Hawaii’s tax landscape is ever-evolving to mirror federal amendments and address the unique financial dynamics of the island state. A significant wave of change came with House Bill 1041, along with other legislative adjustments in 2023. Let’s dive into the key points of these legislative measures.
Alignment with Federal Tax Laws
House Bill 1041 aligns Hawaii’s tax laws with certain federal tax law changes, particularly around the treatment of the second round recovery rebates under the CARES Act, marking them as non-taxable. However, it diverges from the federal exclusion of up to $10,200 in unemployment benefits received in 2020 due to cost concerns.
Tax Treatment of Federal Grants
The forgiven amounts of PPP loans, EIDL, and other federal grants will remain non-taxable income in Hawaii, a respite for small business owners amidst the economic repercussions of the pandemic. However, unlike the federal law that allowed a double benefit, the associated expenses won’t be deductible in Hawaii.
Recent Legislative Adjustments in 2023
In 2023, Hawaii witnessed further legislative amendments to its tax laws:
- Higher Tax Credits: A notable shift came with higher tax credits for many Hawaii residents, marking about $104 million worth of relief targeted for the upcoming year.
- Health and Tobacco Products Taxation: The Session Laws of Hawaii 2023, Act 62, addressed tax treatment relating to health, tobacco products, and electronic smoking devices.
- Tax Treatment of Red Hill Bulk Fuel Storage Facility Payments: Act 62 also covered the tax treatment of certain payments related to the Red Hill Bulk Fuel Storage Facility on Oahu.
Announcements from Hawaii’s Department of Taxation
The Hawaii Department of Taxation has been active in elucidating these tax law changes, ensuring taxpayers sail through the turbulent tax seas with the requisite knowledge.
Final Thoughts
Understanding these tax changes is crucial for individuals and businesses to navigate the financial waters adeptly in Hawaii. The wave of legislative amendments, including House Bill 1041 and the recent 2023 adjustments, signifies a noteworthy shift in the tax landscape, underscoring the importance of staying updated with tax laws to ensure smooth sailing in Hawaii’s tax waters.
