Governor approves ‘historic’ tax relief for working families in bid to address high cost of living
HONOLULU (HawaiiNewsNow) - Gov. Josh Green signed two bills into law Monday that will provide significant tax relief, including the largest tax cut in the state’s history for working families.
With the high cost of living driving out residents, the governor said he hopes this measure will provide some relief with tax breaks targeting families who need it most.
“It’s a partnership that we have with the Legislature,” Green said, in a news conference Monday.
“This will provide historic breaks for individuals, that are working ... mostly under $112,000 for families. But we are going essentially from being one of the highest-taxed states in the country to one of the lowest-taxed states over the course of this period.”
Green said it’s a $5.6 billion tax reduction between early 2025 and 2031 — and a 70% decrease in tax income for working families.
For example, a family of four making a median household income of $88,000 will see the take-home pay go up by about $3,600 by 2031. Under the current tax law, the family would owe roughly $5,000 in state taxes, but with the new changes, the family would owe just $1,480.
“Forty percent now of our taxpayers will pay zero state income tax, up from 25% — so this is about equity,” Green said.
READ MORE: It’s being called Hawaii’s biggest tax break, but some will get more help than others
“We’ve seen an exodus of those individuals going to the mainland, working families, because they just can’t afford rent. We have the highest cost of living in our country. It is a great burden for people just starting their careers.”
Also signed into law was SB1035, which gives tax exemptions for medical services.
The bill exempts hospitals, medical clinics, pharmacies and others from the general excise tax on goods or services that are reimbursed through Medicaid, Medicare or TRICARE.
Governor Josh Green Monday signed two tax relief bills that will save almost all Hawaii families hundreds of dollars and could also save some doctors from going out of business.
The tax bills will provide significant relief, especially for people in the middle and lower income levels. But the largest group in the governor’s office were medical providers there for another tax break could make it easier for people to get care.
Doctors say removing the excise tax from medical services for people on government health care programs could save practices, especially on neighbor islands and in rural areas.
Radiologist Dr. Elizabeth Ignacio said, “I think there are plenty of desperate practices out there who are struggling to give good quality care, while they are struggling to keep the lights on.”
Dr. CIndy Pa, endocrinologist and kidney specialist, said the biggest impact will be on medical practices on the neighbor islands where doctors don’t the support of a large practice or clinic.
She also said many doctors turn away new Medicaid or Medicare patients, and the tax break will make taking those patients more viable.
“Hopefully, this means that more doctors, more healthcare providers will be accepting patients with Medicare, Medicaid and TRICARE, and that will help to increase the access for patients,” she said.
The doctors did express frustration over the decision to delay the excise tax break for government health care until 2026.
As for everyone else, you could see more money in your paycheck effective this January.
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