About The Hawai‘i Tax Cut
Big Tax Cuts Are Here. Here’s What You Need to Know.
When Do the Changes Start?
In 2024, Hawai‘i passed the largest income tax cut in state history to help local families keep more of their hard-earned money. These tax cuts started in 2024, so you’ll see the changes when you file your taxes for 2024 in early 2025.
Starting January 2025, your paycheck will reflect these changes, meaning more take-home pay for many employees.
These changes are designed to make life more affordable for people living and working in Hawai‘i. Act 46 was a cooperative effort led by Governor Josh Green, the Hawai‘i State Legislature, and local community and tax reform advocates.
How Does it Work?
More of your income is tax-free. If you don’t itemize your deductions and instead use the standard deduction, here’s good news: the standard deduction is increasing. This means a larger portion of your income won’t be taxed, leading to lower overall taxes for those who take the standard deduction. More of your income is tax-free.
You pay less taxes on what you earn. Act 46 also changes the tax brackets. Tax brackets determine the tax rate you pay based on how much money you make. Act 46 widens the brackets, so more of your income is taxed at a lower rate.
Hawai‘i’s Tax Burden is Dropping for All of Us
Who Benefits From the New Law?
While all taxpayers will see savings, the biggest relief will go to households earning $150,000 or less.
For example, a family of four making $88,000 a year will save about $20,000 in state taxes over the next five years.
Before this law, Hawai‘i had one of the highest income tax burdens in the country. Thanks to Act 46, We will rank among the lowest for middle-income families when the law is fully implemented in 2031.
Discover Your Tax Savings
Use our simple calculator to estimate your tax savings from 2025 to 2031. It’s fast, easy, and tailored to your situation.