State Tax Changes Taking Effect January 1, 2025

by Joseph Johns, Abir Mandal, Jared Walczak, Jacob Macumber-Rosin, Tax Foundation, December 19, 2024 (excerpt)

Thirty-nine states will begin 2025 with notable tax changes, including nine states cutting individual income taxes (two of them implementing flat taxes), three states cutting corporate income taxes, and two states adopting new first-year expensing provisions. Generally, state tax changes take effect either at the start of the calendar year (January 1) or the fiscal year (July 1 for most states), with rate changes for major taxes typically implemented effective January 1—either prospectively, as in these cases, or retroactively, as may happen under legislation enacted in the new year.

Recent years have seen a wave of significant tax reforms, and the changes scheduled for 2025 show that these efforts have not let up. The evidence of the past four years indicates that many states understand and value the importance of creating and maintaining a stable, pro-growth, and competitive tax code….

Hawaii Tax Changes Effective January 1, 2025

Hawaii will significantly modify its individual income tax brackets under HB 2404. Starting January 1, 2025, the lowest rate of 1.4 percent will apply to single filer income below $9,600 (up from $2,400 in 2024), and the highest rate of 11 percent will apply to income exceeding $325,000 (up from $200,000). These changes, along with an increase in the size of the standard deduction, will significantly reduce effective tax rates across the income distribution, while still retaining Hawaii’s complex bracket structure with 12 brackets. Brackets will be widened further in 2027, with standard deduction increases phasing in for several additional years.

The Hawaii rental motor vehicle surcharge tax increases by a fixed rate annually. Beginning January 1, 2025, the tax will increase from $6.50 per day to $7.00 per day that a vehicle is rented….

read … 2025 State Tax Changes Taking Effect January 1st | Tax Foundation