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HB2306 • 2026

RELATING TO INCOME TAX.

RELATING TO INCOME TAX.

Taxes
Active

The official status still shows this bill as active or still awaiting another formal step.

Sponsor
NAKAMURA (Introduced by request of another party)
Last action
2026-03-12
Official status
Referred to WAM.
Effective date
Not listed

Plain English Breakdown

Using official source text because the generated explanation was unavailable or could not be confirmed against the official bill text.

RELATING TO INCOME TAX.

RELATING TO INCOME TAX.

What This Bill Does

  • RELATING TO INCOME TAX.
  • Income Tax; Income Tax Brackets; Household and Dependent Care Services Tax Credit; Disallowance Period; Earned Income Tax Credit; Food/Excise Tax Credit Repeals future adjustments to income tax brackets.
  • For taxable years beginning after 12/31/2026, increases the income tax rates for the three highest income tax brackets by one percentage point each.
  • Increases a taxpayer's applicable percentage of employment-related expenses that is used to calculate the household and dependent care services tax credit.

Limits and Unknowns

  • This entry is temporarily using official source text because the generated explanation could not be confirmed against the official bill text during the last sync.

Amendments

These notes stay tied to the official amendment files and metadata from the legislature.

HD1

1

Hawaii published version HD1

Plain English: HB2306 HD1 HOUSE OF REPRESENTATIVES H.B.

  • HB2306 HD1 HOUSE OF REPRESENTATIVES H.B.
  • NO.
  • 2306 THIRTY-THIRD LEGISLATURE, 2026 H.D.
  • 1 STATE OF HAWAII A BILL FOR AN ACT RELATING TO INCOME TAX .

Bill History

  1. 2026-03-12 S

    Referred to WAM.

  2. 2026-03-12 S

    Passed First Reading.

  3. 2026-03-12 S

    Received from House (Hse. Com. No. 394).

  4. 2026-03-10 H

    Passed Third Reading with none voting aye with reservations; Representative(s) Alcos, Amato, Garcia, Gedeon, Kong, Matsumoto, Muraoka, Pierick, Reyes Oda, Shimizu, Souza voting no (11) and none excused (0). Transmitted to Senate.

  5. 2026-03-06 H

    Passed Second Reading as amended in HD 1; placed on the calendar for Third Reading with Representative(s) Amato, Souza voting aye with reservations; Representative(s) Alcos, Garcia, Gedeon, Kong, Matsumoto, Muraoka, Pierick, Reyes Oda, Shimizu voting no (9) and Representative(s) Hashem, Perruso, Quinlan, Sayama excused (4).

  6. 2026-03-06 H

    Reported from FIN (Stand. Com. Rep. No. 1018-26) as amended in HD 1, recommending passage on Second Reading and placement on the calendar for Third Reading.

  7. 2026-03-04 H

    The committee on FIN recommend that the measure be PASSED, WITH AMENDMENTS. The votes were as follows: 16 Ayes: Representative(s) Todd, Takenouchi, Hartsfield, Hussey, Keohokapu-Lee Loy, Kitagawa, Kusch, Lee, M., Miyake, Morikawa, Perruso, Templo, Yamashita, Alcos, Gedeon, Reyes Oda; Ayes with reservations: none; Noes: none; and Excused: none.

  8. 2026-03-03 H

    Bill scheduled for decision making on Wednesday, 03-04-26 10:00AM in conference room 308 VIA VIDEOCONFERENCE.

  9. 2026-03-03 H

    The committee(s) on FIN recommend(s) that the measure be deferred until 03-04-26.

  10. 2026-02-27 H

    Bill scheduled to be heard by FIN on Tuesday, 03-03-26 10:00AM in House conference room 308 VIA VIDEOCONFERENCE.

  11. 2026-01-30 H

    Referred to FIN, referral sheet 5

  12. 2026-01-28 H

    Introduced and Pass First Reading.

  13. 2026-01-26 H

    Pending introduction.

