Introduction

All of Hawaiʻi’s families deserve the opportunity to thrive without worrying whether they’ll be able to make ends meet each month. Yet Hawaiʻi’s unaffordable cost of living continues to act as a barrier to long-term economic security. This crisis has driven many low- to middle-income families to other states in search of lower costs and higher-paying jobs. Many of the working families who stay are at risk of falling into poverty, debt, and even houselessness. 

Tax credits are an effective way to give these families the money they need to pay for their everyday expenses, such as food, rent, and medical care. Improving existing tax credits, as well as implementing a new state-level child tax credit, would help lift up tens of thousands of the local families that power our economy, strengthening our shared prosperity.

The need for robust tax credits continues to grow along with the increasingly unaffordable cost of living in Hawaiʻi. In 2022, 15,664 local residents left Hawaiʻi for other states in the U.S. Much of this outmigration has been driven by how difficult it is for families to make ends meet, even if they work full-time.

• In 2023, the median income for a single person was $60,346 per year. For comparison, the median rent was $1,940 a month, or $23,280 for the year.

• In 2022, 10.2 percent of Hawaiʻi’s residents were living in poverty. Overall, 44 percent of households in Hawaiʻi were either living in poverty, or were under the Asset-Constrained, Income-Limited, Employed (ALICE) threshold. ALICE households are not technically living in poverty, but they are still struggling to make ends meet. 

A family of four with two young children would have to earn over $107,000 to stay above the ALICE threshold and achieve basic economic security. This amount of money is simply out of reach for most working parents, given how few available jobs pay a living wage.

In 2025, a living wage for that same Hawaiʻi family of four—when both adults are working—is $36.43 an hour in Honolulu, compared to the Hawaiʻi state minimum wage of just $14 an hour.

Food service jobs make up 12.4 percent of all jobs in Hawaiʻi, followed by retail and sales jobs at 8.6 percent. These jobs often pay low wages, and do not provide opportunities for non-college educated workers to adequately support their families.

Underscoring this point, families with children were significantly more likely to be in poverty compared to the rest of the population. Further, nearly one out of four single mothers in Hawaiʻi live beneath the poverty line. 

Without help from the government, many people living in poverty are unable to reach lasting economic security. This partly explains why poverty carries over from one generation to the next, as children who grow up in low-income households are less likely to attend college and find well paying jobs later in life.

Tax Credits Make Living in Hawai‘i More Affordable

Tax credits are extra money that qualifying people receive when filing their tax returns. They are intended to lower the income taxes paid by certain populations, particularly low- to middle-income people. There are two major advantages of using tax credits to help people over other types of assistance.

1. Tax credits are simpler to apply for than government programs. If someone meets the basic requirements, they can automatically claim the credit when they file their tax return. In comparison, it can take more time and effort to apply for government programs like the Supplemental Nutrition Assistance Program (SNAP). SNAP recipients have to undergo a lengthy application process, which includes an interview, providing documentation, and getting recertified every 6 months.
   

2. Tax credits can be used for any expenses. Tax credits can be spent on food, housing, transportation, or anything else that people need in their day-to-day life. This gives recipients the freedom to decide how they will spend their money, without restrictions. On the other hand, SNAP recipients can only spend their benefits on food, excluding hot meals. Likewise, housing assistance from the federal government can only be used to pay rent.