taxable income of any individual, there shall be deducted, in lieu of the personal exemptions allowed by the Internal Revenue Code, personal exemptions computed as follows:  Ascertain the number of exemptions which the individual can lawfully claim under the Internal Revenue Code, add an additional exemption for the taxpayer or the taxpayer's spouse who is sixty-five years of age or older within the taxable year, and multiply that number by [$1,144,] $2,288, for taxable years beginning after December 31, [1984.] 2022.  A nonresident shall prorate the personal exemptions on account of income from sources outside the State as provided in section 235-5.  In the case of an individual with respect to whom an exemption under this section is allowable to another taxpayer for a taxable year beginning in the calendar year in which the individual's taxable year begins, the personal exemption amount applicable to such individual under this subsection for such individual's taxable year shall be zero.

     (b)  In computing the taxable income of an estate or trust there shall be allowed, in lieu of the deductions allowed under subsection (a), the following:

     (1)  An estate shall be allowed a deduction of $400.

     (2)  A trust which, under its governing instrument, is required to distribute all of its income currently shall be allowed a deduction of $200.

     (3)  All other trusts shall be allowed a deduction of $80.

     (c)  A blind person, a deaf person, and any person totally disabled, in lieu of the personal exemptions allowed by the Internal Revenue Code, shall be allowed, and there shall be deducted in computing the taxable income of a blind person, a deaf person, or a totally disabled person, instead of the exemptions provided by subsection (a), the amount of $7,000.

     (d)  For each taxable year beginning after December 31, 2023, the director of taxation, no later than December 15 of the preceding calendar year, shall recompute the personal exemption and deduction amounts in this section by multiplying the amount for the preceding taxable year by the cost-of-living adjustment factor, if the cost-of-living adjustment factor is greater than zero, and rounding off the resulting product to the nearest $1.  If the cost-of-living adjustment factor is less than or equal to zero in a given year, then no adjustment will occur in the following year."

     SECTION 5.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 6.  This Act shall take effect upon its approval, and shall apply to taxable years beginning after December 31, 2022.

 

Report Title:

Income Tax; Income Tax Brackets; Personal Exemption; Standard Deduction; Cost-of-living Adjustment; Earned Income Tax Credit; Amount

 

Description:

Increases the amounts for the income tax brackets and personal exemption and standard deduction amounts for tax year 2023.  Adjusts annually for tax years beginning after 12/31/2023, the income tax brackets and personal exemption, and standard deduction amounts by a cost-of-living adjustment factor.  Amends the taxable income brackets and income tax rates for each filing status for taxable years beginning after 12/31/2022.  (SD1)

 

 

 

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