Tax Research Insights
Welcome! This site shares posts written by authors of the Department’s annual research reports. The researchers highlight interesting findings from the reports they produce. Each post focuses on a key idea from their research.
The State is still on the hook for more than $75 million from expired tax credits
There are two kind of tax credits that taxpayer can claim: the refundable and the nonrefundable credit. For the refundable tax credit, the taxpayer receives the full amount of tax credit in the form of either a reduction of tax liability, a refund, or both. For the...
New Departmental Tax Initiatives Significantly Reduced GET Exemptions in 2021, Saving the Hawaii Taxpayers an Estimated $196.5 Million
There was a big drop in the General Excise & Use Tax (GET) exemptions claimed in 2021. Figure 1 from the 2021 GET Exemptions Report presents the amount of gross receipts and GET exemptions claimed by Hawaii taxpayers since 2018. Figure 1GET Exemptions and Gross...
Covid-19 reduced the usage of the Child Care Tax Credit
A resident taxpayer may qualify for a tax credit that offsets some of the cost of childcare. The tax credit is called the Tax Credit for Child and Dependent Care Expenses. The credit is normally the third most commonly claimed tax credit, but it fell to fourth place...
The Covid-19 pandemic has led to big changes in Hawaii’s Tourism Industry
The pandemic took a big toll on Hawaii’s tourism industry. Global shutdowns drastically curtailed the ability for travel. Governor’s Ige decision to restrict air travel to Hawaii also reduced the number of visitors. What is interesting is that the subsequent recovery...
More people claimed the Refundable Food/Excise Tax Credit during the 2020 Pandemic
Hawaii has several tax credits that promote social welfare. More people claimed these credits during the Covid-19 pandemic, supporting the idea that these credits provide important economic support when Hawaii’s families are hurting the most. More Hawaii taxpayers...
What would recession do to Hawaii’s Tax Revenues?
There has been significant talk of a recession in the financial press. High levels of inflation have prompted the Federal Reserve (Fed) to take decisive action by raising the benchmark interest rates. Will the abrupt change in monetary policy cause a recession? And if...
The impacts of tax credit diminish over time if the income limitation is not updated
Social welfare tax credits often have an income-based limitation. What happens when income limits remain unchanged for long periods of time? Let’s look at two examples here Tax credit for Low-Income Household Renters. The tax credit is computed by multiplying $50 by...
While fewer in number, national corporations generate the lion’s share of receipts in the State
Corporations are the main contributors of Hawaii business receipts. In tax year of 2019, corporations contributed 78% of Hawaii business receipts. There are two types of corporations: those operating only in the State of Hawaii and those that operate nationally (i.e....
Hawaii’s individual income tax is progressive
Higher income groups pay more in taxes relative to their income in Hawaii. A progressive tax structure is defined as one where higher income taxpayers pay a larger percentage of their income in taxes. By this metric, Hawaii’s individual income tax is clearly...