The Hawai’i Tax Fairness Coalition on Thursday urged lawmakers to raise taxes on the state’s highest earners, backing six bills that remain alive at the midpoint of the 2026 legislative session and would change Hawaii’s tax structure to direct more revenue to housing, education, health care, and climate programs.
The coalition outlined its position at a news conference at the state Capitol. Speakers focused on proposals that would increase taxes on higher-income residents and high-value property transactions while revisiting a 2024 income tax relief package that is scheduled to reduce taxes through 2031.
The debate comes as lawmakers weigh whether to preserve or scale back the 2024 law, which was projected to provide $5.4 billion in tax relief through 2031. Gov. Josh Green has proposed partially repealing that measure through House Bill 2306 and Senate Bill 3125. His plan would end the final five years of the scheduled cuts and preserve an estimated $1.8 billion in state revenue.
The 2024 law was projected to provide $1.5 billion in tax relief in 2026. Under that law, a family of four earning $50,000 would see an estimated 85 percent reduction in its state income tax bill, or about $1,700 a year. A household earning $500,000 would receive about $12,000 in savings, equal to a 28 percent reduction.
Will White, executive director of the Hawaii Appleseed Center for Law and Economic Justice, said the coalition supports a tax system that requires higher earners to contribute more.
Lawmakers have amended both repeal bills. White said he preferred the House version, which keeps scheduled increases to the standard deduction in 2028 and 2030. That version now awaits Senate consideration.
Coalition speakers said Hawaii’s tax system places a heavier burden on lower-income households than on the highest earners when measured as a share of income. Younghee Overly of Indivisible Hawaii said the bottom 20 percent of earners pay 14 percent of their income in Hawaii state income taxes, compared with 10 percent for the top 1 percent.
Overly said the coalition’s position is that Hawaii should move toward a more progressive system in which tax rates rise with income. She also pointed to the state’s reliance on the General Excise Tax, which applies broadly to purchases and business transactions.
One of the measures backed by the coalition, House Bill 1850, would increase taxes on capital gains income with some exceptions. The bill is awaiting Senate action. Overly said it would generate about $84 million a year in state revenue.
Coalition members said that added revenue could be used for public services including health care and affordable housing. Supporters of the bill said capital gains income is concentrated among higher-income households.
Another focus of the coalition’s campaign is legislation tied to housing costs. ‘Alihilani Katoa, a community organizer with Our Hawaii, urged passage of Senate Bill 2362 or House Bill 2049, both of which would raise conveyance tax rates on higher-value property sales. Under the proposals, additional revenue would be directed to affordable housing.
Katoa said housing costs continue to rise and that Native Hawaiian communities and working families are facing increasing pressure from high prices and displacement.
Hawaii lawmakers are also considering possible changes to the state’s treatment of Real Estate Investment Trusts. Tanya Yamanaka of the Chamber of Sustainable Commerce said Senate Bill 2362 was amended to study those changes rather than put them in place immediately. She said the current system allows REIT profits distributed to shareholders to avoid state income tax at the trust level.
Efforts to change REIT taxation in Hawaii have failed in previous sessions. This year’s proposal remains pending in the House after amendments in the Senate narrowed the measure.
The coalition’s tax proposals have drawn opposition from critics who say scaling back the 2024 tax cuts would amount to a tax increase on middle-income residents. According to testimony cited by opponents, about 140 people submitted testimony against the repeal bills. Support also came from social welfare and advocacy organizations.
Opponents have argued that lawmakers should focus on reducing spending before raising taxes. Supporters of repeal have said the state may need to preserve more revenue as it prepares for possible federal funding reductions and other policy changes.
The issue comes as state and local governments continue to face competing budget demands. In Honolulu, city officials recently shifted $50 million from vacant positions to other priorities, including wastewater upgrades and road projects, while avoiding a property tax increase.
Thursday’s event was part of the coalition’s Fund Our Future campaign. Speakers included University of Hawaii debate team leader Maddax Tsuchiya, Hawaii Health and Harm Reduction Center program manager Nikos Leverenz, and UNITE HERE Local 5 executive Eric Gill.
Gill said the current tax structure does not require wealthy residents to contribute enough.
The legislative session is scheduled to end May 8. Lawmakers have less than two months to decide whether to advance the coalition-backed measures and whether to change the scope of the 2024 tax relief law.
The final outcome will determine whether Hawaii keeps the full schedule of tax reductions enacted last year or adopts a revised plan that preserves more state revenue while increasing taxes on some higher-income households and property transactions.
Source: Tax fairness promoted in bills would implement major changes | Hawaii News