Hawaii ~ Corporate, Personal Income Taxes: Standard Deduction, Personal Exemption Increases Delayed; Other Deductions Limited

Hawaii legislation has been enacted that delays the standard personal income tax deduction and personal exemption increases approved under Act 60, Laws 2009, and makes those increases permanent; temporarily limits the amount of itemized personal income tax deductions that may be claimed by taxpayers with income above specified thresholds; and makes the income tax deductions for state taxes paid inoperative for certain taxpayers.

Standard Deduction and Personal Exemption

The standard deduction and personal exemption increases approved under Act 60, Laws 2009, are now applicable for taxable years beginning after December 31, 2012 (previously, December 31, 2010). Also, the increases, previously scheduled to be repealed on December 31, 2015, are made permanent.

Other Deductions

For taxable years beginning after December 31, 2010, and before January 1, 2016, itemized tax deductions claimed must not exceed the lesser of the limitation on itemized deductions under IRC §68 or any of the following that may be applicable:

— $25,000 for a taxpayer filing a single return or a married person filing separately with a federal adjusted gross income of $100,000 or more;

— $37,500 for a taxpayer filing as a head of household with a federal adjusted gross income of $150,000 or more; and

— $50,000 for a taxpayer filing a joint return or as a surviving spouse with a federal adjusted gross income of $200,000 or more.

Also, for taxable years beginning after December 31, 2010, the IRC §164(a)(3) and (b)(5) deductions for state taxes paid are made specifically inoperative for corporate taxpayers and the same individual taxpayers subject to the itemized deduction limitations discussed above.

Act 97 (S.B. 570), Laws 2011, effective July 1, 2011, and applicable as noted above

AUTHOR

Wolters Kluwer Tax and Accounting

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