2025 Employer Payroll Updates

Attention Employers! Here’s What You Need to Know & Do

The first phase of employer payroll updates for Hawai‘i’s individual income tax cut takes effect January 2025. And it means more take-home pay for employees. But as an employer, you need to update your payroll to ensure that employees benefit in a timely manner.

What You Need to Do:

  • Step 1: Update Your Payroll System – The new 2025 withholding tables are in Booklet A. Make sure you are using the latest withholding amounts! If you use a payroll service provider, make sure they are applying the new rates correctly.
  • Step 2: Notify Your Employees – Employees will have more take-home pay when the withholding tables are updated. Let them know when it’s coming and that it’s due to the tax cuts.
  • Step 3: Repeat Steps 1 and 2 each year – Withholding tables are scheduled to update yearly through 2031.

What Employees Need to Do:

  • No action needed from employees – But they can adjust their withholdings if they want to modify the amount withheld from their paychecks.

How is Hawai‘i’s Individual Income Tax Cut Changing the Tax Code?

  • ✔️ Additional tax cuts each year until 2031 – More take-home pay for employees each year.
  • ✔️ Standard deductions are increasing – More income will be tax-free, reducing taxable income.
  • ✔️ Tax brackets are shifting – Higher income thresholds mean most employees will be taxed at lower rates.

Need More Info?

Stay ahead of these changes and keep your payroll compliant!

Page Last Updated: January 10, 2025