REPORT TITLE:
Taxation


DESCRIPTION:
Increases standard deduction to $5,000 for singles, $8,685 for
head of household, and $10,000 for a couple; increases personal
exemption to $5,000 for first two exemptions and $2,500 for all
additional exemptions.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
THE SENATE                              S.B. NO.           2103
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO TAXATION. 


BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  The legislature finds that while Hawaii's
 
 2 economy has begun to show signs of recovery and growth, many of
 
 3 the State's residents continue to suffer from the economic
 
 4 stagnation of the previous decade.  Low and moderate income
 
 5 individuals and families in particular have little discretionary
 
 6 income, and spend a larger portion of their income on essential
 
 7 expenses.  In order to generate economic renewal and activity,
 
 8 the State must place more disposable income in the hands of
 
 9 Hawaii's residents.
 
10      The purpose of this Act it to increase the standard
 
11 deductions and personal exemptions for taxable income.
 
12      SECTION 2.  Section 235-2.4, Hawaii Revised Statutes, is
 
13 amended by amending subsection (a) to read as follows:
 
14      "(a)  Section 63 (with respect to taxable income defined) of
 
15 the Internal Revenue Code shall be operative for the purposes of
 
16 this chapter, except that the standard deduction amount in
 
17 section 63(c) of the Internal Revenue Code shall instead mean:
 
18      (1)  [$1,900] $10,000 in the case of:
 
19           (A)  A joint return as provided by section 235-93; or
 

 
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                                     S.B. NO.           2103
                                                        
                                                        

 
 1           (B)  A surviving spouse (as defined in section 2(a) of
 
 2                the Internal Revenue Code);
 
 3      (2)  [$1,650] $8,685 in the case of a head of household (as
 
 4           defined in section 2(b) of the Internal Revenue Code);
 
 5      (3)  [$1,500] $5,000 in the case of an individual who is not
 
 6           married and who is not a surviving spouse or head of
 
 7           household; or
 
 8      (4)  [$950] $5,000 in the case of a married individual
 
 9           filing a separate return.
 
10      Section 63(c)(4) shall not be operative in this State.
 
11 Section 63(c)(5) shall be operative, except that the limitation
 
12 on basic standard deduction in the case of certain dependents
 
13 shall be the greater of $500 or such individual's earned income.
 
14 Section 63(f) shall not be operative in this State.
 
15      The standard deduction amount for nonresidents shall be
 
16 calculated pursuant to section 235-5."
 
17      SECTION 3.  Section 235-54, Hawaii Revised Statutes, is
 
18 amended by amending subsection (a) to read as follows:
 
19      "(a)  In computing the taxable income of any individual,
 
20 there shall be deducted, in lieu of the personal exemptions
 
21 allowed by the Internal Revenue Code, personal exemptions
 
22 computed as follows:  Ascertain the number of exemptions which
 
23 the individual can lawfully claim under the Internal Revenue
 

 
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                                     S.B. NO.           2103
                                                        
                                                        

 
 1 Code, add an additional exemption for the taxpayer or the
 
 2 taxpayer's spouse who is sixty-five years of age or older within
 
 3 the taxable year, and multiply that number by [$1,040,] $5,000
 
 4 for the first two exemptions, and by $2,500 for all additional
 
 5 exemptions, for taxable years beginning after December 31,
 
 6 [1984.] 1999.  A nonresident shall prorate the personal
 
 7 exemptions on account of income from sources outside the State as
 
 8 provided in section 235-5.  In the case of an individual with
 
 9 respect to whom an exemption under this section is allowable to
 
10 another taxpayer for a taxable year beginning in the calendar
 
11 year in which the individual's taxable year begins, the personal
 
12 exemption amount applicable to such individual under this
 
13 subsection for such individual's taxable year shall be zero."
 
14      SECTION 4.  Statutory material to be repealed is bracketed.
 
15 New statutory material is underscored.
 
16      SECTION 5.  This Act shall take effect upon approval;
 
17 provided that section 2 shall be applicable for taxable years
 
18 beginning after December 31, 1999.
 
19 
 
20                           INTRODUCED BY:  _______________________