Hawaii taxpayers have a new way to see how much state income tax relief they should receive through 2031 under historic legislation enacted in 2024.

The state Tax Department on Tuesday unveiled a website with information that includes a tax change calculator to estimate individual taxpayer benefits under the 2024 law, Act 46, implementing the biggest cumulative tax cut in Hawaii history.

Tax relief under the law began in 2024 with small initial reductions that taxpayers may be able to discern after finishing their 2024 tax returns, which are due April 21.

Significantly higher savings this year are happening incrementally, and can be seen on paychecks with less income withheld for state income taxes.

Now, with the online calculator at taxcuthawaii.org, taxpayers can get estimates for their annual tax benefits through 2031.

“We expect it’s going to make a significant impact to taxpayers, and we want to help them understand what that impact is,” Gary Yamashiroya, a special assistant to the state tax director, said Tuesday during a demonstration of the website.

Act 46 amends tax brackets and increases the standard deduction in steps over eight years that could make Hawaii the fourth- lowest burdensome state for taxes by 2031 after being the second- most burdensome in 2024.

Generally, taxpayers earning $22,000 to $62,000 a year should expect to see their state income tax payment drop between 63% and 72%, while people with the highest incomes should see reductions of 10% to 15%.

Using the online calculator, a single person with no dependents who earns Honolulu’s 2024 median income of $97,500 and claims the standard deduction should expect savings of $181 in 2024 followed by $1,141 this year. That person’s estimated annual savings, if their income doesn’t change, would continue upward to reach $1,984 in 2028 and top out in 2031 at $2,698.

Over eight years such an individual can expect a 38.4% drop in their annual state income tax obligation to $4,323 in 2031 from $7,021 in 2023, generating a cumulative savings of $14,387, according to the website.

For a married couple with two dependents earning Honolulu’s 2024 median household income of about $139,000 for a family of four and claiming the standard deduction, the estimated cumulative savings is $24,264 and represents a 49.3% tax cut.

Seth Colby, the state Tax Department’s research and planning officer, said as part of Tuesday’s presentation that the calculator can help taxpayers make more informed financial decisions for the future because it can be hard to recognize the gradual accumulation of tax benefits until they add up.

Colby used the analogy of frogs in a pot of water not noticing a gradual rise in heat to explain how a taxpayer might not notice $50 in additional take-home pay in each paycheck.

“You know, $20,000 over the next seven years for a family making $100,000 is a life-changing event,” he said.

The calculator does not account for taxpayers who itemize deductions. Colby said most Hawaii taxpayers itemize deductions, but that is expected to reverse by 2031 because of increases to the standard deduction every two years.

Other information on the website includes general background on the law, a breakdown of tax brackets and the standard deduction by year, and information for businesses about tax withholding requirements and other things.

Gov. Josh Green, who in June signed the tax cut legislation into law after proposing similar legislation in 2023, previously said the tax reform, estimated to cost $5.6 billion, will increase spending in the local economy and lower the cost of living that has prompted many residents to leave the state.

In a statement Tuesday, Green said, “With our historic tax cut in effect, thousands of working families statewide are now seeing more money in their paychecks and bigger tax refunds, with even more savings on the way. This means real incremental financial relief for local households — helping families cover essentials like groceries, rent and childcare. I thank the Legislature for enacting the largest tax cut Hawaii has ever seen, making life more affordable for kamaaina.”

—

Tax relief calculator

The state Tax Department unveiled a tax change calculator to estimate individual taxpayer benefits. Visit the website at: taxcuthawaii.org