THE SENATE	S.B. NO.	1649
THIRTY-THIRD LEGISLATURE, 2025
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO INCOME TAX.

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

SECTION 1. The legislature finds that over the past several decades, income inequality has worsened in the State. According to the Center on Budget and Policy Priorities, since the 1970s, incomes for the State's richest households have grown at double the rate of middle-class households, and at almost five times the rate of the State's poorest households. As income gains have increasingly gone to the highest earners, wages have stagnated for most workers.

The legislature also finds that while the State's highest‑earning households have enjoyed the benefits of these trends, they have not borne the appropriate corresponding burden. A 2024 report by the Institute on Taxation and Economic Policy found that the top twenty per cent of income earners in the State paid a substantially lower share of household income in taxes than the bottom eighty per cent. This state of affairs allows the highest income earners to amass wealth, and the power that comes with it, without paying their fair share of taxes in return. Moreover, it saddles the State's working families with the burden of paying a greater portion of their household income in taxes, though they can ill afford to do so.

The legislature further finds that Nobel Prize winning economist Joseph Stiglitz has called an increase in the top marginal income tax rates "[t]he most obvious reform . . . [to] both raise needed revenues and soften America's extreme and harmful inequality." According to the Center on Budget and Policy Priorities, evidence indicates that increasing the personal income tax rates for the highest earners "can generate substantial revenue for public investments that boost a state's productivity in the long run, without harming economic growth in the short term." The increased revenues derived from an increased tax rate for the highest earners would strengthen the State's economy by funding essential public goods and services and would provide benefits to families at all income levels, whether by helping to create private wealth through research grants and small business subsidies, or by providing essential government programs that make it easier for working families to achieve upward mobility. By simply paying their fair share, the State's highest earners will be helping to fund investments in people and communities that will provide long-term social and economic benefits to the State.

Accordingly, the purpose of this Act is to increase the income tax rate on the highest income earners in the State by establishing a new income tax bracket for taxable years beginning after December 31, 2029.

SECTION 2. Section 235-51, Hawaii Revised Statutes, is amended by amending subsections (a), (b), and (c) to read as follows:

"(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, 2024:

If the taxable income is: The tax shall be:

Not over $19,200 1.40% of taxable income

Over $19,200 but $269.00 plus 3.20% of

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

Over $28,800 but $576.00 plus 5.50% of

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

Over $38,400 but $1,104.00 plus 6.40% of

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

Over $48,000 but $1,718.00 plus 6.80% of

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

Over $72,000 but $3,350.00 plus 7.20% of

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

Over $96,000 but $5,078.00 plus 7.60% of

not over $250,000 excess over $96,000

Over $250,000 but $16,782.00 plus 7.90% of

not over $350,000 excess over $250,000

Over $350,000 but $24,682.00 plus 8.25% of

not over $450,000 excess over $350,000

Over $450,000 but $32,932.00 plus 9.00% of

not over $550,000 excess over $450,000

Over $550,000 but $41,932.00 plus 10.00% of

not over $650,000 excess over $550,000

Over $650,000 $51,932.00 plus 11.00% of

excess over $650,000.

In the case of any taxable year beginning after December 31, 2026:

If the taxable income is: The tax shall be:

Not over $28,800 1.40% of taxable income

Over $28,800 but $403.00 plus 3.20% of

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

Over $38,400 but $710.00 plus 5.50% of

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

Over $48,000 but $1,238.00 plus 6.40% of

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

Over $72,000 but $2,774.00 plus 6.80% of

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

Over $96,000 but $4,406.00 plus 7.20% of

not over $250,000 excess over $96,000

Over $250,000 but $15,494.00 plus 7.60% of

not over $350,000 excess over $250,000

Over $350,000 but $23,094.00 plus 7.90% of

not over $450,000 excess over $350,000

Over $450,000 but $30,994.00 plus 8.25% of

not over $550,000 excess over $450,000

Over $550,000 but $39,244.00 plus 9.00% of

not over $650,000 excess over $550,000

Over $650,000 but $48,244.00 plus 10.00% of

not over $800,000 excess over $650,000

Over $800,000 $63,244.00 plus 11.00% of

excess over $800,000.

