HB 1268 Summary

• Increases the state income tax rate by 5 percentage points for the highest-income earners in Hawaii for six years (taxable years beginning after December 31, 2020, but before January 1, 2028).

• For joint filers and surviving spouses, raises the top marginal tax rate from 11% to 16% on income over $400,000; for heads of household, raises it from 11% to 16% on income over $300,000; for single filers, raises it from 11% to 16% on income over $200,000.

• Returns to the previous 11% rate for all taxpayer categories beginning January 1, 2028, making the increase temporary.

• Aims to address state budget deficits caused by the COVID-19 pandemic and its disproportionate impact on lower and middle-wage workers by taxing high-income earners at higher rates.