Aloha Friend,
This week Governor Josh Green signed into law the largest income tax cut for Hawaii families in the state’s history including two major pieces of legislation, House Bill 2404 and Senate Bill 1035.
“This is a historic day,” Governor Green said during the bill signing ceremony at the Capitol. “This is the biggest tax break we’ve ever had for working families, and these reforms will move Hawaii from having the second-highest to the fourth-lowest income tax burden in the country.”
The tax reform will take effect in steps over the next eight years — providing an estimated $5.6 billion in total savings to taxpayers and reducing taxes from 10% to 72%, depending on household income.
The legislation doubles the standard deduction starting with the 2024 tax year and then continues to raise it every two years through 2030, also adjusting the tax brackets every two years from 2025 to 2031.
The reform delivers the largest tax cuts to households with lower incomes — with reductions between 63% and 72% for those earning $22,000 to $62,000 a year, and 10% to 15% reductions for higher earners.
Under current tax law, a family of four making the median household income of $88,000 would owe $5,086 in state taxes, but when the new law is fully implemented, the same family would owe only $1,479 — saving $3,613 in taxes.
Tax savings for a person earning $75,000 annually will rise from $995 in the first year to $2,372 by 2031, and for a married couple earning $150,000 with two dependents the savings will rise from $1,975 to $4,712.
"This tax relief will put money in people’s pockets and help stimulate the local economy,” Governor Green said. “It will reduce the cost of living for Hawaii’s working families, and make our state more affordable for all our residents."
By 2031, 40% of Hawaii households will pay no state income tax — up from 25% currently.
Governor Green emphasized that the tax cuts will not be paid for by reducing government services, and that he intends to eliminate a number of unfilled positions in state government that have been vacant for more than four years to help pay for the tax relief.
“We will work with the Legislature going forward to make sure the budget is right-fit,” Governor Green said. “Right now we have a vacancy rate of 30% in state jobs."
If you support Josh’s efforts to make Hawaii more affordable for everyone in our state, please consider chipping in a donation today.
Thank you for supporting Josh and being a part of Team Green.
Mahalo,
Team Green