In the case of any taxable year beginning after December 31, 2028:

If the taxable income is: The tax shall be:

Not over $38,400 1.40% of taxable income

Over $38,400 but $538.00 plus 3.20% of

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

Over $48,000 but $845.00 plus 5.50% of

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

Over $72,000 but $2,165.00 plus 6.40% of

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

Over $96,000 but $3,701.00 plus 6.80% of

not over $250,000 excess over $96,000

Over $250,000 but $14,173.00 plus 7.20% of

not over $350,000 excess over $250,000

Over $350,000 but $21,373.00 plus 7.60% of

not over $450,000 excess over $350,000

Over $450,000 but $28,973.00 plus 7.90% of

not over $550,000 excess over $450,000

Over $550,000 but $36,873.00 plus 8.25% of

not over $650,000 excess over $550,000

Over $650,000 but $45,123.00 plus 9.00% of

not over $800,000 excess over $650,000

Over $800,000 but $58,623.00 plus 10.00% of

not over $950,000 excess over $800,000

Over $950,000 $73,623.00 plus 11.00% of

excess over $950,000.

In the case of any taxable year beginning after December 31, 2029:

If the taxable income is: The tax shall be:

Over $1,900,000 $147,246.00 plus 16.00% of excess over $1,900,000.

(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.

In the case of any taxable year beginning after December 31, 2024:

If the taxable income is: The tax shall be:

Not over $14,400 1.40% of taxable income

Over $14,400 but $202.00 plus 3.20% of

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

Over $21,600 but $432.00 plus 5.50% of

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

Over $28,800 but $828.00 plus 6.40% of

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

Over $36,000 but $1,289.00 plus 6.80% of

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

Over $54,000 but $2,513.00 plus 7.20% of

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

Over $72,000 but $3,809.00 plus 7.60% of

not over $187,500 excess over $72,000

Over $187,500 but $12,587.00 plus 7.90% of

not over $262,500 excess over $187,500

Over $262,500 but $18,512.00 plus 8.25% of

not over $337,500 excess over $262,500

Over $337,500 but $24,699.00 plus 9.00% of

not over $412,500 excess over $337,500

Over $412,500 but $31,449.00 plus 10.00% of

not over $487,500 excess over $412,500

Over $487,500 $38,949.00 plus 11.00% of

excess over $487,500.

In the case of any taxable year beginning after December 31, 2026:

If the taxable income is: The tax shall be:

Not over $21,600 1.40% of taxable income

Over $21,600 but $302.00 plus 3.20% of

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

Over $28,800 but $533.00 plus 5.50% of

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

Over $36,000 but $929.00 plus 6.40% of

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

Over $54,000 but $2,081.00 plus 6.80% of

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

Over $72,000 but $3,305.00 plus 7.20% of

not over $187,500 excess over $72,000

Over $187,500 but $11,621.00 plus 7.60% of

not over $262,500 excess over $187,500

Over $262,500 but $17,321.00 plus 7.90% of

not over $337,500 excess over $262,500

Over $337,500 but $23,246.00 plus 8.25% of

not over $412,500 excess over $337,500

Over $412,500 but $29,433.00 plus 9.00% of

not over $487,500 excess over $412,500

Over $487,500 but $36,183.00 plus 10.00% of

not over $600,000 excess over $487,500

Over $600,000 $47,433.00 plus 11.00% of

excess over $600,000.

In the case of any taxable year beginning after December 31, 2028:

If the taxable income is: The tax shall be:

Not over $28,800 1.40% of taxable income

Over $28,800 but $403.00 plus 3.20% of

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

Over $36,000 but $634.00 plus 5.50% of

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

Over $54,000 but $1,624.00 plus 6.40% of

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

Over $72,000 but $2,776.00 plus 6.80% of

not over $187,500 excess over $72,000

Over $187,500 but $10,630.00 plus 7.20% of

not over $262,500 excess over $187,500

Over $262,500 but $16,030.00 plus 7.60% of

not over $337,500 excess over $262,500

Over $337,500 but $21,730.00 plus 7.90% of not over $412,500 excess over $337,500

Over $412,500 but $27,655.00 plus 8.25% of

not over $487,500 excess over $412,500

Over $487,500 but $33,842.00 plus 9.00% of

not over $600,000 excess over $487,500

Over $600,000 but $43,967.00 plus 10.00% of

not over $712,500 excess over $600,000

Over $712,500 $55,217.00 plus 11.00% of

excess over $712,500.

