Income Tax Burden In Hawaii; Second Highest In the U.S. According to Analysis

Why Does Income Tax Burden In Hawaii Second Highest In the U.S.?

The analysis revealed that even middle-class residents face an income tax burden in Hawaii. A family of four earning the state’s median income of $88,005 would pay approximately $5,086 in state income taxes per year. Interestingly, single filers in Hawaii earning $500,000 annually pay more in income taxes compared to their counterparts in other states. Similarly, married couples earning over $1 million per year also face higher income tax burdens when compared to similar households in other states.

Seth Colby, a tax research planning officer with the Hawaii Department of Taxation, explained that Hawaii follows a progressive income tax schedule, meaning that tax rates increase as income levels rise.

The high-income tax burden in Hawaii contributes to the state’s overall high cost of living, as noted by Keli’i Akina, president, and CEO of the Grassroot Institute of Hawaii. He believes that Hawaii’s tax system fares poorly when compared to other states and attributes it to the state’s underperforming economy.

To address the issue of high living costs, Governor Josh Green introduced the “Green Affordability Plan,” which focuses on various factors contributing to Hawaii’s high cost of living. The plan includes tax breaks, such as increasing the child and dependent care tax credit and doubling the food excise tax credit. These measures aim to provide direct tax relief, totaling over $104 million for taxpayers in Hawaii.

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Governor Green Income Tax Burden In Hawaii

Governor Green expressed his commitment to further reducing the tax burden in Hawaii and in the future. He plans to implement additional tax breaks, aiming for a total of $250 million in tax relief to alleviate the financial strain on Hawaii residents.

Keli’i Akina emphasized the importance of easing the income tax burden in Hawaii for the well-being of future generations. He hopes that lawmakers will pass the remaining components of the governor’s tax plan, including exempting medical services from the general excise tax, in the coming years.

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