Walk back our tax cuts? That would be a shame.

by Keli'i Akina, Ph.D., President / CEO, Grassroot Institute of Hawaii

You might have noticed something a little different about your most recent paycheck.

The largest state income tax cut in Hawaii history, which was proposed last year by Gov. Josh Green and approved by every state senator and representative, is finally kicking in — and people are seeing the benefits.

The cuts involved increasing the standard deduction and shifting tax brackets, which for someone making $75,000 a year will result in a bimonthly paycheck that’s about $36.44 more than for the same period last year. Over the course of an entire year, that will equal almost $900 more in take-home pay.

And things are only going to get better. The cuts are scheduled to continue and increase through 2031, so every year for the next six years, we’re going to see bigger paychecks.

But danger lurks ahead.

Believe it or not, some lawmakers think the Legislature went too far in letting us keep more of our own money, and now they are talking about walking back the cuts to return to their good old days of “tax and spend.”

Basically, our income tax savings could be eaten away by tax and fee increases elsewhere, unless we are vigilant and able to make sure that doesn't happen.

The 2025 legislative session hasn’t officially started yet, but we’ve already heard about a few potential tax hikes. As we saw last year, one would increase the state conveyance tax, which would affect home and rental prices.

It’s also likely that we'll see another attempt to increase the taxes on tourists, which would affect not only visitor arrivals but residents who travel interisland.

We’ll also likely be seeing — again — bills to increase our carbon taxes, which would affect the price of energy and our cost of living.

And I’m expecting to eventually see proposals that would make permanent the 0.5% surcharge on the state general excise tax that is supposed to expire on Dec. 31, 2030 — which, if enacted, would prove once again that there is no such thing as a temporary tax hike.

Proponents of these tax increases might argue that they are small relative to the income tax cut and could easily be absorbed by Hawaii residents. But that’s not the point. Small nibbles add up quickly, and before you know it, our increases in take-home pay could be swallowed by higher taxes, costs and fees.

Our state lawmakers did a truly great thing last year when they reduced the state personal income tax. It was a tangible way to make Hawaii more affordable for residents, and seeing the result of the cut in our paychecks is exciting.

Now, we need to make sure that those ttax savings don't disappear.

Hawaii’s lawmakers must have the discipline to reject tax hikes and fee increases. Otherwise, they will undo the progress they have made in lowering our cost of living — and make life in Hawaii harder for all of us who haven’t already left for greener pastures on the mainland.

E hana kākou! (Let's work together!)