In the case of any taxable year beginning after December 31, 2029:

If the taxable income is: The tax shall be:

Over $1,425,000 $110,434.00 plus 16.00% of excess over $1,425,000.

(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.

In the case of any taxable year beginning after December 31, 2024:

If the taxable income is: The tax shall be:

Not over $9,600 1.40% of taxable income

Over $9,600 but $134.00 plus 3.20% of

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

Over $14,400 but $288.00 plus 5.50% of

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

Over $19,200 but $552.00 plus 6.40% of

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

Over $24,000 but $859.00 plus 6.80% of

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

Over $36,000 but $1,675.00 plus 7.20% of

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

Over $48,000 but $2,539.00 plus 7.60% of

not over $125,000 excess over $48,000

Over $125,000 but $8,391.00 plus 7.90% of

not over $175,000 excess over $125,000

Over $175,000 but $12,341.00 plus 8.25% of

not over $225,000 excess over $175,000

Over $225,000 but $16,466.00 plus 9.00% of

not over $275,000 excess over $225,000

Over $275,000 but $20,966.00 plus 10.00% of

not over $325,000 excess over $275,000

Over $325,000 $25,966.00 plus 11.00% of

excess over $325,000.

In the case of any taxable year beginning after December 31, 2026:

If the taxable income is: The tax shall be:

Not over $14,400 1.40% of taxable income

Over $14,400 but $202.00 plus 3.20% of

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

Over $19,200 but $355.00 plus 5.50% of

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

Over $24,000 but $619.00 plus 6.40% of

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

Over $36,000 but $1,387.00 plus 6.80% of

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

Over $48,000 but $2,203.00 plus 7.20% of

not over $125,000 excess over $48,000

Over $125,000 but $7,747.00 plus 7.60% of

not over $175,000 excess over $125,000

Over $175,000 but $11,547.00 plus 7.90% of

not over $225,000 excess over $175,000

Over $225,000 but $15,497.00 plus 8.25% of

not over $275,000 excess over $225,000

Over $275,000 but $19,622.00 plus 9.00% of

not over $325,000 excess over $275,000

Over $325,000 but $24,122.00 plus 10.00% of

not over $400,000 excess over $325,000

Over $400,000 $31,622.00 plus 11.00% of

excess over $400,000.

In the case of any taxable year beginning after December 31, 2028:

If the taxable income is: The tax shall be:

Not over $19,200 1.40% of taxable income

Over $19,200 but $269.00 plus 3.20% of

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

Over $24,000 but $422.00 plus 5.50% of

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

Over $36,000 but $1,082.00 plus 6.40% of

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

Over $48,000 but $1,850.00 plus 6.80% of

not over $125,000 excess over $48,000

Over $125,000 but $7,086.00 plus 7.20% of

not over $175,000 excess over $125,000

Over $175,000 but $10,686.00 plus 7.60% of

not over $225,000 excess over $175,000

Over $225,000 but $14,486.00 plus 7.90% of

not over $275,000 excess over $225,000

Over $275,000 but $18,436.00 plus 8.25% of

not over $325,000 excess over $275,000

Over $325,000 but $22,561.00 plus 9.00% of

not over $400,000 excess over $325,000

Over $400,000 but $29,311.00 plus 10.00% of

not over $475,000 excess over $400,000

Over $475,000 $36,811.00 plus 11.00% of

excess over $475,000.

In the case of any taxable year beginning after December 31, 2029:

If the taxable income is: The tax shall be:

Over $950,000 $73,622.00 plus 16.00% of

excess over $950,000."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2029.

INTRODUCED BY:

_____________________________

Report Title:

Income Tax; Income Tax Brackets; Highest Income Earners

Description:

Increases the income tax rate on the highest income earners in the State by establishing a new tax bracket for taxable years beginning after 12/31/2029.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.