HI HB83

Addresses a marginal tax rate issue identified in a 2014 academic study that found Hawaii taxpayers could face a 367,100 percent marginal tax rate at $200,000 in federal adjusted gross income due to confluence of existing tax provisions.

Implements limitations on itemized tax deductions based on federal adjusted gross income: full deductions allowed up to $100,000, reduced deductions between $100,000 and $500,000 (declining by 25% of income over $100,000), and zero deductions for income of $500,000 or more.

Repeals income-based restrictions on state and local tax deductions under Section 164 of the Internal Revenue Code, allowing corporate taxpayers and all individual taxpayers regardless of income level to claim state and local income tax deductions.

Retains the prohibition on claiming credits for federal foreign taxes and prevents double-claiming of state tax deductions where a credit under Section 235-55 has already been claimed.

Takes effect July 1, 2030, and applies to taxable years beginning after December 31, 2014.