Several bills that would cut household taxes in Hawaii are advancing at the Legislature, including one promising to save a family of four around $2,000 or more in 2024 and beyond.

The biggest proposed savings are in a bill from Gov. Josh Green that would boost all Hawaii income tax bracket thresholds and increase the standard deduction along with the personal exemption.

The measure, House Bill 1049, also would increase a tax credit for low-income renters, the earned income tax credit, the food excise tax credit and a child and dependent care credit, while also creating a new maximum $500 credit for many public and private school teachers who spend their own money on school supplies.

Another bill from Green, HB 1050, would exempt the state general excise tax from most grocery food purchases, excluding alcohol and hot prepared food, and for over-the-counter drugs and feminine hygiene and incontinence products.

Green has described the income tax amendment bill as an “audacious” multipronged strategy to deliver economic relief to households burdened by Hawaii’s cost of living, which is higher than any other state’s and almost twice the national average.

The governor’s office, in written testimony supporting the bill, also said that leaving more money in the pockets of Hawaii consumers will encourage more spending that helps support the state economy.

“Also known as the Green Affordability Plan, or GAP, this measure seeks to improve the lives of people throughout our state, especially families and individuals who we know and see in our daily lives who are coping with difficult cost of living and quality of life challenges,” the testimony from Green’s office said. “Under the GAP, every income bracket in our state will pay less state income tax.”

The cost of tax relief under HB 1049 is estimated by the state Department of Taxation to be $313 million in the next fiscal year, and would grow annually by around $20 million to reach $417 million in fiscal year 2029, according to testimony submitted by the state Department of Budget and Finance.

Revenue lost from general excise tax exemptions proposed in HB 1050 is estimated to be $245 million in fiscal year 2025.

“On its face, these estimated revenue losses are large; however, the Council on Revenues’ general fund revenue projections are more than sufficient to accommodate the GAP bill and other Administration bills submitted to the Legislature this session,” Budget and Finance Director Luis Salaveria said in his written testimony.

The state has a roughly $2 billion current financial surplus, and it is projected to remain at around the same level at least through mid-2025.

Green, in his State of the State speech in January, said his income tax reduction plan, if implemented, would save a family of four in every income tax bracket nearly $2,000 and that lower-income families would see greater savings.

The proposed general excise tax exemption could save a family of four with budget-conscious grocery food spending around $800 a year, according to the Hawaii Food Industry Association, which said the exemption should be easy for retailers to program into their point-of-sale systems and bring Hawaii into line with 37 other states.

HB 1049, the income tax savings bill, has received encouragement in written testimony from about two dozen people and several nonprofit organizations supporting families and children, including the Hawaii Appleseed Center for Law & Economic Justice, during a Feb. 14 hearing held by the House Committee on Economic Development and the House Committee on Education.

The Tax Foundation of Hawaii, a nonprofit policy organization, suggested that teachers be reimbursed for class expenses instead of being given a tax credit, and welcomed the proposed general tax relief, given that many households have long been undeservedly pushed into higher income tax brackets based on income that has risen only as much as or less than inflation.

“This relief is welcome because Hawaii taxpayers have been ‘bracket creeped’ for a long time,” the foundation said in written testimony.

Under the bill, tax brackets, along with the standard deduction and personal exemption, would be adjusted to inflation annually.

The nonprofit Grassroot Institute of Hawaii said in written testimony that HB 1049 would effectuate one of the largest tax reduction proposals in state history.

“We applaud the governor for introducing such a bold plan and thank the Legislature for considering this important proposal, especially considering how skyrocketing inflation on top of Hawaii’s already high cost of living has made it hard for low-income and working-class families to afford basic necessities such as food, rent and medical care,” said Ted Kefalas, the organization’s director of strategic campaigns.

Deb Marois said in written testimony that Hawaii’s Tax Review Commission has recommended an increase in the standard deduction in every one of its reviews since 1983.

“This is long overdue and sorely needed, along with regularly occurring increases that account for inflation,” she said.

The two House committees passed HB 1049 unanimously Feb. 14. The House Finance Committee is scheduled to hear the bill Wednesday. Passage by the full House is expected, and if that happens the measure would then cross over to the Senate for consideration.

The general excise tax exemption bill, HB 1050, was passed Feb. 10 almost unanimously by the House Committee on Economic Development and unanimously by the House Committee on Health and Homelessness. The bill is now referred to the House Finance Committee for a hearing.

There are also at least a couple of other bills that have advanced at the Legislature and propose tax relief limited to pieces of what Green has proposed.

One, HB 954, contemplates increasing the value of Hawaii’s earned income tax credit, which reduces the tax burden of low- to moderate-income taxpayers and can provide a tax refund to those with little to no tax liability.

Another measure, HB 493, would amend income tax brackets and increase the value for Hawaii’s refundable food excise tax credit.

These two bills passed the House Economic Development Committee but have not yet been heard by the House Finance Committee.

WHERE RESIDENTS WOULD SAVE MONEY

Gov. Josh Green’s primary piece of tax relief legis­lation, House Bill 1049, which he calls the Green Affordability Plan, proposes to overhaul major elements of Hawaii personal income tax regulations that would save households close to or more than $2,000, depending on their income.

Here’s what it would do starting in 2024:

>> Raise qualifying income levels of every tax bracket.*

>> Increase the standard deduction by about 130%.*

>> Double the personal exemption.*

>> Broaden eligibility and increase the amount of a credit on expenses for child and dependent care.

>> Expand eligibility and increase the amount of a refundable credit for rental housing costs available to low-income households to as much as $350 per exemption, up from $50.

>> Increase the earned income tax credit for low-income households to 30% of the federal EITC, up from 20%.

>> Expand eligibility and double the size of a refundable credit representing a rebate on excise taxes low-income households pay on food purchases.

>> Create a new maximum $500 credit for many public and private school teachers who spend their own money on school supplies.

* Automatically adjusted for inflation annually after 2024