Bill Text: HI SB2325 | 2024 | Regular Session | Introduced
Bill Title: Relating To Capital Gains.
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Introduced) 2024-01-19 - Referred to WAM. [SB2325 Detail]
Download: Hawaii-2024-SB2325-Introduced.html
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THE SENATE |
S.B. NO. |
2325 |
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THIRTY-SECOND LEGISLATURE, 2024 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
relating to capital gains.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that Hawaii has a capital gains tax rate of 7.25 per cent, which is lower than the tax rate many of the State's residents pay on their wages and salaries. The legislature further finds that the low capital gains tax rate primarily benefits wealthy individuals, including nonresidents who invest in real estate in the State. According to the department of taxation, taxing capital gains at the same rate as ordinary income could generate over $132,000,000 in its first year of implementation, with that amount rising to an estimated $187,000,000 within six years.
The legislature additionally finds that revenue generated by taxing capital gains at the same rate as ordinary income could be used to strengthen basic government programs, including tax credits for working families, emergency preparedness, disaster prevention, public education, affordable housing, construction, mental health services, public preschool programming, childcare access, climate change adaptation and mitigation, and homeless services.
The legislature further finds that because section 55(b)(3) of the Internal Revenue Code, which covers the maximum rate of tax on net capital gain of noncorporate taxpayers, is inoperative for the State, a simple repeal of the applicable provisions of the State's tax laws will impose the ordinary income tax rate to capital gains income.
Accordingly, the purpose of this Act is to strengthen tax fairness for working families by taxing capital gains at the same rate as ordinary income.
SECTION 2. Section 235-51, Hawaii Revised Statutes, is amended to read as follows:
"§235-51 Tax imposed on individuals;
rates. (a) There is hereby
imposed on the taxable income of every:
(1) Taxpayer
who files a joint return under section 235-93; and
(2) Surviving
spouse,
a
tax determined in accordance with the following table:
In the case of any taxable year beginning
after December 31, 2017:
If
the taxable income is: The tax shall
be:
Not
over $4,800 1.40% of taxable
income
Over
$4,800 but $67.00 plus 3.20%
of
not
over $9,600 excess over
$4,800
Over
$9,600 but $221.00 plus
5.50% of
not
over $19,200 excess over
$9,600
Over
$19,200 but $749.00 plus
6.40% of
not
over $28,800 excess over
$19,200
Over
$28,800 but $1,363.00 plus
6.80% of
not
over $38,400 excess over
$28,800
Over
$38,400 but $2,016.00 plus
7.20% of
not
over $48,000 excess over
$38,400
Over
$48,000 but $2,707.00 plus
7.60% of
not
over $72,000 excess over
$48,000
Over
$72,000 but $4,531.00 plus
7.90% of
not
over $96,000 excess over
$72,000
Over
$96,000 but $6,427.00 plus
8.25% of
not
over $300,000 excess over
$96,000
Over
$300,000 but $23,257.00 plus
9.00% of
not
over $350,000 excess over
$300,000
Over
$350,000 but $27,757.00 plus
10.00% of
not
over $400,000 excess over
$350,000
Over
$400,000 $32,757.00 plus
11.00% of
excess
over $400,000.
(b)
There is hereby imposed on the taxable income of every head of a
household a tax determined in accordance with the following table:
In the case of any taxable year beginning
after December 31, 2017:
If
the taxable income is: The tax shall
be:
Not
over $3,600 1.40% of taxable
income
Over
$3,600 but $50.00 plus 3.20%
of
not
over $7,200 excess over
$3,600
Over
$7,200 but $166.00 plus
5.50% of
not
over $14,400 excess over
$7,200
Over
$14,400 but $562.00 plus
6.40% of
not
over $21,600 excess over
$14,400
Over
$21,600 but $1,022.00 plus
6.80% of
not
over $28,800 excess over
$21,600
Over
$28,800 but $1,512.00 plus
7.20% of
not
over $36,000 excess over
$28,800
Over
$36,000 but $2,030.00 plus
7.60% of
not
over $54,000 excess over
$36,000
Over
$54,000 but $3,398.00 plus
7.90% of
not
over $72,000 excess over
$54,000
Over
$72,000 but $4,820.00 plus
8.25% of
not
over $225,000 excess over
$72,000
Over
$225,000 but $17,443.00 plus
9.00% of
not
over $262,500 excess over
$225,000
Over
$262,500 but $20,818.00 plus
10.00% of
not
over $300,000 excess over
$262,500
Over
$300,000 $24,568.00 plus
11.00% of
excess
over $300,000.
