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HOUSE OF REPRESENTATIVES |
H.B. NO. |
1729 |
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THIRTY-SECOND LEGISLATURE, 2024 |
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STATE OF HAWAII |
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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 Urban Hawaii Consumer Price Index for all items, as published by the United States Department of Labor, from July of the prior calendar year to July of the current calendar year; provided that if the Urban Hawaii Consumer Price Index is discontinued, the Chained Consumer Price Index for all urban areas for all items, 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 for each taxable year beginning on or after January 1, 2025, 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 previous
tax 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 further that if the cost-of-living adjustment
factor is less than 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 that were operative for federal tax year
2009; [and]
(2) For each taxable year beginning on or after January 1, 2025, 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 previous tax 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 further that if the cost-of-living adjustment factor is less than 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."
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.
(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.
(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.
(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 on or after
January 1, 2025, 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 previous tax 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 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, for taxable
years beginning after December 31, 1984.
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.
SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 6. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2024.
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INTRODUCED BY: |
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Report Title:
Taxation; Income Tax; Income Tax Brackets; Cost-of-Living Adjustments
Description:
Adjusts annually for tax years beginning on or after 1/1/2025, the income tax brackets, personal exemption amounts, standard deduction amounts, and the overall limitation on itemized deductions by a cost-of-living adjustment factor linked to the Urban Hawaii Consumer Price Index.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.