Hawaii lawmakers push for continued tax relief for most families

HONOLULU (HawaiiNewsNow) – The Hawaii State Legislature is entering the final weeks of the 2025 session with at least one point of agreement: income taxes will continue to decline for most families.

Both the House and Senate rejected the governor’s plan to cancel some tax relief, despite earlier uncertainty about the state’s financial situation.

“So what the Senate’s position is, is we want to make sure that the promises that were made are kept, especially with those families that make $350,000 a year or less,” said Senate Ways and Means chair Donovan Dela Cruz.

House Finance chair Rep. Chris Todd agreed the priority is ensuring ongoing tax relief.

Energy tax credits targeted to offset revenue loss

Continuing to reduce taxes means nearly $2 billion has to come from somewhere else. The Senate Ways and Means Committee voted to eliminate state energy tax credits for things like solar power and electric cars in 2029.

The credits could be saved if the economy improves.

“So this becomes a shared approach. Government cuts, business tax credits, get sunset, and then we’re still charging some of the higher end income brackets,” Dela Cruz said. “Their tax breaks are going to get repealed.”

House proposes tax increase on high earners

The House moved along a redesigned tax package that makes tax credits for spending on child care and food more generous and raises income taxes on families with incomes over $350,000.

“It would provide some ongoing tax relief to low to middle income families, but in return, we would request a 1% tax increase on very high income families,” Todd said.

The financial picture is clearer now, even with flood disaster costs, because of the federal disaster declaration.

“Now the state’s eligible to get reimbursed for a lot of these funds. We’re not sure what it’s going to look like, but that’s going to be positive for us,” Dela Cruz said.

Todd said the state is sitting on a solid reserve, a luxury not many states have right now.

All the proposals from the House and the Senate are now going into conference committee, where the final details will be worked out over the next month.

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