A bill that would hike Hawaii’s income tax to the highest in the nation passed the full Senate today by a near unanimous vote. The measure would impose a 16% tax on individuals earning more than $200,000 a year, up from the current rate of 11%.
Senate Bill 56 was approved 24 to 1. Sen. Gil Riviere (D-Heeia-Laie-Waialua) was the lone no vote. Sen. Les Ihara (D-Moiliili-Kaimuki-Palolo) voted yes, but with reservations. The proposed legislation will now move to the House of Representatives for consideration.
If the bill ultimately passes, Hawaii will overtake California as the state with the highest income tax, according to the Associated Press. California’s rate is 13.3% on those earning more than $1 million.
The measure also includes increases to the capital gains tax, corporate tax and taxes on high-end real estate sales.
The bill cites the state’s plummeting tax collections brought about by the coronavirus pandemic as the rationale for the tax increases.
By the end of last year, state officials were estimating the state would have a budget shortfall in excess of $2 billion.
However, a proposed federal aid package is expected to largely plug that hole. The relief package, which Congress is on the cusp of passing, is expected to provide Hawaii with more than $6.1 billion in funding. The package includes $1.6 billion to bolster the state’s budget.