THE SENATE

S.B. NO.

3102

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:

 


PART I

SECTION 1. Section 235-55.75, Hawaii Revised Statutes, is amended to read as follows:

"[[]235-55.75[] 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; and provided 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.

[(g) This section shall apply to taxable years beginning after December 31, 2017, but shall not apply to taxable years beginning after December 31, 2022.]"

PART II

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 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 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 been filed.

 

[Adjusted gross income Credit per exemption

for taxpayers filing

a single 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 $ 0.

 

Adjusted 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[, "adjusted gross income" means adjusted gross income as defined by the Internal Revenue Code.]:

(1) "Hawaii earned income" means:

(A) Wages, salaries, tips, and other employee compensation earned in the State, 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, earned in the State, 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."

PART III

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; [and]

(7) $10.10 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."

PART IV

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.

 

INTRODUCED BY:

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Report Title:

Income Tax; Earned Income Tax Credit; Refundable Food/Excise Tax Credit; Minimum Wage

 

Description:

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, rather than 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.

 

 

 

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