State Policy Network
Hawaii Enacts Biggest Income Tax Cut in State History 

Hawaii Governor Josh Green signed a tax package into law yesterday that lowers the state income tax burden for average families by almost 70% by 2031—saving taxpayers roughly $5 billion during that period. 

This legislation will especially help working families. As the Grassroot Institute of Hawaii explains, “A local family of four making $91,000 a year currently has to pay $5,300 in income taxes. For tax year 2025, that amount will drop to $3,800, and by 2031, to about only $1,600. That’s a 69% tax cut.” 

Also called HB2404, the tax cuts will reposition Hawaii from having one of the highest state income-tax rates in the country to one of the lowest.  

Grassroot Institute of Hawaii Key to Advancing this Reform  

For years, the Grassroot Institute of Hawaiia nonprofit policy organization and member of State Policy Network—has encouraged policymakers to cut taxes. Through research papers, media appearances and placements, personal outreach to lawmakers, and even editorial cartoons, the Institute has made the case for tax relief, explaining how lowering rates would not only help Hawaii families—but the state overall.  

When Governor Green announced this tax reform plan last year, Grassroot immediately began encouraging lawmakers to pass it. Their efforts culminated in the passage of HB2404 on June 3, 2024.  

Tax Relief Will Help Hawaiians Cope with Inflation and High Cost of Living 

With its beautiful beaches, diverse marine life, and tropical climate, Hawaii is one of the world’s most popular destinations. But its pristine beauty comes at a cost, especially for people who call the Aloha State home. Many residents struggle with the state’s high cost of living, which is driven in part by the Legislature’s appetite for substantial spending and high taxes. 

This tax relief package will help lower that high cost of living for Hawaii residents. As the Grassroot Institute of Hawaii’s president and CEO Keli’i Akina notes:  

“Enactment of HB2404 will help offset the crippling inflation of the past few years; save Hawaii taxpayers billions of dollars in coming years; reposition the state from having one of the highest state income tax rates in the country to one of the lowest; lower Hawaii’s cost of living; fuel economic growth; and reverse or at least slow down the ongoing exodus of Hawaii residents.” 

Related Reading 

Blue Hawaii Takes the Plunge on Tax Cuts 
Grassroot Institute of Hawaii in National Review  

Huge Tax Cut Leads Way of Legislature’s Achievements 
Grassroot Institute of Hawaii  

Keeping More of Your Own Money is a Good Thing 
Grassroot Institute of Hawaii  

Proposed Income Tax Cuts a Net Positive for Hawaii’s Economy 
Grassroot Institute of Hawaii in the Honolulu Star-Advertiser  

The Income Tax: Explained 
State Policy Network  

Organization: State Policy Network