Taxes & Budget
Hawaiʻi is improving tax fairness for low-income working families by expanding programs like the state Earned Income Tax Credit, now worth 40 percent of the federal credit. Tax credits reduce poverty, boost spending, and are simpler to access than other government benefits.
Yet many families still struggle. The EITC excludes people who cannot work. To fund essential community investments, Hawaiʻi must reform its unequal tax system, which overburdens working families while under-taxing corporations and the wealthy. A fairer approach is critical to addressing inequality.
2026 Legislative Priorities
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Capital gains are the profits made from selling assets like stock, antiques and real estate. In Hawaiʻi, they are taxed at a maximum rate of 7.25 percent, which is lower than the tax rate applied to income from work for many high-earners.
This creates a loophole that wealthy residents with assets can exploit to lower their overall tax rate. Closing the loophole by taxing capital gains at the same marginal rates as ordinary income would generate badly-needed revenue for the state while increasing fairness within the tax code.
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Stopping the implementation of Act 46’s broad and sweeping income tax cuts after 2025 would allow the state to recapture some of the vital revenue the 2024 law is projected to lose the state over the next six years.
The long-term goal is to adjust Act 46 to reduce its benefit for high-income taxpayers, while preserving the benefits that the law distributes to lower-income households so that it can function as a tax fairness boost without absorbing too much of the state budget.
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Create a state-level Child Tax Credit that delivers a sum of money (e.g. $250 per child each year) to low- and middle-income households. This program is a proven strategy to help low-income families afford the cost of basic necessities, which improves their economic security while generating economic activity, and therefore tax revenue, for the state.
The General Excise Tax. We all know it, we all complain about it, especially the way it stacks up in transaction after transaction, raising prices. But there was a time when it didn't exist at all. Here's a look at who created it, when, and, most importantly, why.