(c)
There is hereby imposed on the taxable income of (1) every unmarried
individual (other than a surviving spouse, or the head of a household) and (2)
on the taxable income of every married individual who does not make a single
return jointly with the individual's spouse under section 235-93 a tax
determined in accordance with the following table:
In the case of any taxable year beginning
after December 31, 2017:
If
the taxable income is: The tax shall
be:
Not
over $2,400 1.40% of taxable
income
Over
$2,400 but $34.00 plus 3.20%
of
not
over $4,800 excess over
$2,400
Over
$4,800 but $110.00 plus
5.50% of
not
over $9,600 excess over
$4,800
Over
$9,600 but $374.00 plus
6.40% of
not
over $14,400 excess over
$9,600
Over
$14,400 but $682.00 plus
6.80% of
not
over $19,200 excess over
$14,400
Over
$19,200 but $1,008.00 plus
7.20% of
not
over $24,000 excess over
$19,200
Over
$24,000 but $1,354.00 plus
7.60% of
not
over $36,000 excess over
$24,000
Over
$36,000 but $2,266.00 plus 7.90%
of
not
over $48,000 excess over
$36,000
Over
$48,000 but $3,214.00 plus
8.25% of
not
over $150,000 excess over
$48,000
Over
$150,000 but $11,629.00 plus
9.00% of
not
over $175,000 excess over
$150,000
Over
$175,000 but $13,879.00 plus
10.00% of
not
over $200,000 excess over
$175,000
Over
$200,000 $16,379.00 plus
11.00% of
excess
over $200,000.
(d) The tax imposed by section 235-2.45 on estates and trusts shall be determined in accordance with the following table:
In the case of any taxable year beginning after December 31, 2001:
If the taxable income is: The tax shall be:
Not over $2,000 1.40% of taxable income
Over $2,000 but $28.00 plus 3.20% of
not over $4,000 excess over $2,000
Over $4,000 but $92.00 plus 5.50% of
not over $8,000 excess over $4,000
Over $8,000 but $312.00 plus 6.40% of
not over $12,000 excess over $8,000
Over $12,000 but $568.00 plus 6.80% of
not over $16,000 excess over $12,000
Over $16,000 but $840.00 plus 7.20% of
not over $20,000 excess over $16,000
Over $20,000 but $1,128.00 plus 7.60% of
not over $30,000 excess over $20,000
Over $30,000 but $1,888.00 plus 7.90% of
not over $40,000 excess over $30,000
Over $40,000 $2,678.00 plus 8.25% of
excess over $40,000.
(e) Any taxpayer, other than a corporation, acting as a business entity in more than one state who is required by this chapter to file a return may elect to report and pay a tax of .5 per cent of the taxpayer's annual gross sales if the:
(1) Taxpayer's only activities in this State consist of sales;
(2) Taxpayer does not own or rent real estate or tangible personal property; and
(3) Taxpayer's annual gross sales in or into this State during the tax year is not in excess of $100,000.
[(f) If a taxpayer has a net capital gain for any
taxable year to which this subsection applies, then the tax imposed by this
section shall not exceed the sum of:
(1) The tax
computed at the rates and in the same manner as if this subsection had not been
enacted on the greater of:
(A) The
taxable income reduced by the amount of net capital gain, or
(B) The
amount of taxable income taxed at a rate below 7.25 per cent, plus
(2) A tax of 7.25
per cent of the amount of taxable income in excess of the amount determined
under paragraph (1).
This subsection shall apply to
individuals, estates, and trusts for taxable years beginning after December 31,
1986.]"
SECTION 3. Statutory material to be repealed is bracketed and stricken.
SECTION 4. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2023.
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INTRODUCED BY: |
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Report Title:
Capital Gains Tax; Rate; Repeal
Description:
Taxes capital gains income at the same rate as ordinary income.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.
