Bill Text: HI SB2242 | 2020 | Regular Session | Introduced

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Bill Title: Relating To Income Tax.

Spectrum: Partisan Bill (Democrat 5-0)

Status: (Introduced - Dead) 2020-01-21 - Referred to WAM. [SB2242 Detail]

Download: Hawaii-2020-SB2242-Introduced.html

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THE SENATE	S.B. NO.	2242
THIRTIETH LEGISLATURE, 2020
STATE OF HAWAII

A BILL FOR AN ACT

 

 

RELATING TO INCOME TAX.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 

     SECTION 1. The legislature finds that the last time Hawaii increased its standard deduction and personal exemption for individual income tax purposes was in 2009, pursuant to Act 60, Session Laws of Hawaii 2009.  The legislature further finds that the tax review commission has repeatedly recommended that the standard deduction and the personal exemption be increased and subsequently adjusted for inflation.  The most recent tax review commission report, issued in 2017, stated that the standard deduction and personal exemption "have been eroded over time by inflation and are now outdated."

     The purpose of this Act is to increase the amount of the standard deduction and the personal exemption and schedule the deduction and exemption for annual adjustments for inflation.

     SECTION 2.  Section 235-2.4, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  Section 63 (with respect to taxable income defined) of the Internal Revenue Code shall be operative for the purposes of this chapter, subject to the following:

     (1)  Section 63(c)(1)(B) (relating to the additional standard deduction), 63(c)(1)(C) (relating to the real property tax deduction), 63(c)(1)(D) (relating to the disaster loss deduction), 63(c)(1)(E) (relating to the motor vehicle sales tax deduction), 63(c)(4) (relating to inflation adjustments), 63(c)(7) (defining the real property tax deduction), 63(c)(8) (defining the disaster loss deduction), 63(c)(9) (defining the motor vehicle sales tax deduction), and 63(f) (relating to additional amounts for the aged or blind) of the Internal Revenue Code shall not be operative for purposes of this chapter;

     (2)  Section 63(c)(2) (relating to the basic standard deduction) of the Internal Revenue Code shall be operative, except that the standard deduction amounts provided therein shall instead mean:

          (A)  [$4,400] $4,840 in the case of:

              (i)  A joint return as provided by section 235‑93; or

             (ii)  A surviving spouse (as defined in section 2(a) of the Internal Revenue Code);

          (B)  [$3,212] $3,533 in the case of a head of household (as defined in section 2(b) of the Internal Revenue Code);

          (C)  [$2,200] $2,420 in the case of an individual who is not married and who is not a surviving spouse or head of household; or

          (D)  [$2,200] $2,420 in the case of a married individual filing a separate return;

     (3)  Section 63(c)(5) (limiting the basic standard deduction in the case of certain dependents) of the Internal Revenue Code shall be operative, except that the limitation shall be the greater of $500 or the individual's earned income; and

     (4)  The standard deduction amount for nonresidents shall be calculated pursuant to section 235-5[.];

provided that effective January 1, 2021, and every year thereafter, the deduction amounts set forth in this subsection shall be adjusted to reflect the percentage change for the most recent one-year period in the Consumer Price Index for All Urban Consumers for Honolulu published by the Bureau of Labor Statistics of the federal Department of Labor."

     SECTION 3.  Section 235-54, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  In computing the taxable income of any individual, there shall be deducted, in lieu of the personal exemptions allowed by the Internal Revenue Code, personal exemptions computed as follows:  Ascertain the number of exemptions which the individual can lawfully claim under the Internal Revenue Code, add an additional exemption for the taxpayer or the taxpayer's spouse who is sixty-five years of age or older within the taxable year, and multiply that number by [$1,144,] $1,258, for taxable years beginning after December 31, 1984.  Effective January 1, 2021, and every year thereafter, the personal exemption amount set forth in this subsection shall be adjusted to reflect the percentage change for the most recent one-year period in the Consumer Price Index for All Urban Consumers for Honolulu published by the Bureau of Labor Statistics of the federal Department of Labor.  A nonresident shall prorate the personal exemptions on account of income from sources outside the State as provided in section 235-5.  In the case of an individual with respect to whom an exemption under this section is allowable to another taxpayer for a taxable year beginning in the calendar year in which the individual's taxable year begins, the personal exemption amount applicable to such individual under this subsection for such individual's taxable year shall be zero."

     SECTION 4.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 5.  This Act, upon its approval, shall apply to taxable years beginning after December 31, 2019.

 

INTRODUCED BY:	_____________________________

 

 

Report Title:

Income Tax; Standard Deduction; Personal Exemption

 

Description:

Increases the amount of the standard deduction and the personal exemption.  Requires the standard deduction and personal exemption to be adjusted for inflation on an annual basis.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.