HOUSE OF REPRESENTATIVES
THIRTIETH LEGISLATURE, 2020
STATE OF HAWAII
A BILL FOR AN ACT
RELATING TO HELPING WORKING FAMILIES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Section 235-55.75, Hawaii Revised Statutes, is amended to read as follows:
Earned] Refundable earned income tax credit. (a) Each qualifying individual taxpayer may claim
a [ nonrefundable] refundable earned income tax credit. The tax credit, for the appropriate taxable
year, shall be twenty per cent of the federal earned income tax credit allowed
and properly claimed under section 32 of the Internal Revenue Code and reported
as such on the individual's federal income tax return.
(b) For a part-year resident, the tax credit shall equal the amount of the tax credit calculated in subsection (a) multiplied by the ratio of Hawaii adjusted gross income to federal adjusted gross income.
(c) For purposes of this section, "qualifying individual taxpayer" means a taxpayer that:
(1) Files a federal income tax return for the taxable year claiming the earned income tax credit under section 32 of the Internal Revenue Code; and
(2) Files a Hawaii income tax return using the filing status used on the federal income tax return for the taxable year and claiming the same dependents claimed on the federal income tax return for the taxable year.
(d) The credit allowed under this section shall
be claimed against the net income tax liability for the taxable year. [
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 net income tax
liability in subsequent years until exhausted.] If the tax credit claimed
by the taxpayer under this section exceeds the amount of the income tax
payments due from the taxpayer, the excess of credit over payments due shall be
refunded to the taxpayer; provided that the tax credit properly claimed by a
taxpayer who has no income tax liability shall be paid to the taxpayer;
provided further that no refunds or payments on account of the tax credit
allowed by this section shall be made for amounts less than $1. All claims, including amended claims, for a
tax credit under this section shall be filed on or before the end of the
twelfth month following the close of 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 credit.
(e) No credit shall be allowed under this section for any taxable year in the disallowance period. For purposes of this subsection, the disallowance period is:
(1) The period of ten taxable years after the most recent taxable year for which there was a final administrative or judicial decision that the taxpayer's claim for credit under this section was due to fraud; and
(2) The period of two taxable years after the most recent taxable year for which there was a final administrative or judicial decision disallowing the taxpayer's claim for credit.
(f) The director of taxation:
(1) Shall prepare any forms necessary to claim a tax credit under this section;
(2) May require proof of the claim for the tax credit;
(3) Shall alert eligible taxpayers of the tax credit using appropriate and available means;
(4) Shall prepare an annual public report to the legislature and the governor containing the:
(A) Number of credits granted for the prior calendar year;
(B) Total amount of the credits granted; and
(C) Average value of the credits granted to taxpayers whose earned income falls within various income ranges; and
(5) May adopt rules pursuant to chapter 91 to effectuate this section.
This section shall apply to] If
nonrefundable credits claimed under this section for either of the two consecutive
taxable years beginning after December 31, 2017, [ but shall not apply to
taxable years] exceeds the taxpayer's income tax liability for the
original claim year, the excess of the tax credits over liability may be used
as a credit against the taxpayer's net income tax liability in subsequent years
until exhausted; provided that no credit carried forward under this subsection
shall be used as a credit for a taxable year beginning after December 31,
SECTION 2. Section 235-55.85, Hawaii Revised Statutes, is amended as follows:
1. By amending subsection (b) to read:
"(b) Each individual taxpayer with Hawaii earned
income of at least $1 but less than $30,000 and a federal adjusted gross income
of less than $30,000 may claim a refundable food/excise tax credit of
$150 multiplied by the number of qualified exemptions to which the taxpayer
is entitled [
in accordance with the table below]; provided that for taxpayers
with a filing status of head of household, married filing separate, and married
filing jointly, the taxpayer has Hawaii earned income of at least $1 but less
than $50,000 and federal adjusted gross income of less than $50,000; provided
further that a husband and wife filing separate tax returns for a
taxable year for which a joint return could have been filed by them shall claim
only the tax credit to which they would have been entitled had a joint return
gross income Credit per exemption for
taxpayers filing a
return Under $5,000 $110 $5,000 under $10,000 $100 $10,000 under $15,000 $ 85 $15,000 under $20,000 $ 70 $20,000 under $30,000 $ 55 $30,000 and over $
gross income Credit per exemption for
heads of household, married
individuals filing separate returns, and married couples filing joint returns Under $5,000 $ 110 $5,000 under $10,000 $100 $10,000 under $15,000 $ 85 $15,000 under $20,000 $ 70 $20,000 under $30,000 $ 55 $30,000 under $40,000 $ 45 $40,000 under $50,000 $ 35 $50,000 and over $ 0.]"
2. By amending subsection (g) to read:
"(g) For the purposes of this section[
gross income" means adjusted gross income as defined by the Internal
(1) "Hawaii earned income" means:
(A) Wages, salaries, tips, and other employee compensation that is subject to the taxes imposed by this chapter, but only if these amounts are includible in gross income for the taxable year; and
(B) The amount of the taxpayer's net earnings from self-employment that is subject to the taxes imposed by this chapter for the taxable year (within the meaning of section 1402(a) of the Internal Revenue Code); provided that the net earnings shall be determined with regard to the deduction allowed to the taxpayer by section 164(f) of the Internal Revenue Code; and
(2) For purposes of paragraph (1):
(A) The Hawaii earned income of an individual shall be computed without regard to any community property laws;
(B) No amount received as a pension or annuity shall be taken into account;
(C) No amount to which section 871(a) of the Internal Revenue Code applies (relating to income of nonresident alien individuals not connected with United States business) shall be taken into account;
(D) No amount received for services provided by an individual while the individual is an inmate at a penal institution shall be taken into account;
(E) No amount described in paragraph (1) received for service performed in work activities as defined in paragraph (4) or (7) of section 407(d) of the Social Security Act to which the taxpayer is assigned under any state program under part A of title IV of the Social Security Act shall be taken into account, but only to the extent the amount is subsidized under the state program; and
(F) A taxpayer may elect to treat amounts excluded from gross income by reason of section 112 of the Internal Revenue Code as Hawaii earned income."
SECTION 3. 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; [
per hour beginning January 1, 2018[
(8) $11.00 per hour beginning January 1, 2021;
(9) $12.00 per hour beginning January 1, 2022;
(10) $12.50 per hour beginning January 1, 2023; and
(11) $13.00 per hour beginning January 1, 2024."
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; provided that parts I and II shall apply to taxable years beginning after December 31, 2019.
Income Tax; Earned Income Tax Credit; Refundable Food/Excise Tax Credit; Minimum Wage
Makes the state earned income tax credit refundable and permanent. Increases and amends the refundable food/excise tax credit by basing the amount of the credit on a taxpayer's Hawaii earned income and federal adjusted gross income. Increases minimum wage rate to $11.00 per hour beginning on 1/1/2021, $12.00 per hour beginning on 1/1/2022, $12.50 per hour beginning on 1/1/2023, and $13.00 per hour beginning on 1/1/2024. (HD1)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.