HI HB2306: HD1 | PolicyEngineFreezes Hawaii income tax bracket thresholds at 2025 levels, increases top three marginal rates by 1pp (9%→10%, 10%→11%, 11%→12%), expands the child and dependent care credit (50%-5% match up to $160k AGI vs current 25%-15% up to $50k), and extends Act 163 enhanced credits (40% EITC, expanded CDCC limits, food/excise credit) through 2032. Effective for taxable years beginning after December 31, 2026.Key Provisions

Freeze bracket thresholds: Repeals scheduled bracket threshold increases, keeping thresholds at January 1, 2025 levels for all filing statuses. (Scheduled increases in 2027 and 2029 → Thresholds frozen at 2025 levels)

Increase top marginal rates: Increases the top three marginal income tax rates by 1 percentage point each. (9%, 10%, 11% → 10%, 11%, 12%)

Expand CDCC: Replaces the 7-bracket CDCC rate schedule with an expanded 10-bracket structure with higher match rates. (25%-15% of federal credit (AGI up to $50k) → 50%-5% of federal credit (AGI up to $160k))

Extend Act 163 credits: Maintains enhanced EITC (40%), CDCC expense limits ($10k/$20k), and food/excise credit amounts through 2032. Credits revert to pre-Act 163 levels for TY 2033+. (Enhanced credits sunset Dec 31, 2027 → Credits extended through Dec 31, 2032)

View full analysis on PolicyEngine

2026 State Legislative Tracker | PolicyEngine

Track state-level tax and benefit legislation across all 50 states. See fiscal impacts, winners and losers, and district-level analysis powered by PolicyEngine microsimulation.

This application requires JavaScript to run. Please enable JavaScript in your browser settings.

Visit PolicyEngine.org