Hawaiʻi lawmakers reach agreement to preserve promised tax relief for working families

Late in the evening of Tuesday, April 29, the Hawaiʻi Legislature reached an agreement on a bill that ensures previously enacted income tax relief will remain in place for working families throughout the islands.

The final version of Senate Bill 3125 maintains the income tax cuts passed in 2024 for joint filers earning less than $350,000, heads of household making less than $262,500 and single filers earning less than $175,000.

Lawmakers said it would preserve critical financial relief for Hawaiʻi’s working and middle-income households.

The agreement does not include a proposed additional 1% increase on the top three income tax brackets, helping protect many local small business owners who file as individuals and supporting Hawaiʻi’s broader economy.

Federal funding cuts created economic uncertainty, resulting in lower general fund tax revenues for the state.

Lawmakers worked through conference committee negotiations to reconcile differences between the House and Senate versions of the measure. The Senate remained committed throughout the process to preserving income tax relief for 90% of the state’s local families.

Hawaiʻi Senate Ways and Means Committee Chairperson Oʻahu state Sen. Donovan Dela Cruz emphasized from Day 1 the importance of preserving the full tax relief package.

“Affordability for local families remains a top priority for the Senate,” said Dela Cruz in a release following Tuesday’s vote. “Despite federal funding cuts affecting our budget, we are standing by our commitment to the people by preserving and continuing the promised tax relief.”

The agreement reached late this evening on the income tax measure reflects a shared commitment to protecting local families from rising costs and ensuring the relief package delivers its original intent.

“At a time when the cost of living continues to challenge so many households, maintaining these income tax cuts will help families keep more of what they earn and provide greater financial stability,” said Senate Ways and Means Committee Vice Chairperson and Oʻahu state Sen. Sharon Moriwaki in the release. “I appreciate the collaboration that made this agreement possible while protecting essential services for our communities.”

The agreement also provides the state with a strong financial base.

House Bill 1800, the state budget bill, still needs to be discussed to ensure Hawaiʻi has funding necessary to provide core services to residents.