Historic 2024 tax cuts rescued for majority of Hawaii residents

by Keli'i Akina, Ph.D., President / CEO, Grassroot Institute of Hawaii, May 9, 2026

It was only two years ago that, to much fanfare and celebration, our lawmakers boldly passed history-making income tax cuts to provide struggling Hawaii families with much-needed relief from the state’s crippling cost of living.

Those sweeping cuts were scheduled to phase in through 2031, which seems to have given state officials time to reconsider them. And indeed, Gov. Josh Green kicked off the 2026 legislative session by asking the Legislature to do just that in response to emerging budget concerns.

House and Senate lawmakers considered the governor’s proposal to press pause on the tax cuts and instead crafted their own unique plans to amend them. After a lot of back and forth, we finally know what path forward the chambers agreed on.

The good news — worth a hearty cheer — is that under the measure approved by the Legislature yesterday, most Hawaii residents will get to keep all of their tax cuts.

That bill now heads to the governor’s desk for his approval, and if he goes along with it, the income tax reductions he signed into law in 2024 will continue to phase in as planned for incomes below $175,000 for single filers and below $350,000 for joint filers. In other words, those cuts were completely saved.

Almost everyone earning more income than those levels will still see their state tax bills reduced compared to what they were paying before the 2024 changes took effect, but not by as much as originally promised.

Seeing the proposed changes go from cutting everyone’s income taxes to walking back only a small amount is a huge victory, and I am proud of the role my colleagues at the Grassroot Institute of Hawaii played in helping make that happen.

I am concerned, however, that lawmakers also agreed to hike taxes on single filers who earn more than $750,000 and joint filers making more than $1.5 million. This move reflects a persistent and worrisome belief that the answer to any budget problem is to increase taxes on the wealthy.

Across the country, such efforts have been resulting in those higher-income earners relocating to lower-tax states. When they leave, they take their businesses and the jobs they have created with them. The economies of the states left behind suffer, and their budget problems worsen.

Hawaii simply cannot afford such a doom spiral. The state’s ongoing exodus of residents who can no longer simply make ends meet here has been damaging enough to our fragile economy without pushing away higher-income residents as well.

So while I am pleased that most of the 2024 tax cuts have been saved, and commend the individual legislators who stood firm to make that possible, I hope our lawmakers in general will finally realize that smarter budgeting and reductions in our cost of living are what we truly need for our state to flourish.

E hana kākou! (Lets work together!)