HOUSE OF REPRESENTATIVES	H.B. NO.	1126
THIRTY-SECOND LEGISLATURE, 2023
STATE OF HAWAII

A BILL FOR AN ACT

relating to taxation.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that Hawaii's economy is slowly recovering as it emerges from the COVID-19 pandemic. However, many of Hawaii's working families are still experiencing financial difficulties and hardships. The legislature further finds that the last time the State increased the amount of the personal exemption allowable for individual income tax purposes was in 2009, pursuant to Act 60, Session Laws of Hawaii 2009. By increasing the personal exemption and subsequently adjusting the personal exemption for inflation, Hawaii's families, especially low-income earners, will receive much needed tax relief on a regular basis.

The purpose of this Act is to:

(1) Increase the amount of the personal exemption allowable for taxable income years beginning after December 31, 2023; and

(2) Require the personal exemption to subsequently be increased biannually based on any increase in the Consumer Price Index for All Urban Consumers for Honolulu for the most recent two-year period.

SECTION 2. Section 235-54, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) In computing the taxable income of any individual, there shall be deducted, in lieu of the personal exemptions allowed by the Internal Revenue Code, personal exemptions computed as follows: Ascertain the number of exemptions which the individual can lawfully claim under the Internal Revenue Code, add an additional exemption for the taxpayer or the taxpayer's spouse who is sixty-five years of age or older within the taxable year, and multiply that number by $1,144, for taxable years beginning after December 31, 1984[.]; provided that for taxable years beginning after December 31, 2023, the exemptions shall be multiplied by $1,400. On June 30, 2025, and every two years thereafter, the department shall increase the exemption amount set forth in this subsection, to be effective the following January 1, by the same total percentage change over the most recent two year period in the Consumer Price Index for All Urban Consumers for Honolulu published by the Bureau of Labor Statistics of the federal Department of Labor; provided that if the Consumer Price Index for All Urban Consumers for Honolulu decreased over the most recent two year period, the department shall not decrease the exemption amount but shall retain the most recently established exemption amount. A nonresident shall prorate the personal exemptions on account of income from sources outside the State as provided in section 235-5. In the case of an individual with respect to whom an exemption under this section is allowable to another taxpayer for a taxable year beginning in the calendar year in which the individual's taxable year begins, the personal exemption amount applicable to such individual under this subsection for such individual's taxable year shall be zero."

SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 4. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2023.

INTRODUCED BY:

_____________________________

Report Title:

Income Tax; Personal Exemption; Inflation

Description:

Increases the amount of the personal exemption for taxable income years beginning after 12/31/2023. Requires the personal exemption to be increased biannually based on any increase in the Consumer Price Index for All Urban Consumers for Honolulu for the most recent two-year period.

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