Official Summary Text

RELATING TO INCOME TAX.
Income Tax; Income Tax Brackets; Household and Dependent Care Services Tax Credit; Disallowance Period; Earned Income Tax Credit; Food/Excise Tax Credit
Repeals future adjustments to income tax brackets. For taxable years beginning after 12/31/2026, increases the income tax rates for the three highest income tax brackets by one percentage point each. Increases a taxpayer's applicable percentage of employment-related expenses that is used to calculate the household and dependent care services tax credit. Establishes certain disallowance periods following a final decision that a claim for the credit was due to fraud and that the claim was disallowed. Extends the sunset for amendments made by Act 163, SLH 2023, to the Household and Dependent Care Services Tax Credit, Earned Income Tax Credit, and Food/Excise Tax Credit. Effective 7/1/3000. (HD1)

Current Bill Text

Read the full stored bill text
HB2306

HOUSE OF REPRESENTATIVES

H.B. NO.

2306

THIRTY-THIRD LEGISLATURE, 2026

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.
�
Section
235-2.4, Hawaii Revised Statutes, is amended by amending subsection (a) to read
as follows:

����
"(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;

���������
(D)
�
$2,200
in the case of a married individual filing a separate return;

���������
(E)
�
For
taxable years beginning after December 31, 2023:

�������������
(i)
�
$8,800 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)
�
$6,424 in the case of a head of household (as defined in section
2(b) of the Internal Revenue Code);

�����������
(iii)
�
$4,400 in the case of an individual who is not married and who is
not a surviving spouse or head of household; or

������������
(iv)
�
$4,400 in the case of a married individual filing a separate
return; and

���������
(F)
�
For
taxable years beginning after December 31, 2025:

�������������
(i)
�
$16,000 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)
�
$12,000 in the case of a head of household (as defined in section
2(b) of the Internal Revenue Code);

�����������
(iii)
�
$8,000 in the case of an individual who is not married and who is
not a surviving spouse or head of household; or

������������
(iv)
�
$8,000 in the case of a married individual filing a separate
return;

�������
[
(G)
�
For taxable years beginning after December 31, 2027:

�������������
(i)
�
$18,000 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)
�
$13,500 in the case of a head of household (as defined in
section 2(b) of the Internal Revenue Code);

�����������
(iii)
�
$9,000 in the case of an individual who is not married and who
is not a surviving spouse or head of household; or

������������
(iv)
�
$9,000 in the case of a married individual filing a separate
return;

���������
(H)
�
For taxable years beginning after December 31, 2029:

�������������
(i)
�
$20,000 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)
�
$15,000 in the case of a head of household (as defined in
section 2(b) of the Internal Revenue Code);

�����������
(iii)
�
$10,000 in the case of an individual who is not married and who
is not a surviving spouse or head of household; or

������������
(iv)
�
$10,000 in the case of a married individual filing a separate
return; and

���������
(I)
�
For taxable years beginning after December 31, 2030:

�������������
(i)
�
$24,000 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)
�
$18,000 in the case of a head of household (as defined in
section 2(b) of the Internal Revenue Code);

�����������
(iii)
�
$12,000 in the case of an individual who is not married and who
is not a surviving spouse or head of household; or

������������
(iv)
�
$12,000 in the case of a married individual filing a separate
return;
]

����
(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."

����
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.
]

����
(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.
]

����
(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.
]
"

����
SECTION 3.
�

Section 235-55.6, Hawaii Revised Statutes, is amended to read as
follows:

����
"
�235-55.6
�
Expenses for household and dependent care
services necessary for gainful employment.
�

(a)
�
Allowance of credit.

