Happy 2018, Hawaii!
The state and city are ringing in the new year by lightening your pocketbooks through new laws or rule changes that take effect Monday.
Hawaii residents who are in higher-income tax brackets will need to pay more in the 2018 tax year, and it will cost you more if you want to stay in a hotel room as part of the plan to help bail out the city’s contentious rail project. Oahu transit riders will need to shell out more for TheBus, while motorists will need to pay more to register their cars and trucks.
On the other hand, lower-income folks who work will be able to get a tax credit.
The most noticeable and immediate impacts on family budgets are at the city level.
Riders of TheBus will need to pay $2.75 for a single-fare, one-way ride and $5.50 for a one-day pass. Riders now pay $2.50 for a single fare and $5 for a one-day pass. The flimsy transfer slips allowing a rider to hop on a second bus were eliminated earlier this year and replaced by the one-day passes. The monthly adult bus pass will cost $70 and an annual one $770, up from the current $60 a month and $600 for the year, respectively.
Under Bill 28, youths will still pay $1.25 per ride and seniors $1 for single rides. Monthly rates, however, will rise to $35 a month (from $30) and $385 (from $330) for annual passes for those between 6 and 17. Seniors, those 65 and older, will continue to pay $1 for a single ride and $2 for a daily pass, but the monthly rate is going up to $6 (from $5) and the annual rate to $35 (from $30).
Increases for HandiVan fares were considered initially but eventually dropped by the Council.
Mayor Kirk Caldwell’s initial budget plan called for three years of rate increases for both services, but City Council members chose to do away with the second and third years after concerns were raised by passengers and their advocates that the rate increases would hurt Honolulu residents least able to absorb paying more.
Transportation Services Director Wes Frystacki warned Council members in May that additional increases would be forthcoming. Handi-Van fares were last raised in 2001, while TheBus prices have stayed the same since 2009.
For more information about TheBus or TheHandiVan service, go to thebus.org.
The annual cost to register a car or truck on Oahu also rises Monday.
The weight tax portion of a vehicle registration is going up by 1 cent per pound in each of the next two years — to 6 cents per pound for most vehicles in 2018 and then to 7 cents per pound on Jan. 1, 2019. Trucks would go to 6.5 cents per pound in January and then 7.5 cents in 2019.
For the driver of a Toyota Camry, weighing between 3,300 and 3,600 pounds, each 1-cent increase represents $33 to $36 more each year.
Wealthier to pay more
Budget Director Nelson Koyanagi said each 1-cent increase as proposed in Bill 10 is estimated to bring in $25 million annually for city coffers, so the plan is expected to bring in $12.5 million in 2018 and $50 million in 2019.
City spokesman Andrew Pereira said it won’t help motorists to show up and pay for their vehicle registrations before Monday. A car or truck owner each year pays for a one-year registration that begins and ends after 12 months, regardless of when it is paid, he said.
On the state side, the bad news is those who make more than a certain amount of money will need to pay more as a result of House Bill 209, which reinstates three new tax brackets for the tax year that begins Monday. The good news is the added revenue is targeted for a new state earned income tax that is being made available to those in lower-income tax categories.
Those filing joint returns making more than $300,000 annually, single heads of households making more than $225,000 and singles making more than $150,000 are affected.
For instance, joint filers will need to pay 9 percent of taxable income for between $300,000 and $350,000, 10 percent on between $350,000 to $400,000 and 11 percent on taxable income greater than $400,000. Head of households would pay 11 percent on income greater than $300,000 while singles would pay 11 percent on any portion greater than $200,000.
A host of social service agencies testified this past spring in support of an earned income tax credit, calling it a means to ease the tax burden on low-income wage earners who are least able to pay taxes. The credit will be eligible to those who qualify for the federal earned income tax credit, and would be worth up to 20 percent of the allowable federal credit.
Meanwhile, the minimum wage statewide will rise to $10.10 an hour Monday, 85 cents more than in 2017.
The increase is the last of four increases under Senate Bill 2609 (2014) approved by the 2014 Legislature and signed by then-Gov. Neil Abercrombie. On Jan. 1, 2015, the minimum was increased to $7.75 an hour from $7.25, which had been the minimum wage since 2007. It went to $8.50 an hour in 2016 and to $9.25 this year.
The federal minimum wage is $7.25 an hour and has not changed since 2009.
It will cost you more to stay at a hotel or other visitor accommodation facility anywhere in Hawaii. On Monday the so-called transient accommodations tax, also known as TAT or the hotel room tax, rises to 10.25 percent, up from 9.25 percent, for the next 13 years. Those proceeds are designated for the city’s East Kapolei-to-Ala Moana Center rail line, which has been estimated to cost nearly $10 billion, including financing costs.
Passed by the Legislature in special session and then signed by Gov. David Ige this summer, Senate Bill 4 (2017 first special session), the bill also extended Honolulu’s 0.5 percent surcharge on the 4 percent general excise tax another three years — to 2030.
Altogether the package is expected to net about $2.4 billion for the rail project — $1.33 billion from the TAT increase and $1.05 billion from the surcharge extension.
The TAT increase was opposed vehemently by visitor industry and business interests who argued that a hike in hotel room taxes could put Hawaii’s travel industry at a disadvantage in a highly competitive global market.
MAJOR STATE LAWS THAT TAKE EFFECT MONDAY:
>> Income tax rates increase for joint filers with taxable income greater than $300,000, head-of-household filers with income greater than $225,000, and single filers making more than $150,000. — HB 209
>> Earned income tax credit created: A nonrefundable earned income tax credit will be made available for low-income working people, worth up to 20 percent of the allowable federal earned income tax credit. — HB 209
>> Minimum wage hike: The minimum wage in Hawaii will rise to $10.10 an hour, up 85 cents from 2017. It is the last of four increases that began Jan. 1, 2015, when the minimum was increased to $7.75 an hour from $7.25. — SB 2609 (2014)
>> Transient accommodations tax increase: The so-called hotel room tax will rise to 10.25 percent, up from 9.25 percent, to help fund Honolulu’s rail project. — SB4, 2017 first special session
>> Continuous alcohol monitoring devices: Allows for a judge to require the device be fitted on people found to be repeat intoxicated drivers. — HB 306
>> Driver’s license needed to operate an autocycle: Requires those who drive autocycles, three-wheeled enclosed vehicles that are part motorcycle and part car, to have driver’s licenses. — HB 1258
MAJOR CITY LAWS THAT TAKE EFFECT MONDAY:
>> Bus fare increase: Monthly passes for TheBus go to $70 from $60, one-day passes to $5.50 from $5, and single fares to $2.75 from $2.50. — Bill 28
>> Car registration tax increase: The city vehicle weight tax rises to 6 cents per pound from 5 cents. For example, the weight tax on a 2,800-pound Toyota Corolla would increase to $168 from $140. — Bill 10
>> Defibrillators: All buildings with a designed capacity of 20 or more people that receive building permits must be equipped with automated electronic defibrillators, or AEDs, used to revive people suffering from cardiac arrest. — Bill 69 (2016)
Star-Advertiser reporter Nanea Kalani contributed to this story.