State Tax Changes as of January 1, 2020

by Katherine Loughead, Tax Foundation, Dec 20, 2019 (Hawaii-related excerpts)

Key Findings

• Five states will see changes to their estate taxes. Connecticut, Minnesota, Vermont, and New York will see increases in their estate tax exemptions (taxpayer-friendly provisions), while Hawaii’s estate tax will become more burdensome.
• Four states (Hawaii, Illinois, Michigan, and Wisconsin) will begin requiring marketplace facilitators to collect sales taxes.
• Two states (Hawaii and Pennsylvania) will begin using Wayfair-like standards to determine economic nexus for income tax purposes.

Hawaii

As of the first of the year, Hawaii will require marketplace facilitators to collect and remit its General Excise Tax (the state sales tax) when those marketplace facilitators have $100,000 or more in income sourced to Hawaii or at least 200 transactions in the state.[9]

Hawaii also became the first state to align its income tax economic standards with its Wayfair safe harbor. Senate Bill 495, enacted in July 2019, requires income tax filing for any individual, estate, or business with 200 or more transactions or more than $100,000 in sales into Hawaii.[10]

In addition, Act 3, signed into law in April, created a new estate tax bracket, taxing estates valued above $10 million at a rate of 20 percent. This new rate applies to decedents dying in 2020.[11]

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Hawaii-related Footnotes:

[9] Gail Cole, “Marketplace Facilitators to Collect Hawaii Sales Tax for Third-Party Sellers,” Avalara, Oct. 22, 2019.

[10] “Hawaii Adopts Wayfair Standard for Income Tax Nexus Presumption,” RSM, July 12, 2019.

[11] “Department of Taxation Announcement No. 2019-09,” State of Hawaii Department of Taxation, July 24, 2019.