����
(1)
�
In
general.
�
For each resident taxpayer, who
files an individual income tax return for a taxable year, and who is not
claimed or is not otherwise eligible to be claimed as a dependent by another
taxpayer for federal or Hawaii state individual income tax purposes, who
maintains a household which includes as a member one or more qualifying
individuals (as defined in subsection (b)(1)), there shall be allowed as a
credit against the tax imposed by this chapter for the taxable year an amount
equal to the applicable percentage of the employment-related expenses (as
defined in subsection (b)(2)) paid by the individual during the taxable
year.
�
If the tax credit claimed by a
resident taxpayer exceeds the amount of income tax payment due from the
resident taxpayer, the excess of the credit over payments due shall be refunded
to the resident taxpayer; provided that tax credit properly claimed by a
resident individual who has no income tax liability shall be paid to the
resident individual; and provided further that no refunds or payment on account
of the tax credit allowed by this section shall be made for amounts less than
$1.

����
(2)
�
Applicable
percentage.
�
For purposes of paragraph
(1), the taxpayer's applicable percentage shall be [
determined as follows:

���������
Adjusted
gross income
��������
Applicable
percentage

���������
Not
over $25,000
������������
���������
25%

���������
Over
$25,000 but
������������
���������
24%

�����������
not
over $30,000

���������
Over
$30,000 but
������������
���������
23%

�����������
not
over $35,000

���������
Over
$35,000 but
������������
���������
22%

�����������
not
over $40,000

���������
Over
$40,000 but
������������
���������
21%

�����������
not
over $45,000

���������
Over
$45,000 but
������������
���������
20%

�����������
not
over $50,000

���������
Over
$50,000
����������������
���������
15%.
]

���������
equal to fifty per cent reduced by
one percentage point for each $3,000, or fraction thereof, by which the
taxpayer's adjusted gross income exceeds $150,000; provided that the applicable
percentage shall not be reduced below fifteen per cent.

����
(b)
�

Definitions of qualifying individual and employment-related
expenses.
�
For purposes of this section:

����
(1)
�
Qualifying
individual.
�
The term "qualifying
individual" means:

���������
(A)
�
A
dependent of the taxpayer who is under the age of thirteen and with respect to
whom the taxpayer is entitled to a deduction under section 235-54(a),

���������
(B)
�
A
dependent of the taxpayer who is physically or mentally incapable of caring for
oneself, or

���������
(C)
�
The
spouse of the taxpayer, if the spouse is physically or mentally incapable of
caring for oneself.

����
(2)
�
Employment-related
expenses.

���������
(A)
�
In
general.
�
The term "employment-related
expenses" means amounts paid for the following expenses, but only if such
expenses are incurred to enable the taxpayer to be gainfully employed for any
period for which there are one or more qualifying individuals with respect to
the taxpayer:

�������������
(i)
�
Expenses for household services, and

������������
(ii)
�
Expenses for the care of a qualifying individual.

�����������
�
Such
term shall not include any amount paid for services outside the taxpayer's
household at a camp where the qualifying individual stays overnight.

���������
(B)
�
Exception.
�
Employment-related expenses described in
subparagraph (A) which are incurred for services outside the taxpayer's
household shall be taken into account only if incurred for the care of:

�������������
(i)
�
A qualifying individual described in paragraph (1)(A), or

������������
(ii)
�
A qualifying individual (not described in paragraph (1)(A)) who
regularly spends at least eight hours each day in the taxpayer's household.

���������
(C)
�
Dependent
care centers.
�
Employment-related
expenses described in subparagraph (A) which are incurred for services provided
outside the taxpayer's household by a dependent care center (as defined in
subparagraph (D)) shall be taken into account only if:

�������������
(i)
�
Such center complies with all applicable laws, rules, and
regulations of this State, if the center is located within the jurisdiction of
this State; or

������������
(ii)
�
Such center complies with all applicable laws, rules, and
regulations of the jurisdiction in which the center is located, if the center
is located outside the State; and

�����������
(iii)
�
The requirements of subparagraph (B) are met.

���������
(D)
�
Dependent
care center defined.
�
For purposes of
this paragraph, the term "dependent care center" means any facility
which:

�������������
(i)
�
Provides care for more than six individuals (other than individuals
who reside at the facility), and

������������
(ii)
�
Receives a fee, payment, or grant for providing services for any of
the individuals (regardless of whether such facility is operated for profit).

