(The Center Square) – Hawaii Gov. Josh Green signed House Bill 2404 into law on Monday. The bill increases the standard income tax deduction in odd years and lowers tax rates for all brackets in even years.
The governor said the change would lead to a 71% decrease in the income tax rate by 2031, which would increase take-home pay by $3,613 for a family of four that makes $88,000.
“This legislation is a historic step toward addressing the financial challenges and the cost-of-living crisis faced by Hawaii’s working families,” Green said. “By doubling the standard deduction and amending the tax brackets, HB 2404 provides much-needed tax relief to our residents.”
Hawaii is the second highest-taxed state and will become the fourth-highest with the change, according to Green’s office.
Green also signed Senate Bill 1035, which exempts some medical services from the state’s general excise tax.
“This law is a significant step toward relieving financial burdens and stimulating economic growth in our healthcare sector,” Green said. “By exempting healthcare and dental services reimbursed from these critical programs from the GET, we will promote increased equity and access to healthcare and strengthen our healthcare infrastructure. As a former ER physician working in a rural community, I can confidently say that this legislation will be especially beneficial for rural healthcare providers and patients.”
Keli’i Akina, president and CEO of the Grassroot Institute of Hawaii, said despite criticism by some who said the state could not afford the tax breaks, he believes the state “cannot afford to not cut taxes.”
“For years, Hawaii’s governments have been stuck in a spiral of high spending and high taxes — the result being a stagnant economy and a state we can’t afford to live in,” Akina said in a letter to subscribers. “Hawaii’s high cost of living is being driven even higher by inflation, and people are leaving the state for better opportunities as many of Hawaii’s beloved local businesses are closing their doors.”
