HOUSE OF REPRESENTATIVES	H.B. NO.	25
THIRTY-SECOND LEGISLATURE, 2023		H.D. 2
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 the coronavirus disease 2019 (COVID-19) pandemic presented the world with unprecedented issues, forcing people out of employment or even their own homes. The COVID-19 pandemic further exacerbated the economic hardship for many Hawaii families who are above the federal poverty line but still struggle to make ends meet. According to Aloha United Way, the COVID-19 pandemic significantly increased the percentage of households that are considered to be asset limited, income constrained, and employed (ALICE) to fifty-nine per cent, which is up from forty-two per cent prior to the pandemic. Aloha United Way further reported a six hundred per cent increase in calls received from people seeking assistance during the pandemic.

The legislature further finds that Act 115, Session Laws of Hawaii 2022 (Act 115), provided, among other things, a one-time general income tax refund to every resident individual taxpayer of the State based on certain income limits multiplied by the number of their qualified exemptions. Act 155 demonstrated the possibility of providing relief to resident taxpayers instead of having to wait until taxes are filed. Rather than a tax credit, which is claimed by the taxpayer for the previous taxable year, the tax refund operated like a tax rebate. The legislature finds that such a mechanism could be useful in providing low-income taxpayers with the immediate assistance they need to meet their everyday needs and provide relief from the general excise tax. The goal of this approach is to simplify and streamline the calculation and distribution of tax credits to support the most vulnerable residents.

The purpose of this Act is to convert the refundable food/excise tax credit to a tax rebate that is allocated directly to qualifying individuals and families.

SECTION 2. Section 235-55.85, Hawaii Revised Statutes, is amended to read as follows:

"§235-55.85 [Refundable food/excise] Food/excise tax [credit.] rebate. (a) [Each] There shall be allowed to each individual taxpayer, who files an individual income tax return for a taxable year, and who is not claimed or is not otherwise eligible to be claimed as a dependent by another taxpayer for federal or Hawaii state individual income tax purposes, [may claim] a [refundable] food/excise tax [credit against the taxpayer's individual income tax liability for the taxable year for which the individual income tax return is being filed;] rebate; provided that an individual who has no income or no income taxable under this chapter and who is not claimed or is not otherwise eligible to be claimed as a dependent by a taxpayer for federal or Hawaii state individual income tax purposes [may claim] shall be eligible for this [credit.] rebate. The tax rebate provided under this section shall not be used to offset any tax liability under title 14 of the taxpayer.

(b) [Each individual taxpayer may claim a refundable] The amount of the food/excise tax [credit] rebate shall be equal to [multiplied by] the number of qualified exemptions to which the taxpayer is entitled multiplied by the rebate amount allowed per exemption, in accordance with the table below; provided that [a husband and wife] married individuals filing separate tax returns for a taxable year for which a joint return could have been filed by them shall claim only the tax [credit] rebate to which they would have been entitled had a joint return been filed.

Adjusted gross income [Credit] Rebate per exemption

for taxpayers filing

a single return

Under [$5,000 $110

$5,000 under $10,000 $100

$10,000 under $15,000 $ 85

$15,000 under $20,000 $ 70

$20,000 under $30,000 $ 55

$30,000 and over $ 0.]

$           $          

$           and over $          .

Adjusted gross income [Credit] Rebate per exemption

for heads of household,

married individuals filing

separate returns, and

married couples filing

joint returns

Under [$5,000 $110

$5,000 under $10,000 $100

$10,000 under $15,000 $ 85

$15,000 under $20,000 $ 70

$20,000 under $30,000 $ 55

$30,000 under $40,000 $ 45

$40,000 under $50,000 $ 35

$50,000 and over $ 0.]

$           $          

$           and over $          .

(c) For the purposes of this section, a qualified exemption is defined to include those exemptions permitted under this chapter; provided that no additional exemption may be claimed by a taxpayer who is sixty-five years of age or older; provided that a person for whom exemption is claimed has been physically present in the State for more than nine months during the taxable year; and provided further that multiple exemptions shall not be granted because of deficiencies in vision or hearing, or other disability. For purposes of [claiming] determining eligibility for and the amount of this [credit] rebate only, a minor child receiving support from the department of human services of the State, social security survivor's benefits, and the like, may be considered a dependent and a qualified exemption of the parent or guardian.

(d) The tax [credit] rebate under this section shall not be available to:

(1) Any person who has been convicted of a felony and who has been committed to prison and has been physically confined for the full taxable year;

(2) Any person who would otherwise be eligible to be claimed as a dependent but who has been committed to a youth correctional facility and has resided at the facility for the full taxable year; or

(3) Any misdemeanant who has been committed to jail and has been physically confined for the full taxable year.

(e) [The tax credits claimed by a taxpayer pursuant to this section shall be deductible from the taxpayer's individual income tax liability, if any, for the tax year in which they are properly claimed. If the tax credits claimed by a taxpayer exceed the amount of income tax payment due from the taxpayer, the excess of credits over payments due shall be refunded to the taxpayer; provided that tax credits properly claimed by [an] individual who has no income tax liability shall be paid to the individual; and provided further that no refunds or payment on account of the tax credits allowed by this section shall be made for amounts less than $1.

(f) All claims for tax credits under this section, including any amended claims, shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credits may be claimed.] The tax rebate shall only be allowed for an individual taxpayer who files a state income tax return for the taxable year. Failure to comply with [the foregoing provision] this filing requirement shall constitute a waiver of the right to claim the [credit.] rebate.

[(g)] (f) For the purposes of this section, "adjusted gross income" means adjusted gross income as defined by the Internal Revenue Code."

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

SECTION 4. This Act shall take effect on July 1, 3000; provided that section 2 shall apply to taxable years beginning after December 31, 2022.

Report Title:

Tax Rebate; Food/Excise Tax Rebate

Description:

Converts the refundable food/excise tax credit to a tax rebate to be issued to qualifying taxpayers annually. Applies to taxable years beginning after 12/31/2022. Effective 7/1/3000. (HD2)

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