����
(c)
�

Dollar limit on amount creditable.
�

The amount of the employment-related expenses incurred during any
taxable year which may be taken into account under subsection (a) shall not
exceed:

����
(1)
�
$10,000
if there is one qualifying individual with respect to the taxpayer for such
taxable year, or

����
(2)
�
$20,000
if there are two or more qualifying individuals with respect to the taxpayer
for such taxable year.

The amount
determined under paragraph (1) or (2) (whichever is applicable) shall be
reduced by the aggregate amount excludable from gross income under section 129
(with respect to dependent care assistance programs) of the Internal Revenue
Code for the taxable year.

����
(d)
�

Earned income limitation.

����
(1)
�
In
general.
�
Except as otherwise provided in
this subsection, the amount of the employment-related expenses incurred during
any taxable year which may be taken into account under subsection (a) shall not
exceed:

���������
(A)
�
In
the case of an individual who is not married at the close of such year, such
individual's earned income for such year, or

���������
(B)
�
In
the case of an individual who is married at the close of such year, the lesser
of such individual's earned income or the earned income of the individual's
spouse for such year.

����
(2)
�
Special
rule for spouse who is a student or incapable of caring for oneself.
�
In the case of a spouse who is a student or a
qualified individual described in subsection (b)(1)(C), for purposes of
paragraph (1), such spouse shall be deemed for each month during which such
spouse is a full-time student at an educational institution, or is such a
qualifying individual, to be gainfully employed and to have earned income of
not less than:

���������
(A)
�
$200
if subsection (c)(1) applies for the taxable year, or

���������
(B)
�
$400
if subsection (c)(2) applies for the taxable year.

���������
In the case of any husband and wife,
this paragraph shall apply with respect to only one spouse for any one month.

����
(e)
�

Special rules.
�
For purposes of
this section:

����
(1)
�
Maintaining
household.
�
An individual shall be
treated as maintaining a household for any period only if over half the cost of
maintaining the household for the period is furnished by the individual (or, if
the individual is married during the period, is furnished by the individual and
the individual's spouse).

����
(2)
�
Married
couples must file joint return.
�
If the
taxpayer is married at the close of the taxable year, the credit shall be
allowed under subsection (a) only if the taxpayer and the taxpayer's spouse
file a joint return for the taxable year.

����
(3)
�
Marital
status.
�
An individual legally separated
from the individual's spouse under a decree of divorce or of separate
maintenance shall not be considered as married.

����
(4)
�
Certain
married individuals living apart.
�
If:

���������
(A)
�
An
individual who is married and who files a separate return:

�������������
(i)
�
Maintains as the individual's home a household that constitutes for
more than one-half of the taxable year the principal place of abode of a
qualifying individual, and

������������
(ii)
�
Furnishes over half of the cost of maintaining the household during
the taxable year, and

���������
(B)
�
During
the last six months of the taxable year the individual's spouse is not a member
of the household, the individual shall not be considered as married.

����
(5)
�
Special
dependency test in case of divorced parents, etc.
�
If:

���������
(A)
�
Paragraph
(2) or (4) of section 152(e) of the Internal Revenue Code of 1986, as amended,
applies to any child with respect to any calendar year, and

���������
(B)
�
The
child is under age thirteen or is physically or mentally incompetent of caring
for the child's self,

���������
in the case of any taxable year
beginning in the calendar year, the child shall be treated as a qualifying
individual described in subsection (b)(1)(A) or (B) (whichever is appropriate)
with respect to the custodial parent (within the meaning of section 152(e)(1)
of the Internal Revenue Code of 1986, as amended), and shall not be treated as
a qualifying individual with respect to the noncustodial parent.

����
(6)
�
Payments
to related individuals.
�
No credit shall
be allowed under subsection (a) for any amount paid by the taxpayer to an
individual:

���������
(A)
�
With
respect to whom, for the taxable year, a deduction under section 151(c) of the
Internal Revenue Code of 1986, as amended (relating to deduction for personal
exemptions for dependents) is allowable either to the taxpayer or the taxpayer's
spouse, or

���������
(B)
�
Who
is a child of the taxpayer (within the meaning of section 151(c)(3) of the
Internal Revenue Code of 1986, as amended) who has not attained the age of
nineteen at the close of the taxable year.

