Bill Text: HI SB614 | 2021 | Regular Session | Amended

Bill Title: Relating To Taxation.

Spectrum: Partisan Bill (Democrat 9-0)

Status: (Engrossed - Dead) 2021-03-12 - Referred to LAT, CPC, FIN, referral sheet 23 [SB614 Detail]

Download: Hawaii-2021-SB614-Amended.html


S.B. NO.



S.D. 2
















     SECTION 1.  The legislature finds that the coronavirus disease 2019 (COVID-19) pandemic has created a financial crisis in many households in Hawaii.  The State's unemployment rate, which was 2.4 per cent in March 2020, surged to 22.3 per cent in April 2020, resulting in more than 350,000 individuals filing unemployment insurance benefit claims that month.  For many people, it was their first time filing for unemployment insurance benefits.

     The statewide stay-at-home orders and mandatory fourteen-day quarantine for travelers decimated the State's tourism and service industry and, as of January 2021, more than three thousand businesses remain closed.  According to the Bank of Hawaii Foundation, Hawaii residents are struggling to pay for basic necessities, such as housing, utilities, and transportation, and are relying on public and private support to navigate these difficult times.  One in three residents are delinquent in paying at least some of their bills, and more than one in four residents experienced issues with food security since the start of the pandemic.  More than forty thousand Hawaii residents lost their private health insurance coverage during the pandemic, and many residents who did not qualify for coverage under government plans were required to purchase plans themselves despite their financial hardship.

     The legislature also finds that, even with the federal economic relief package, including stimulus payments and additional unemployment aid, approximately six in ten Americans currently do not have the financial flexibility to handle an unexpected $1,000 expense, such as an emergency medical bill or car repair.

     The legislature finds that currently, six states Alabama, California, Montana, New Jersey, Pennsylvania, and Virginia exempt unemployment insurance benefits from income taxes; nine states Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming do not have income taxes and, therefore, do not collect tax on unemployment insurance benefits; and two states Indiana and Wisconsin make partial exemptions on unemployment insurance benefits.  Meanwhile, Hawaii treats unemployment insurance benefits as fully taxable income.

     The purpose of this Act is to alleviate the financial strain on many struggling households in Hawaii by exempting unemployment insurance benefits received during the period of March 1, 2020, through December 31, 2020, from the state income tax.

     SECTION 2.  Notwithstanding sections 235-69 and 383-163.6, Hawaii Revised Statutes, to the contrary, income received by an individual as unemployment compensation under chapter 383, Hawaii Revised Statutes, and pandemic unemployment assistance, pursuant to the federal Coronavirus Aid, Relief, and Economic Security Act, during the period of March 1, 2020, through December 31, 2020, shall be exempt from state income tax.  The department of taxation shall allow individuals to credit the state income tax that was deducted and withheld from their unemployment compensation or pandemic unemployment assistance during the period of March 1, 2020, through December 31, 2020, against their overall state income tax liability.

     SECTION 3.  This Act shall take effect on July 1, 2050.



Report Title:

DOTAX; State Income Tax Exemption; Unemployment Benefits; Retroactive Application



Retroactively exempts from the state income tax, unemployment compensation and pandemic unemployment assistance received from 3/1/2020, to 12/31/2020.  Requires the department of taxation to allow taxpayers to credit the state income tax deducted and withheld from their unemployment compensation and pandemic unemployment assistance during that time period against their overall state income tax liability.  Effective 7/1/2050.  (SD2)




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