State tax rebates should begin showing up in bank accounts of Hawaii residents Monday, though full delivery could be prolonged by a low supply of paper check stock.
Gov. David Ige on Tuesday announced the expected schedule for delivering about $300 million to local taxpayers and their dependents eligible to each receive $300 or $100, depending on household income.
Ige said the first batch of 100,000 rebates should be received on or around Monday by taxpayers who filed 2021 tax returns by July 31 and have a direct-deposit arrangement with the state Department of Taxation. An additional 200,000 or so taxpayers in the same situation should receive rebates in their bank accounts by Sept. 21, Ige added.
However, delivering rebates to roughly 300,000 more taxpayers, who filed their 2021 tax returns by July 31 but don’t have direct-deposit arrangements, could take until the end of October or possibly later if the state Department of Accounting and General Services can’t get enough check stock relatively soon, according to the governor.
“I want to caution that this is dependent on the arrival of the check stock,” Ige said about the Oct. 31 timetable. “We do know that there are supply chain issues even dealing with check stock.”
DAGS has only about 50,000 blank checks and needs to use some for purposes other than issuing the tax rebates authorized by the Legislature on May 5 and approved by Ige on June 22. So the agency is allocating about 2,000 blank checks for rebates weekly until an expected infusion allows the flow to grow to 90,000 rebate checks per week.
Isaac Choy, director of the Tax Department, was more optimistic that enough check stock should be in hand within a few weeks to enable relatively fast delivery of rebates by check.
“By the end of September we should have everything that we need to send out these refunds,” he said.
Rebates also can be received by eligible residents who file 2021 tax returns after July 31 and before the end of this year. For these filers, receipt of the rebate is expected to take up to 10 weeks after they file their return.
People earning under $100,000 are eligible for $300, and the same amount is available for spouses and each dependent. So a family of four earning less than $200,000 would receive $1,200. Households with income over $100,000 for a single person, or $200,000 for a married couple, qualify for the $100 rebate along with dependents. About 90% of rebates are expected to be $300.
To be eligible, tax filers must have been Hawaii residents for at least nine months. People convicted of a misdemeanor or felony and incarcerated for all of this year, as well as dependents held at a youth correctional facility for all of this year, are not eligible.
Ige proposed $100 rebates during his State of the State address in January as a way to help residents and the economy rebound from financial hits brought on by the coronavirus pandemic since 2020.
State lawmakers enhanced the amount for moderate- and lower-income residents in part because the cost of goods and services including gas, electricity and food spiked in recent months as part of high inflation nationwide.
Ige reiterated this dynamic Tuesday. “We do know that there are many challenges in these tough economic times,” he said. “The current inflation — gas, electricity costs — have been increasing, so we know this refund will be welcome. … This money will go directly into the pockets of Hawaii’s hardworking people.”
The rebates are expected to increase consumer spending, and represent a record amount of money returned to taxpayers under a requirement of Hawaii’s Constitution.
This requirement for many years stated that taxpayers must receive a tax refund or credit if there was at least a 5% general fund surplus in two successive fiscal years. The provision was amended in 2010 to also or alternatively permit a deposit into the state’s emergency reserve fund, and again in 2016 with additional options to prepay general obligation bond debt and post-employment benefit funding.
Most past rebates to meet the constitutional requirement were symbolic, often $1. Some higher rebates included $100 in 1981, $125 in 1989 and an income-qualified one that ranged from $25 to $140 in 2007.
In addition to the rebates this year, lawmakers and Ige put $500 million into the state’s “rainy day” Emergency and Budget Reserve Fund, and $300 million into the state’s underfunded pension fund.
The state had a record surplus this year from revenue that included federal coronavirus aid, and a surplus over 5% is expected in 2023 as well.
HOW MUCH WILL YOU GET?
$300 per person
for taxpayers earning under $100,000, or married couples earning less than $200,000, and their dependents
$100 per person
for taxpayers earning over $100,000, or married couples earning more than $200,000, and their dependents