���������
For purposes of this paragraph, the
term "taxable year" means the taxable year of the taxpayer in which
the service is performed.

����
(7)
�
Student.
�
The term "student" means an
individual who, during each of five calendar months during the taxable year, is
a full-time student at an educational organization.

����
(8)
�
Educational
organization.
�
The term "educational
organization" means a school operated by the department of education under
chapter 302A, an educational organization described in section 170(b)(1)(A)(ii)
of the Internal Revenue Code of 1986, as amended, or a university, college, or
community college.

����
(9)
�
Identifying
information required with respect to service provider.
�
No credit shall be allowed under subsection
(a) for any amount paid to any person unless:

���������
(A)
�
The
name, address, taxpayer identification number, and general excise tax license
number of the person are included on the return claiming the credit,

���������
(B)
�
If
the person is located outside the State, the name, address, and taxpayer
identification number, if any, of the person and a statement indicating that
the service provider is located outside the State and that the general excise
tax license and, if applicable, the taxpayer identification numbers are not
required, or

���������
(C)
�
If
the person is an organization described in section 501(c)(3) of the Internal
Revenue Code and exempt from tax under section 501(a) of the Internal Revenue
Code, the name and address of the person are included on the return claiming
the credit.

���������
In the case of a failure to provide
the information required under the preceding sentence, the preceding sentence
shall not apply if it is shown that the taxpayer exercised due diligence in
attempting to provide the information so required.

����
(f)
�

No credit shall be allowed under this section for any taxable year in
the disallowance period.
�
For purposes of
this subsection, the disallowance period is:

����
(1)
�
The
period of ten taxable years after the most recent taxable year for which there
was a final administrative or judicial decision that the taxpayer's claim for
credit under this section was due to fraud; and

����
(2)
�
The
period of two taxable years after the most recent taxable year for which there
was a final administrative or judicial decision disallowing the taxpayer's
claim for credit.

����
[
(f)
]
(g)
�
Rules.
�

The director of taxation shall prescribe such rules under chapter 91 as
may be necessary to carry out the purposes of this section.

����
(h)
�

As used in this section, "adjusted gross income" means
adjusted gross income as defined by the Internal Revenue Code of 1986, as
amended.
"

����
SECTION 4.
�

Act 163, Session Laws of Hawaii 2023, is amended by amending section 5
to read as follows:

����
"This Act, upon its approval, shall
apply to taxable years beginning after December 31, 2022; provided that on
December 31, [
2027,
]
2032,
this Act shall be repealed and sections
235-55.6(c), 235-55.75(a), and 235-55.85(b), Hawaii Revised Statutes, shall be
reenacted in the form in which they read on the day prior to the effective date
of this Act."

����
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; provided that section 3 of
this Act shall apply to taxable years beginning after December 31, 2026; provided
further that on December 31, 2032, section 3 of this Act shall be repealed and
section 235-55.6, Hawaii Revised Statutes, shall be reenacted in the form in
which it read on the day prior to the effective date of Act 163, Session Laws
of Hawaii 2023.

INTRODUCED BY:

_____________________________

BY REQUEST

Report Title:

Income
Tax; Standard Deduction; Income Tax Brackets; Child and Dependent Care Tax
Credit

Description:

Repeals
future adjustments to the standard deduction and income tax brackets.
�
Increases the applicable percentage of the
employment-related expenses for which the child and dependent care tax credit
may be claimed; provides for a disallowance period when there is a final
administrative or judicial decision finding that the claim was due to fraud or
disallowing the credit; and defines "adjusted gross income" for
purposes of the child and dependent care tax credit as adjusted gross income as
defined by the Internal Revenue Code of 1986, as amended.
�
Extends the sunset for amendments made by Act
163, SLH 2023 to the child and dependent care tax credit, earned income tax
credit, and food/excise tax credit.

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