THE SENATE

S.B. NO.

2484

TWENTY-NINTH LEGISLATURE, 2018

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

relating to estate taxes.

 

 

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

 


     SECTION 1.  The legislature finds that the federal government has significantly raised the threshold for the federal estate tax.  The federal estate tax had been imposed on decedents' estates valued at $5,490,000 or greater per individual and $10,980,000 per surviving spouse.  Estates valued at less than these amounts are exempt from paying federal estate taxes.  The recently enacted Public Law No. 115-97, originally introduced in Congress as the Tax Cuts and Jobs Act, doubles the threshold to $11,200,000 and $22,400,000, respectively, and will result in a reduction in federal estate tax revenues.  According to Internal Revenue Service data, twenty-one estates in Hawaii paid a total of $23,471,000 in federal estate taxes in 2015.

     The legislature further finds that these changes to the federal estate tax provide the State with an opportunity to benefit Hawaii residents.  By amending Hawaii's estate tax thresholds and rates, the State can capture some of the money that certain residents will no longer be required to pay to the federal government and redirect that money to the State.

     The legislature additionally finds that any additional estate tax revenue paid to the State can be used to pay for priorities that the federal government will no longer be able to support due to the significant reduction of estate tax revenues.

     The purpose of this Act is to maintain the responsibility of Hawaii residents to pay a fair and equitable tax on large estates.

     SECTION 2.  Section 236E-6, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  An exclusion from a Hawaii taxable estate shall be allowed to the estate of every decedent against the tax imposed by section 236E-8.  For the purpose of this section, the applicable exclusion amount is the same as the federal applicable exclusion amount, as amended by section 236E-8, the exemption equivalent of the unified credit reduced by the amount of taxable gifts made by the decedent that reduces the amount of the federal applicable exclusion amount, or the exemption equivalent of the unified credit on the decedent's federal estate tax return, as set forth for the decedent in chapter 11 of the Internal Revenue Code as further adjusted below:

     (1)  For residents, 100 per cent of the applicable exclusion amount;

     (2)  For nonresidents, an amount computed by multiplying the applicable exclusion amount by a fraction, the numerator of which is the value of the property in the State subject to tax under this chapter, and the denominator of which is the federal gross estate; and

     (3)  For nonresidents not citizens, an amount computed by multiplying the exemption equivalent of the unified credit by a fraction, the numerator of which is the value of the property in the State subject to tax under this chapter, and the denominator of which is the federal gross estate."

     SECTION 3.  Section 236E-8, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

     "(b)  With respect to the estates of decedents dying after January 25, 2012, the tax based on the Hawaii net taxable estate shall be as provided in the following schedule:

     If the Hawaii net taxable

     estate is:                  The tax shall be:

     $1,000,000 or less          10.0% of the Hawaii net

                                   taxable estate

 

     Over $1,000,000 but         $100,000 plus 11.0% of the

       not over $2,000,000         amount by which the Hawaii

                                   net taxable estate

                                   exceeds $1,000,000

 

     Over $2,000,000 but         $210,000 plus 12% of the

       not over $3,000,000         amount by which the Hawaii

                                   net taxable estate

                                   exceeds $2,000,000

 

     Over $3,000,000 but         $330,000 plus 13% of the

       not over $4,000,000         amount by which the Hawaii

                                   net taxable estate

                                   exceeds $3,000,000

 

     Over $4,000,000 but         $460,000 plus 14% of the

       not over $5,000,000         amount by which the Hawaii

                                   net taxable estate

                                   exceeds $4,000,000

 

     Over $5,000,000 but         $600,000 plus 15.7% of the

       not over $10,000,000        amount by which the Hawaii

                                   net taxable estate

                                   exceeds $5,000,000[.]

 

     Over $10,000,000            $1,200,000 plus 20% of the

                                   amount by which the Hawaii

                                   net taxable estate

                                   exceeds $10,000,000."

     SECTION 4.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 5.  This Act shall take effect upon its approval and shall apply to decedents dying or taxable transfers occurring after December 31, 2017.

 

INTRODUCED BY:

_____________________________

 

 



 

Report Title:

Estate and Generation-Skipping Transfer Tax

 

Description:

Increases estate taxes for Hawaii net taxable estates valued at over $10,000,000.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.