S.B. NO.



S.D. 1
















SECTION 1. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to part I to be appropriately designated and to read as follows:

"235-   Minimum wage income tax credit for small businesses. (a) There shall be allowed to each qualified small business subject to the tax imposed by this chapter, a credit to offset the increase in minimum hourly rate that an employer must pay an employee, which shall be deductible from the net income tax liability of the qualified small business, if any, imposed by this chapter for the taxable year in which the credit is properly claimed.

(b) The amount of the credit shall be twenty per cent of the increase of total hourly wages paid to all employees during the taxable year over the total hourly wages paid in the prior taxable year. The credit claimed by each qualified small business shall not exceed $50,000 per taxable year that the credit is available.

In the case of a partnership, S corporation, or other pass-through or disregarded entity, eligibility and calculation of the tax credit shall be determined at the entity level.

(c) If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of the tax credit over liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted. Claims for the tax credit under this section, including any amended claims, shall be filed on or before the end of the twelfth month following the taxable year for which the credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the tax credit.

(d) For purposes of this section, "qualified small business" means a taxpayer that has:

(1) Fifty or fewer employees; and

(2) No more than $4,000,000 gross income in the taxable year for which the credit is being claimed.

(e) The director of taxation:

(1) Shall prepare any forms necessary to claim a credit under this section;

(2) May require a taxpayer to furnish reasonable information to ascertain the validity of a claim for credit; and

(3) May adopt rules pursuant to chapter 91 to effectuate the purposes of this section.

(f) The credit under this section may be claimed for the taxable year beginning after December 31, 2019 and for the following four taxable years."

SECTION 2. Section 387-2, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Except as provided in section 387‑9 and this section, every employer shall pay to each employee employed by the employer, wages at the rate of not less than:

(1) $6.25 per hour beginning January 1, 2003;

(2) $6.75 per hour beginning January 1, 2006;

(3) $7.25 per hour beginning January 1, 2007;

(4) $7.75 per hour beginning January 1, 2015;

(5) $8.50 per hour beginning January 1, 2016;

(6) $9.25 per hour beginning January 1, 2017; [and]

(7) $10.10 per hour beginning January 1, 2018[.];

(8) $12.00 per hour beginning January 1, 2020; and

(9) $15.00 per hour beginning January 1, 2023."

SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 4. This Act shall take effect on January 1, 2020; provided that section 1 shall apply to taxable years beginning after December 31, 2019.




Report Title:

Minimum Wage; Increase; Tax Credit



Provides an income tax credit for qualifying small businesses to offset the increase in the minimum hourly rate that employers must pay employees. Increases the minimum wage to $12.00 per hour beginning 1/1/2020 and $15.00 per hour beginning 1/1/2023. (SD1)




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