Maui Council updates county’s ‘circuit breaker’ home tax credit

from Grassroot Institute of Hawaii, June 16, 2024

The credit value and eligibility limits were all increased, with an amendment being credited to a Grassroot Institute suggestion

The Maui County Council gave initial approval last Friday to a bill supported by the Grassroot Institute of Hawaii that, if enacted, will increase the amount of the county’s “circuit breaker” tax credit.

On Tuesday, Maui Now reporter Brian Perry quoted Grassroot policy researcher Jonathan Helton as saying: “Increasing the maximum value of the credit is a good idea because it would offset some of the effects of increased assessments and higher tax bills.”

The credit applies to residents who have annual household incomes of $100,000 or less and have received the homeowner exemption for at least five of the past six years. In addition, their homes must be valued at $750,000 or less to receive the full credit. Homes valued at between $750,000 and $800,000 still qualify, but do not receive the full credit value.

If enacted, Bill 85 will increase the maximum value of the credit from $6,500 to $8,200; the annual income limit from $100,000 to $126,000; and the upper limit of the eligible home value from $800,000 to $1.3 million — $200,000 more than originally proposed.

Perry said the amendment proposed by Councilmember Tamara Paltin to increase the upper limit to $1.3 million came at the suggestion of Helton, who had noted in testimony that the median sales price of a single-family home on Maui has increased by almost 70% since the limit was last updated in 2020, from $747,150 to $1.25 million, so “an update is in order here too.”

Similarly, the income limit for the credit had not been adjusted since 2013, even as Maui’s median income has gone up by 19%, from $84,900 to $101,100.

Helton said the proposed increase in the annual income limit to $126,000 would “more than offset the increase in Maui’s median income, creating a buffer that would allow the Council to wait a few years before increasing it again.”